09 Jun 2022

In a climate of rising inflation is it still sensible to invest in property?

BY John Gebbels  

As we are only too aware inflation, and with it the cost of living, is currently rising. In this blog we will investigate some of the impacts for property investors, and whether in a climate of rising inflation property investment still remains a sensible idea. 

The most pressing impacts of the present climate for property investors are rising energy bills and mortgage costs, both of which have the potential to hinder profitability. In a recent survey by Property Investment firm Getground 83% of those surveyed said they were concerned or very concerned that rising inflation would have a negative impact on their ability to continue to invest profitably in the rental market.

However confidence in Oxfordshire property investment remains strong. OXON Property Search have number of savvy counter intuitive investor clients currently using the 2022 summer market, with softening property prices and maximum availability, to expand their property portfolios.

The appeal of investing in property now, even with the prospect of some rising costs, is that investors are struggling to find better options. What might at first glance appear as 'inflation proof alternatives' often come with other downfalls. For example cash savings still generate negligible returns, and stock market performance remains unpredictable. 

There is also presently a widespread shortage of available rental property, which is causing rents to rise and underpinning high demand. Recent research from Goodlord, as quoted in Property Reporter, showed a significant national average rent increases. 

"The average cost of rent in England reached £1,020 per property in May, up 0.83% on April’s figures. This surpasses averages recorded for the previous eight months. The last time prices rose above £1,020 was September 2021 - peak season for the market when rent averages hit £1,104. Overall, the cost of rent has now risen by 11% year-on-year" 

The appeal of investing in the security of bricks and mortar, with a safe and consistent income stream, therefore retains long term appeal. Short term 'flip' or 'development' investors will be more exposed to inflation impacts and might therefore struggle, however longer term investors should still prosper. Provided investments are sensibly financed, and with sufficient 'buffers' to protect from some short term rising costs, the long term benefits of property investment remain as realisable ever. The OXON Property Search golden rule of being not necessarily buying at the right time, but absolutely at the right price therefore remains true. 

To more information on our local property investment insight and Buy to Let search and acquisition service please don't hesitate to make contact to discuss further.