A recent Savills study pinpoints the buy and sell years that resulted in the strongest returns for investment properties. It’s not a well-kept secret that the best investments result from buying and selling at the right time. It is also common knowledge that trying to perfectly time a market’s bottom and top is unlikely to prove a successful endeavour. But despite that it is possible to understand when a market is in the doldrums. And if you can, whatever the investment class is, that is a good time to buy.
The simple reality is that most investors buy when markets are already strong and sell when they are already weak. Whether it is investment properties, the stock market or any other investment class, if you can avoid that your investment returns will already be ahead of the curve. It isn’t necessary to catch the absolute top and bottom of a market cycle. With that in mind it will come as no surprise to learn that the best returns on investment recent history has afforded investment properties have been realised by those brave enough to buy in 2009.
With the UK reeling after the international financial crisis hit in 2009, the property market was in a traumatised state. There weren’t many willing buyers despite prices have dropped significantly from their recent peak. That is reflected by the fact that only 1 in 40 properties sold in 2018 were originally purchased in 2009. But those who did ignore negativity to buy in 2009 realised the best return on investment of 2018 sales. The average profit on a property bought in 2009 and sold in 2018 was £93,378.
The location of investment properties was also crucial to the level of profit generated on price over the past decade and a half. 40% of those who bought a home in London and the South East at some point in the past 15 years made over £100,000 on their buying price when they sold. That drops to 6% in the north of the country. That is of course heavily influenced by the relative average prices of properties in the south and north of England but prices also rebounded from the 2008 market downturn quickly and then went on to greater heights. In some parts of the north prices have only just recovered to 2008 levels and in isolated pockets have still to return to those peaks.
Average profit on the sale of an investment property acquired in the past 15 years was £202,700 in London at one end of the scale and £15,900 in the north east at the other. 19% of 2018 sales in the north of England represented a loss. That rose to 31% in the north east. Only 4% of property sales in London and the south were at a loss on the purchase price.