The 2022 property market is shaping up to be one of the most difficult to predict. There’s the impact of COVID, likely interest rate rises, the cost of living crisis, and labour and supply shortages, to take into account when looking at properties to buy.
But, if you’re a savvy investor, there is still good money to be made in bricks and mortar. We spoke to five experts about locations, types of property and what they’d do with them to make a healthy return.
Most profitable property types
Land was the top criteria that all our property experts looked for when investing.
Buying agent Mark Parkinson, director of Middleton Advisors, believes this will endure, even with the end of the pandemic in sight. "I think outside space will remain at a premium for the foreseeable future — the memory of the worst parts of the pandemic will live long."
Property developer Tarun Singh said: "Homeowners now put gardens as top priority on their wish list."
For Depaq Singh, managing director of ProDesign, renting out two-bedroom semi-detached houses has been extremely profitable, bringing in a yield of between 5.6 and 6.2%. "Anything with a garden or car parking space comes with a premium," he added.
For Richard Black, property developer and broadcaster, it’s very much about how he can expand, enhance and improve what’s there. "My main hit list is detached/semi-detached with a good-sized side garden to allow for an extension; dated — ideally 1970’s chalet as 70’s usually means bigger rooms that can be changed easily — the ability to install ensuites into existing bedrooms and the ability to replace old heating with something modern and eco-friendly."
Price brackets with the best returns
Among experts, there was less agreement when it came to the most profitable property price bracket though.
This ranged from "£120,000 on average" to the top end of the London and country markets because "they tend to be more insulated from interest rate and cost of living variations."
Black was somewhere in the middle: "Up to £300,000. It’s a busy place in the market, and most joint salaries can sustain a mortgage at that price point. The houses are of a good size, not too silly small and not unachievably big.
"Anything £200,000 or over then the buyer isn’t likely to be exposing themselves to a long-term, huge debt and therefore feels comfortable looking in this bracket."
Areas that are currently ‘hot’ for profit
COVID saw a major influx of people out of cities and into the suburbs and rural areas. As a result, property values in these locations saw a big increase. But how will hybrid working impact property prices moving forward?
"I believe that the city will see a big revival; the prices dropped rapidly and they will come back," said Singh.
"Properties in cities with good outdoor space are selling very well," said Parkinson.
He predicts, however, that the commuter belt will widen as a result of part-time office working, and these are the places to invest in.
"Look at the areas just outside traditional commuting destinations — with more people now working from home, many can stretch the commute distance that bit further so prices will begin to rise," he said.
"Holiday hotspots have seen huge price growth. Both COVID and a growing realisation that, long-term, it will no longer be acceptable to jet around the planet several times each year, have made holiday homes a very popular choice."
More specifically, Knight Frank highlighted the commuter haven of north Oxford as a hot spot. "The market in north Oxford has the classic drivers of great properties, shopping and schools," said William Kirkland, head of Knight Frank’s Oxford office.
"From Summertown you can walk to some very good state and independent schools, which is why people are still choosing to come here from London."
Meanwhile, Black favours the east of England. "East Anglia — good transport links, such as the entirely new train fleet, have exposed counties like Norfolk and Suffolk to the post-pandemic London migration."
Should you rent or renovate and sell?
This is a question that property experts have grappled with for years.
The reduction in tax relief for landlords and proposed legislation changes are set to make renting less lucrative for investors, but the current lack of labour and increased cost of building supplies make renovating difficult and expensive too.
The answer comes down to what type of property you are buying. "This entirely depends on the market dynamics, not what the indexes are saying about the market overall, but the specific market the property is in," says Parkinson.
"For example, currently houses and flats in prime central London are performing very differently."
What you decide to do with your property portfolio will also come down to personal preference, and whether you want to get back you return quickly or over time, according to Singh. "I’m a great believer in slow processes, so I build and buy to rent. You’re getting an income while you’re sleeping and can pass it down to your kids."