The UK’s real estate market has been one of the most volatile in Europe for some time. However, the recent share price drop appears to have triggered a new phase in the evolution of this market. British property investors are looking to another part of the world for inspiration and capital. The country’s real estate market is now attracting foreign investment because it is cheap and has great opportunities for growth.
The UK’s real estate market experienced a huge increase in activity between 2010 and 2020 when its property prices rose by almost 25%. Now, many potential investors are looking to another part of the world to learn about property investment and make an Australian or Singaporean home their primary residence.
This article will highlight key differences between the UK and other European countries when it comes to property investment, as well as explore what factors may help or hinder such an investment. However, if you are interested in investing in the UK’s real estate industry then feel free to hire AP Morgan who is one of the best Estate Agents Redditch.
UK Real Estate Investment Trusts (REITs)
A REIT is an investment company that specializes in the acquisition and management of real estate assets. REITs do not trade hands or make profits, but instead, they raise funds by issuing shares or bonds and then hold those assets as opposed to a public company that might issue shares and then has to repay them. REITs range in price from just a few pence to over £100m.
The main difference between a REIT and a publicly listed company is the tax treatment of dividends and long-term capital gains. REITs are required to pay a 20% corporate tax rate, compared to the 20% stamp duty that applies to most commercial property deals.
Europe’s Real Estate Market: An Overview
The European real estate market is worth around $12trn and is responsible for about 15% of global real estate activity. This is expected to increase to 24% by 2026. The largest part of this market is made up of ownership, but there are also significant opportunities for investors in international property flipping and investment trusts.
The size of the European real estate market was worth $13.6trn in 2016 and is expected to reach $15.4trn by 2021. The largest property market in Europe is London, home to around 20% of the entire market. Paris is next with a 16% share, followed by Amsterdam with 8%. Other major cities in Europe with smaller shares include Barcelona (3%), Berlin (3.3%), and Madrid (3%).
Key Differences between the UK and Other European Countries
In terms of general lifestyle and demographics, the UK is quite different from European countries. For example, in the U.K., most people are single and there are huge discrepancies in the amount of wealth at the top compared to the rest of the country. In reality, the real estate market in the U.K. is more similar to Australia or Singapore than it is to Europe.
How to Buy a Home in the UK
First, it’s important to get an idea of what type of home you want to buy and where you want to build it. Once you’ve identified what type of home you want to buy, you can decide where to go from there. The first thing you’ll need to do is call a home show. Home shows are often held in your local area and are free or cheap to attend. The next step is to navigate the Yellow Pages to find homes to view. You can usually save a lot of money this way compared to heading to a real estate show in person.
The Benefits of Exchange Rate Flexibility
One of the biggest benefits of moving to the U.K. is the ability to benefit from the country’s huge exchange rate flexibility. The pound has been hugely overvalued against the dollar compared to other countries over the past few years, which has given British investors a major boost in recent times.
The Downside of Money In The Bank
One of the main advantages of investing in real estate in the U.K. is that you are able to benefit from the country’s low cost of capital. The government currently keeps 15% of all foreign exchange trading revenue, which is managed through the London Stock Exchange. As a result, the cost of investing in the stock market is very low.
Conclusion
The real estate market in the UK has been challenged by a drop in property prices and an increase in demand following the Brexit vote. The market is now expected to bounce back due to favorable economic conditions, but it is likely to remain challenging for investors due to the low share price and uncertainty surrounding the Brexit deal. If you are thinking of buying a home in the UK, the process is simple. You will need to know where you are planning to build and which type of house is best for your budget. Get in touch with builders and find out which type of house is right for you.
