When is the Best Time to Buy Investment Property?

Knowing when to invest in property often lingers in the minds of property investors. While the UK attempts to put the pandemic behind us, many sectors are coming back to life and returning to pre-covid expectations, along with the economy. As we figure out how to compensate for the losses covid caused, it comes as no surprise that numerous changes have affected the market, including rising inflation and interest rates.

Purchasing property is a great way to invest money, but like any investment, timing is an essential factor to consider. Despite not knowing what to expect in the future, the property market has proven to yield valuable assets in recent years, even through difficulties like Brexit and Covid-19. Before investing, it is necessary to find yourself in a secure enough position, personally and financially, to prepare for any unexpected obstacles in the future. 

Managing risk is essential in planning for the future because all investment ventures come with a level of risk. If you haven’t prepared for the possibilities, you may never find the right time to buy an investment property. 

The demand for property in 2022

Near the end of 2020, the private rented sector was reportedly worth an impressive £1.4 trillion, and a lack of supply and high demand plays a huge role in those numbers. Rental amounts are rising gradually, but house prices are growing to a new level. There is plenty of demand for somewhere to live, with many UK residents opting to rent instead of purchasing a home due to budget constraints. 

The undersupply of UK homes remains a factor behind the UK’s rising property prices. The demand for property was 50% higher at the beginning of the year, compared to the same period from 2018 to 2021, while the new supply of properties was 15% lower. 

While the government aims to build at least a million new homes by 2025, this will not meet the demand where the 1.2 million more property transactions expected in 2022 are concerned. For buy-to-let investors, this is perfect, since lack of supply will mean more of the population are likely to stay in the rental market for longer. 

Long-term growth

High demand is promising. However, it’s helpful to know how this will play a part in long-term growth. According to UK Finance, buy-to-let investors borrowed a record £18 billion in 2021, an impressive 83% increase compared to the previous year. 

An estimated 34% of landlords in the UK are looking to purchase an additional property in 2022, so we can only expect to see long-term growth in the future. 

JLL has said that property prices could see up to 4.5% increases over the next ten months. Over the next five years, year-on-year growth could potentially see property prices 20% higher than they are now – highlighting the opportunities a buy-to-let investment can currently offer.

Personal factors to consider when investing in property

While we don’t know entirely what the future holds for the financial market, many investors will still wonder whether or not now is the best time to buy an investment property. It is essential to focus on the personal factors you can recognise, such as your finances. 

Seeking expert advice before taking the plunge is crucial. Take a look at the personal factors to consider when investing below:

Gearing comfortably

You should only invest when you are gearing an amount of money you can meet comfortably, keeping any potentially increased interest rates in mind. This is where you need to look at your finances and decide the right actions to take. With how much you can borrow while fully benefiting from the investment long term, the right time to invest will be when you know the level of gearing you can healthily manage. 

A steady income

Are you experiencing a steady increase in earnings? Now could be the time to invest. Consider any possible changes that could occur and affect your income in the next ten years before signing on the dotted line to see how your income can affect your ability to meet payments. 

If you have concerns about what the near future holds, it is best to hold off on purchasing an investment property until you find the right balance and investment that suits your needs. Consider taking out income protection insurance in case of any unpredictable circumstances.

Manage debt

The sensible action before investing is to reduce any non-deductible debt as much as you possibly can. This type of debt includes credit cards, car loans and any outstanding payments on online shopping accounts. 

If you are already struggling with current debt, investing in a property will only further stretch your finances to a point where you reap zero rewards from the investment. Never borrow money when you are not in a position to pay it back. 

When is the right time to invest for you?

While markets change and percentages rocket, the right time to invest depends on your circumstances. Where the current state of the market is concerned, now has never been a better time to do so. Undersupply of property and skyrocketing rents and property prices offer great opportunities for both long and short term returns – investing in a UK property will be the best decision you could make in 2022. 

With almost 20 years’ experience under our belts, we give our clients a personal service to ensure that their buy to let investment needs are met and make the buy to let process as simple as possible. Get in touch with us today to find out more.