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Is the UK on Sale?

(LAST UPDATED 15/10/2018)

One of the latest movies to hit the cinema, Crazy Rich Asians, features the members of the wealthy Young family, who are termed “not just rich, but crazy-rich”. As the story goes, the family made their fortune through investing in property.

Yes, property is tangible and finite – there’s only so much of it on this planet, so it will always be in demand. But some places are better than others. As any seasoned property investor will tell you, location is perhaps the most important thing to consider for the best returns.

In Singapore, house prices as a whole have dropped 5% since 2011. Some areas have been hit more heavily than others. One of the worst hit was Sentosa Cove, where average prices were down by almost 30% from their 2011 highs.

Residential property on the island city remains highly regulated, and a string of cooling measures by the Government this February put a halt on the short run of growth since last year. In Q3 2018 prices went up by 0.5%, compared to the 3.4% rise in Q2.

Other than the slowdown in growth, an additional hit on property investment in Singapore is that local and foreign buyers now have to pay an extra 5% in stamp duty, further reducing returns.

Right now local property investment appears to be giving less-than-stellar returns. So, if not in Singapore, where then can Singaporeans looking to be crazy-rich put their money?

Currently the exchange rate for the pound sterling is at S$1.81 to £1 (15 Oct). Prior to the 2007 Financial Crisis, the exchange rate hovered at around S$3 to £1.

GBP to SGD over last 20 years (Exchange Conversions)

This means that essentially, the UK is on sale for Singaporeans at a 40% discount compared to a decade ago!

The UK is also facing its biggest ever housing shortfall in England alone, there is a total backlog of almost 4 million homes.

Research by Heriot-Watt University shows England must build 340,000 homes per year until 2031 to meet demand a figure significantly higher than the government’s estimates.

This shortfall in housing is not new, and multiple failures of the UK Government to spur the house-building industry have caused prices to soar. House prices in the UK grew 32.28% over the past 5 years, and a whopping 323.58% over the past 25 years!

CBRE Research predicts house prices to continue to rise. For the next 3 years, house price growth is estimated to increase by 17.1%, while rental is expected to grow by 21%.

UK house price and rental forecast 2018-2021 (CBRE)

Regional cities in the UK are great places to invest in real estate, as their frenzied pace of development continues, compared to the over-saturated market of London.

These British regional cities have shown the most promising growth: over the past 12 months since June, Manchester clinched top spot at 7.4%, followed by Liverpool at 7.2%, and Birmingham at 6.8%. Compared to these, the capital only managed a dismal 0.7%.

Price growth of UK cities in last 12 months (Hometrack)

As long as supply is unable to keep up with demand, prices will continue to rise. For the foreseeable future, England’s shortfall in housing is not going to be solved soon, and Singaporeans can take advantage of the currency rate and purchase UK real estate at a discount!

Are you looking to invest in UK real estate? Don’t hesitate to give us a call at 65-3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong
Edited by Vivienne Pal 

Sources:

  • https://gbp.exchangeconversions.com/sgd/charts#chart_20years_rate
  • https://csiprop.com/should-you-invest-in-property-in-singapore/
  • https://csiprop.com/could-birmingham-be-the-next-london/
  • https://csiprop.com/uk-property-investment-beyond-brexit/
  • https://www.independent.co.uk/news/uk/home-news/housing-homeless-crisis-homes-a8356646.html
  • http://www.theedgemarkets.com/article/singapore-home-prices-rise-even-after-additional-property-curbshttps://sbr.com.sg/residential-property/in-focus/singapore-housing-market-fairly-valued-ubs
  • Featured image: The Straits Times