6 ‘Property Investing during Inflation’ tips

May 24, 2022

The Covid Pandemic has fuelled inflationary pressures. The tragic war in Ukraine has caused further economic damage. And we are now being warned of impending global food shortages. All of these pressures have contributed to pushing inflation to close to 10% in the UK. This makes it the biggest issue facing Britain* closely followed by economic worries. You investors may want to think about property investing during inflation.

Uk property

How are property prices affected?

There’s doom-mongering about spiralling house prices but much of this focuses on averages. And as we know averages can hide a myriad of micro factors.

Prices are affected by supply and demand fundamentally although other factors come into play:

  • Inflation places upward pressure on interest rates and other home ownership expenses. Higher household costs can increase home repossessions. Over-leveraged property investors also put themselves at risk.
  • The property market can get nervous about an impending economic downturn. This in itself can be self-fulfilling.

Are you facing a UK Property price bubble?

In the 2008 credit crunch, the economy and lack of money for mortgage lending were key to falling demand and prices. Property prices had risen significantly through the availability of ‘easy credit’ in the lead-up to this period.

Nowadays mortgage lending criteria are more rigorous and house prices don’t appear out of kilter.

The December 2021 House Price index** shows UK House Prices growth at 7.4%. Demand is up 49% and supply in minus territory. Some areas like Wales have seen prices increase by double digits. But not all areas are seeing significant property price rises. London is fairly static and Aberdeen has negative growth.** In many regions, real property prices (net prices after inflation) have risen at about the rate of inflation.

Zoopla research shows that 3 bed houses are the most popular property type to January 2022. Strong demand for houses, which tend to be more pricey, may be a contributory factor to higher average house prices.

The mix of housing stock and the demand: supply imbalance, is creating price pressure. But this is in micro-markets and housing type niches. You are not necessarily facing a bubble.

Still we aren’t building enough homes and so house prices look set to continue to rise, even if it is at single digit growth.

Property Investing during Inflation – Six Tips for you

  • Know the ins and outs of your patch and what the type of demand is e.g. is there a dearth of 3 bed properties because of family demand vs 1 beds for commuting professionals
  • Know your ideal buyer or tenant type and what it is they want e.g. is it critical to be within a mile of a main train station? Or to have extra space for a Home Office?
  • Look at specific numbers, for a specific area for a specific property type
  • Know your risk profile and capabilities. If you are risk-averse and new to property it might be unwise to over borrow or over-leverage or overstretch your self.
  • There is always a balance with risk and reward so don’t get swayed by the upside and forget the downsides.
  • Stay on top of things. Check the detail of the numbers and rental income to ensure you are alerted early on if there is a problem so you can tackle it straight away rather than burying your head in the sand.

*Ipsos – May 2022 poll – 32% of Britons cited as top concern.


If you want help on your property investment journey then get in contact +44 (0) 1932 849 536 or e-mail info@property-venture.com

My business focuses on helping time-strapped expats and busy professionals who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients and offers a bespoke sourcing and consultancy service.

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