Cost of living drives a surge in property prices within the UK
We have all witnessed the effects of inflation in recent times with increasing costs of energy bills, surging fuel prices, building materials, and bank interest rates. The biggest effect is the ongoing growth of property prices within the UK and why?
Being in my role of helping property investors also gives me a frontline insight of property transactions, in my 10+ years within this industry the total number of properties for sale is reduced due to the largest influx of property investing I have come across. Property investors are seeking high-yielding property options and the cost of living is causing this wave.
Leaving your hard-earned savings in the bank is not doing you any favours if we compare it with all the cost increases, you are effectively losing money since it’s not keeping up with cost increases reason why the public has turned to property.
The Consumer Prices Index (CPI) rose by 5.5% in the 12 months to January 2022, up from 5.4% to December 2021.
UK property landlords especially those that generate a high rental yield will be more at ease, if you have £100,000 savings account, looking at some of the best bank interest rates it seems to be at a rate of around 5% or £5000 for the year. The cost of living is currently increasing at a rate of 5.5% so you can start to understand the panic and why property investment is the more sensible option. Owning property within the UK last year saw an average price increase of around 8%-9%, we must then include the rental yield which from the properties I deal with generate 10% of the purchase price roughly. For the same amount £100,000 however holding within a property, this is a total return of £18,000 in rents and capital growth vs savings bank interest of £5,000.
Annual Change In UK House Prices
We have come through a global pandemic that nationally saw homeowners and landlords choosing not to sell their properties. The lack of stock, inflation, and surge in property transactions is the key reason 2022 has seen a huge impact on price growth right across the country. I do not see this relaxing any time soon even if inflations start to take a more steady growth.
