Invest and Fund: Equity investment to dominate UK housing
Equity investments will dominate the UK housing market and speed up its recovery, Invest and Fund has predicted.
The peer-to-peer property lender suggested that international investors could capitalise on the current opportunities in the UK housing market, which has been in turmoil ever since the October mini-Budget led to creeping rate hikes.
In a new blog post, Invest and Fund noted that media coverage of the UK housing market has been “divergent” with some publications taking a bullish outlook and others expressing pessimism.
The Evening Standard has predicted a ‘soft landing’ for house prices, after the latest Nationwide figures put the average cost of a home in the UK at £260,828. This is just 0.2 per cent lower than the previous month’s estimate, which “doesn’t really equate to a crash fuelled by soaring mortgage rates,” said Invest and Fund.
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The lender has predicted that the annual rate of decline for UK house prices reached around 3.8 per cent by the end of the first quarter of the year.
Meanwhile, the Guardian ran with a headline that UK mortgage approvals rose to their highest level since October 2022 in June, as people raced to fix their rates before the June meeting of the Bank of England’s monetary policy committee.
“This is…a fascinating example of how data can be wielded to be all things to all people,” said Invest and Fund.
“On the one hand, it shows a healthy demand is still there, a positive headline, but there is no way of discerning the volume of those applications that can be attributed to people coming off fixed deals, rather than new market entrants, a not so positive take.”
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Finally, Invest and Fund summarised other media perspectives as taking a “sensationalist” view of the market, running with the angle that house prices are dropping at their fastest annual rate in 14 years, when the global financial crisis tanked the housing market.
“If you look at the size of the V-shaped recovery in 2009, the speed of the decline was soon outpaced by the rate of the rally, and by March 2010, the correction was over, and the influx of cheap money had done its job,” said Invest and Fund.
“We fully anticipate a similar recovery into 2024 and beyond, except this time, it will be backed by massive private equity investment either directly or through conduits to the market, such as investment platforms.”
“Our ‘hot take’ is that equity investment will become a dominant force in UK housing because, looking globally, that’s where the money is, and it’s an opportunity that will inevitably be capitalised on.
“There is a clearly defined trend here of increasing private investor involvement, which will play a massive part in the strength of the housing sector and the speed of its recovery.”
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