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    Home»Property»Property by the Pound – PropertyWire
    Property

    Property by the Pound – PropertyWire

    April 1, 20254 Mins Read


    David Stritch is senior FX analyst at Caxton

    Recent weeks saw the team at RAW Capital Partners release research suggesting that interest in the UK property market is growing amongst overseas investors.

    This isn’t surprising.

    As anyone who lives in the UK knows, while the weather may be unreliable, the upward tick in property values seems to be a given. Nevertheless, there are a range of uncertainties currently at play in the UK and beyond which investors should consider carefully before committing to investing in UK real estate.

    Taking an interest in UK property

    David Stritch

    In common with other countries across the world, the UK is currently emerging from a period of relatively high interest rates, driven by Covid and the conflict in Ukraine.

    While 2024 saw the Bank of England’s base rate start to decline from its peak, this decline has been slow. Ongoing economic uncertainty is giving the Bank cause for caution and March saw the base rate held at 4.5%. This means higher borrowing costs and so helps dampen demand for property.

    As such, for overseas property investors looking at the medium to long term, now could be a good time to buy. It seems likely that there will be further rate reductions over 2025 and certainly over the next 48 months. This will be a stimulus for the UK’s property market and drive up prices meaning an investment made now could yield returns in the near future.

    Property by the Pound

    Another consideration when investing into the UK property market is currency. Higher interest rates often mean a more expensive pound which can decrease spending power for those investing from overseas.

    Forex markets however are fickle at the best of times and have been especially so recently.

    The last 12 months alone have seen GBP lose 5% against the Yen and the Euro. For those already bought into the UK this can quickly eat away at bottom lines though again, if looking at a property investment over the longer-term – which is typically the case – this short term volatility is less of an issue.

    For those not yet invested, significant dips in GBP can also present excellent buying opportunities. On the other hand, they also present terrible selling opportunities. Seeking advice on managing currency volatility will be key to success, especially as the increasingly unpredictable use of tariffs by the new US administration drives ever more currency volatility over 2025.

    Build build build

    Another consideration for potential investors is volume. There are many dynamics that feed into the success of UK property investment but surely one of the key ones is the mismatch between supply and demand. There simply isn’t enough housing, so prices keep going up.

    This is a key driver of political instability in the UK and commitments to build swathes of new housing are a perennial feature of British politics. The relatively new Labour government is no exception and is said to be considering re-designating so called ‘green belt’ zones around UK cities, which will make it easier to build there.

    While the impact of volume house building on prestige property investment might be marginal in the short term, long-term, more supply will decrease property price inflation relative to general inflation. This is a longer term consideration however and also comes with the significant caveat that no government in recent memory has managed to build housing at the volume needed to meet supply.

    With President Trump’s tariffs potentially increasing the costs of the raw materials needed to get Britain building too, the government is faced with significant obstacles on the housing front.

    Conclusion

    The UK remains a highly desirable destination for property investors and current conditions do indeed present some interesting opportunities for those ready to invest. As with the rest of the world though, global macroeconomic and geopolitical events are driving a degree of instability.

    Managing this instability and not getting caught on the wrong side of a currency fluctuation or a hastily erected tariff will be essential to generating good returns long-term.



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