2018 has been an interesting year for the property market, and property investments in particular; with Brexit just around the corner, changes to stamp duty and a big shift in the types of profitable investments in the market. As 2018 draws to a close, we're looking back at some of the major news stories from the year to see how property investment has changed and how this has affected predictions for the 2019 market. Be sure to check out our infographic at the bottom of the article too!
• In January 2018, founder of Surrenden Invest, Jonathan Stephens, predicted that Manchester would remain one of the robust cities for investors with high rental demand and lower city centre prices comparatively. Stephens also predicted that Liverpool would continue to offer low price points and strong potential growth.
• Property Wire reported that "investment volumes in the UK commercial property market... [would] total around £55 billion with returns of 6.4%, down on the £60 billion expected to be confirmed for 2017" - this figure was later confirmed to have totalled £65.4 billion for 2017 (Savills).
• There was a big focus on how Brexit would affect the market in the final 15 months until the deal. The GBP (£) was at its highest level at $1.40 since the vote to leave the EU.
• Demand for London property dropped, and inflation rates rose slowly in the capital, prompting a strong change in investors looking to the north.
• Bridging & Commercial reported that investment in UK commercial property rose 66% compared to this time last year.
• Property investment topped many reports as the safest and most profitable type of investment in the UK.
• Increases in house prices pushed the number of home owners owning properties worth £1 million plus to 768,000 (22.95% up on August 2016).
• In March, reports focused on the shift from small independent landlords to big firms and investors building thousands of properties for rent - something that predicted better managed properties and more 'high tech' accommodations including CCTV, gyms and even cinemas for residents.
• The government introduced new tax rules in April 2017, that affected mortgages and landlords completing their tax forms in April this year. "Before April 2017, landlords were able to deduct their mortgage interest payments from their taxable income before they calculated their tax bill - so that they would be taxed on their profits, rather than their overall turnover. This offered significant savings, as most buy-to-let investors have interest-only mortgages. Now, though, when investors file their 2017-18 tax returns (due by January 2019), they'll only be able to claim relief on 75% of their mortgage interest and will get a 20% tax credit on the rest" (The Telegraph).
• House prices across the UK fell by 0.2% in May, which saw articles from various sources reporting that many investors no longer consider property to be a good investment option, despite a number arguing otherwise. In the north, however, property prices were still rising - particularly in Manchester - seeing those investors still focusing on properties moving north to find profitable opportunities.
• New reports by Select Property suggested that 70% of tenants in the UK have no plans to buy a property, highlighting the disparity between rental demand and the number of units available to tenants, prompting a rise in the number of developments seeking planning permission.
• While investors within the UK were still unsure of property as a good investment, reports showed that 77% of GCC investors saw the UK (the north in particular) as one of the top investment opportunities globally.
• Liverpool was also highlighted as one of the best places to be a buy-to-let landlord; and Leeds one of the best cities to be a landlord for student and graduates.
• Investment from China in UK property cooled to 8.4% in June, with Chinese developers being forced to accelerate sales due to "fresh curbs and tighter funding conditions" in China, taking away some of the steam from the UK market (Reuters).
• Manchester was named the city with the highest capital appreciation in the UK, rising 7.4% versus the national average of 4.6%.
• The Institute for Public Policy Research (IPPR) suggested in July that banks should implement restrictions of mortgages for UK homebuyers to "prevent house prices rising for at least five years" (The Guardian), to end Britain's reliance on property investment to drive the economy.
• Research by Yieldit showed that the average age of UK property investors (particularly in the buy-to-let discipline) had dropped from 52.3 in 2014 to 42, "despite the average age of first-time buyers rising in recent years as property prices have soared in the UK" (Buy Association).
• Birmingham started climbing the ladder for the best place to invest in property in the UK, joining Manchester and Liverpool at the top.
• There was a significant rise in the number of people aged 55+ releasing equity from their homes in order to invest in buy-to-let property.
• The number of European investors in the UK bounced back from its drop since Britain voted to leave the EU, with buyers from the EU making up 15% of property investment between January and August 2018, compared to 10% in the same period the year previous.
• Northern cities such as Manchester, Liverpool and Sheffield were named some of the best cities in the UK to get the highest yields as a landlord of student accommodation.
• The Financial Times reported that the value of the GBP (£) was still steadily increasing, however predicted this could see a decrease in the number of overseas investors.
• There was a shift from buy-to-let to commercial investment in the UK as yields on commercial property increased particularly in the south, however buy-to-let and student accommodation investment was still performing well in the north.
• Tax changes hit the UK property market as it reported the slowest growth since September 2010; leading to an increase in the number of owner-occupier buyers on off-plan builds, and the number of first-time buyers.
• The government promoted a portfolio of seven new investment opportunities (worth £2 billion) to create thousands of new homes and jobs across the UK in Liverpool, Gateshead, Edinburgh, Belfast and Sussex.
• Overseas property investment faced issues again when plans were announced to introduce new tax rules for foreigners who buy UK property. Prime Minister Theresa May stated that it was to "tackle the housing crisis amid concerns that foreign buyers have been using property as a way of stashing money and pushing up prices, particularly in London" (Property Wire). The plans received mixed reviews from those in the industry.
• New research conducted by UCAS and Knight Frank highlighted what students were looking for in their accommodation, giving valuable insights to developers and investors as the student accommodation market grows in the UK. Students wanted to see quality, facilities such as residents' only gyms, and high-speed broadband as standard.
• What Investment named Birmingham, Manchester, London, Liverpool and Newcastle-upon-Tyne as the hotspots to look to for property investment in 2019.
• The proposed 1% increase in stamp duty for foreigners buying UK property, set to go to consultation in January 2019, saw an increase in the number of overseas investors. The decision was still considered controversial between those in the industry.
• A major focus for the end of year is how Brexit - just four months away - will affect investment in the UK property market; predictions are varied, especially with the possibility of a non-deal Brexit making headlines. Much of the research has predicted that the market could continue to decline into the new year, but see a surge from April onwards.
• While house prices in 2018 fell by 2% as a whole, it's predicted they will grow again in 2018 - by 5%, though predictions are varied. Jackson-Stops predicted a flat-line in prices due to stamp duty changes. Whereas both Price Waterhouse Coopers and Strutt & Parker say prices will rise - though possibly flat-line in London.
The Northern Powerhouse and HS2 schemes have also been key contributors to the UK property market for their announcements, and particularly in the last year. Both schemes have bought investors to the north, boosting house prices and the number of developments being built. The Northern Powerhouse scheme has also seen the formation this year (April) of Transport for the North (TfN) - the first sub-regional transport body in the UK. Transport has also been a focus for the HS2 scheme, which sets to improve connections between northern hotspots such as Newcastle-upon-Tyne, Leeds, Sheffield, Manchester, Birmingham and Liverpool to London. The HS2 scheme this year has seen a continuation from mid-2017 with the main civils design work taking place, ready for construction work to commence in early 2019.