Investors looking to make a profit on real estate should seriously consider placing their money in the residential property sector, especially in the commuter belt around the nation’s capital. According to figures released mid-year, the area of the country hardest hit by the housing crisis has been London and with over three decades of insufficient new construction, more and more people are seeking rental properties as the shortage of adequate housing continues to expand.
Growth Continues Outward as London Housing Costs Rise
With the shortage of affordable housing within London, increasing numbers of renters are seeking homes outside the city but within easy travelling distance to and from work. Pay rises have been slow whilst the cost of renting has continued to grow year on year so that living in London, although working there as well, has become increasingly difficult to afford. This has created a mass exodus from the city but has also created a shortage of ‘value for money’ properties available to them. In turn, this has driven up not only house prices outside London but also the demand for housing that is reasonably priced.
Some Stark Facts and Figures
According to projected figures, the average cost of buying a house will rise over the next half decade by 22.8 per cent in most areas of the United Kingdom whilst London is expected to climb by an unprecedented 29.4 per cent. That is a rise in cost of almost 1/3 what homes are now selling for and a rise that is simply unrealistic for the average home buyer. With the cost of London residential properties increasing by almost 7 per cent more than properties in other areas surrounding the capital, it is easy to see how greater numbers of people will be exiting the city in search of housing that is affordable.
Why Invest in and around London?
Property investors would be well advised to consider the projected increase in housing shortages in and around the nation’s capital if they are looking for a higher ROI. Whether building new homes, apartment complexes or simply grabbing up houses already on the market, it’s wise to consider where the greatest need lies at this point in time.
Yes, the cost of homes (new constructions as well as existing homes) is lower in outlying areas, but the return on your investment will also be correspondingly low. The need is greatest around larger metropolitan areas where the majority of people work, so this is where your investment capital is best placed. If you are looking to let out your properties, you have the greatest potential for success where the need is greatest. It’s a simple matter of supply and demand.
For Most – Living in London Is Living in Poverty
According to Trust for London, living in London, for most, is living in poverty. They analyse 80 key indicators that point to inequality and poverty in the nation’s capital which leads to the contention that living in the city is cost prohibitive. This fact alone should lead more and more property investors to seek areas within commuting distance to London, but in areas where the cost of living is still within the reach of the average worker. When looking for the greatest ROI, it’s crucial to find locations where properties are still priced reasonably but with the greatest potential to be let out. This would be those cities bordering London where housing is still affordable and easily let out as a result.
It doesn’t take putting millions of pounds into building huge apartment complexes to make a killing in property investment. Now is the time to grab up homes to be let because the need is great, prices are still low and supply continues to diminish. Property investors can always flip homes for a higher price at a later date, but for residual income and higher ROI, homes to let is a good investment within the commuter belt. There is a real need and rental prices can be kept affordable which means they can be easily let. Looking for a higher ROI? Stay close to the nation’s capital and you’ll find your Mecca.
Article Courtesy of: Boris Dzhingarov, Dzhingarov.com