It has been a very difficult time for the global real estate  market, being hit by a series of inter-connected negative factors.

The main points why now is the time to invest in UK.

• During the market peak, the pound has lost over 30%  in value against all other major global currencies.
• Massive capital value decreases in London property since the market peak - in many cases over 30%.
• Bank of England base rates at an all time low of 0.5%, therefore excellent rates can be achieved for overseas clients.
• Rental yields of between 5-8%+ can be easily achieved, as opposed to 3-4% when the market was at the peak
• The UK property market is transparent, well regulated and offers security of tenure. Investing in property is safer
  than depositing cash in banks, a lesson that many have learned, the hard way.

The main reasons why the global realestate market went into a freefall is firstly, the major lack of confidence in the realestate market was fuelled by the weakness of the US real estate market. Such lack of confidence had brought the UK market to a stand still all through 2008 & 2009, during that period potential buyers had adopted the ‘wait and see’ strategy as they feared further decline in values.

Secondly, the credit crunch had eaten into the borrowings and ultimately purchasing power of the main stream masses. This caused prices to fall sharply in 2008 and in certain sectors of the market the volume of transactions had diminished severely. The Bank of England had to cut interest rates in response to the tightening in lending standards and inflationary pressure. It was a tough time for home owners whose mortgages/borrowings were up for renewal.

Thirdly, In 2008  London went through a substantial contraction: the evolution of the stock price of major banks went down between 30% to 80%, depending on the institution. Job cuts were implemented by banks trying to lower their cash outflows and preserve their capital base. In such environment, there is a now a higher demand for rental properties, with rents for desirable flat and houses generally being reviewed on a upward trend. The Bank of England base rates at an all time low of 0.5%, providing excellent rates for overseas investors.

In 2010 there is know a wave of interest from national and international investors along with first time buyers to acquire real estate.  The UK realestate market has always been transparent, it is well regulated and offers security of tenure. Investing in UK property has always been safer than depositing cash in banks, a lesson that many have learned, the hard way over the past few months.

Copyright © Burgeon 2010

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