Sam Najafi, property writer, has a special interest in regeneration, renovations and self-build properties. This article will look at property investor strategies and investor reactions to economic uncertainty in 2023.
Despite the significant hurdles faced by many in the prevailing economic climate, optimism remains within the property investment landscape, with bricks and mortar retaining its reputation as one of the safest perceived investment vehicles during economically turbulent times – particularly in the UK’s top performing areas.
Research published by Finbri, a bridging finance broker, revealed that more than 50% of existing property investors planned to add to their property portfolios in 2023. Among the most experienced property investors, even more activity was predicted, with 68% of investors with five or more assets in their portfolios intending to take advantage of ‘increased opportunities in 2023’.
Conversely, the research also revealed that a third of investors were not planning to invest more in 2023, while 16% of respondents remained unsure. Given the prevailing economic uncertainty this figure is unsurprising, although it is hoped that the mortgage market will stabilise early in 2023.
Finbri co-founder Stephen Clark said the findings suggested that investors with vast property portfolios were more likely to capitalise on increasing availability of property as less experienced investors sought to sell. Clark pointed out that the outlook for both growth in income and capital appreciation in the rental market were benefits that investors should be particularly aware of at the current time.
In terms of the rental market, the report suggested that tenant demand had continued to grow, leaving property investors in the buy-to-let space with strong rental returns and fewer void periods. Meanwhile, turning to capital appreciation, experts predicted that prices would decrease slightly through 2023, with depreciations ranging from 5% to 10% on average, although this forecast varies from one research centre to the next. This may result in more properties coming onto the market, followed by a return to growth of 2% in 2024, rising to 4% in 2026, Finbri speculates.
Looking back, it is apparent that uncertainty breeds opportunity, with previous property crashes and subsequent economic downturns presenting scope for developers and investors to make their fortunes. While cautious types played the waiting game, bold investors took action, capitalising on the lack of competition. During any property crisis, risk aversion takes a tight grip, particularly among inexperienced investors. However, as Stephen Clark indicates, property investment can be a great way for investors to diversify their portfolio provided they do their research, discovering which locations are ripe for development and keeping a close eye on interest rates.