Majority of property investors looking to invest next year

Majority of property investors looking to invest next year

8:03 AM, 21st November 2022, About A year ago

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More than 50% of property investors are looking to further expand their portfolio in 2023 – despite the uncertainty of the UK’s economic outlook, research reveals.

The findings from bridging finance broker Finbri of more than 1,000 property investors found that 50.45% are planning to invest, with more experienced investors saying they are planning more activity.

The firm’s Stephen Clark said: “Just over 50% of all property investors plan to invest in 2023. 33% of investors aren’t planning to invest, whilst 16% aren’t sure.

“However, 68% of more experienced investors with over five investment properties, do plan to capitalise on increased opportunities in 2023.

“These findings demonstrate that those with a vast property portfolio are more likely to capitalise on the increasing availability of property as less experienced investors look to sell.”

Likely to be an increase in investment property availability

There is likely to be an increase in investment property availability as 23% of investors with fewer than five properties have said that increasing interest rates would cause them to sell their properties.

Whilst the market is predicting a tough year ahead, this survey has identified that 68% of experienced property investors are planning to further invest.

And Finbri says that with more than half of the UK’s property investors looking to expand their portfolios in 2023, the investment benefits include:

  • Capital appreciation: Property prices are predicted to drop by 5-10% in 2023 – and with many homeowners struggling to obtain a mortgage and repossessions on the rise, the increasing number of properties available on the market will be a prime opportunity for investors to expand their property portfolio. As the economic situation improves prices are expected to increase, by 2% in 2024 and 4% in 2026.
  • Additional income: With rental demand on the rise, tenants are often willing to pay a premium for good quality properties in desirable locations. Experienced investors will be able to take advantage, hoping to achieve high yields. The average rental yield in the UK is 4.71%, but this varies from location to location and researching where the highest yields are will provide investors with a strong indication of where they should be looking to expand their portfolio.

Potential risks with property investment

However, the bridging firm also warns of some potential risks with property investment, including:

  • Mortgage rates: As mortgage rates are hitting their highest levels since the financial crisis in 2008, a quarter of property investors have said they would struggle to remortgage or refinance if interest rates rise sharply. The increasing rates are a growing concern with investors with many banks expected to tighten mortgage lending for UK property.
  • Competition: It is possible that the property investment market could become more competitive as more people look to buy. With increased competition, investment property prices could increase.

Finbri has also looked at potential investment hotspots for property buyers and they include Slough, Liverpool, Aberdeen, Burton, Bolton and Reading.

Mr Clark said: “Property investment can be a great way to diversify your portfolio and generate additional income, but it’s important to do your research to discover which locations are better for investment.

“Keep an eye on interest rates, as they are expected to rise over the next few years and be aware of developments in the market that could make it more competitive.”

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