Investing in property, whether in the global property market or the UK market, has more closely come into focus recently thanks to some tough global economic challenges and our increasingly interconnected worlds.
Global property investments have been, broadly speaking, quite protected from the other economic headwinds that have been caused by the pandemic, the war in Ukraine, and the global inflation crisis.
Now that things are starting to settle somewhat we can take a look at how some of the main property markets across the world are performing compared to the UK, and what to expect in the coming months and years.
Global Property Market Overview:
American property market
The American property investment market is a dynamic and complex landscape characterised by various factors. Historically, real estate has proven to be a lucrative investment avenue, attracting both domestic and international investors. Key drivers of the market include population growth, economic conditions, interest rates, and government policies. Major cities like New York, Los Angeles, and San Francisco continue to be popular investment destinations, but emerging markets such as Austin, Denver, and Nashville are gaining momentum.
Residential properties, commercial buildings, and rental properties remain attractive options for investors seeking long-term returns and portfolio diversification. However, market conditions can be volatile, influenced by factors like housing affordability, construction costs, and regulatory changes. Professional advice and thorough research are crucial for success in this ever-evolving market.
According to recent data, the average price of a property in the US is just under $440,000 which is just over £346,000 in the UK. According to Reuters, however, rising interest rates set by the Fed (Federal Reserve System) to curb inflation is likely to result in house prices in America dropping by 4.5% this year, and possibly a little more next year. There is good news for US investors, however, with property yields sitting at a healthy 6.12% according to global data.
European property market
The European Union (EU) property investment market offers investors some really diverse opportunities across member countries with a wide range of economies and real estate markets. Investors can find varying risk levels and potential returns.
Popular investment destinations include Germany, France, Spain, and the Netherlands. Factors such as economic stability, infrastructure development, political stability, and market regulations impact the attractiveness of these markets. Residential properties, commercial real estate, and hospitality sectors are prominent investment options. The EU’s focus on sustainability and green initiatives has also created opportunities for renewable energy and eco-friendly buildings. However, investors should be mindful of varying legal systems, tax regulations, and cultural differences when exploring this diverse market.
Whilst there is no EU average house price, the most recently released data by the EU shows that property prices rose by an average of 3.6% in the year leading up to December 2022.
Yields again vary across EU countries, but the largest markets, for example in France and Germany show 3.97% and 3.12% respectively. Whilst definitely respectable, they are still a few percentage points below the US and UK.
With interest rates rising and the cost of money increasing, there’s an expectation that prices will fall across Europe in the next year.
UK property market
The UK property market is attracting a huge amount of investment right now not necessarily because other markets aren’t doing as well, but because the UK is largely outperforming them by most metrics and has a more established investment market.
The US and EU, for example, have huge and diverse markets that can vary massively in terms of price, demand, yield and rental incomes, whereas the UK has a more contained and reliable set of market data that makes it easier to analyse.
African, Asian and American investors are joining UK landlords in shielding and growing their wealth in tough economic times and seeing strong and stable returns.
The UK average house price currently sits at around £308,000, with average rental yields of 6.21%. UK house prices grew by an impressive 6.3% in the year to January 2023 too.
As we can see, all the main global markets are doing relatively well and still are great areas to invest in, but the UK, once again, appears to be the leading market to invest in right now and into the next 12 months.
If you’re thinking of investing in the UK, why not get in touch today? With almost 20 years of experience in the UK buy-to-let market and a proven track record, we are perfectly placed to help you build your wealth through UK property investment. Get in touch today here!
