Can all those property investors be wrong?
Property ownerships has traditionally been the goal when it comes to investment and accumulating assets. While comparatively low numbers of people play the stock markets or put cash into other investment vehicles, almost everyone aims to buy their own property. In fact, property has become viewed as such a safe and sensible investment now that some people have chosen to buy property rather than pay into a pension even though clearly everyone has to take out a loan in the form of a mortgage to do so. But recently times have moved on and there have been whispers that perhaps property isn’t quite the investment it once was. So what has changed?
A different climate
House prices took a sustained dip this year for the first time in many years. Mortgages have been less available than in years gone by and the uncertainty of Brexit has also had an impact. Add to that the changes that have been made to the taxing and benefits of buy-to-let and suddenly the investment side of property – even just on an individual basis – is less clear.
So, is property investment now a bad idea?
The short answer is no. Propertyis rarely going to be a bad idea because it still increases in value much faster than most other investments. It’s not an investment that is easy to make liquid (i.e. convert into cash), especially now with a slower housing market – but that’s nothing new. Despite the slumps in value that have existed this year most experts don’t predict that investing in property is likely to be a bad idea in the long term.
What are the benefits of property investment?
You have a physical asset. Other types of investment often take place on a level that is almost invisible (e.g. trading in shares). With property investment you have bricks and mortar to show for your cash.
Capital appreciation is reliable. Property will continue to go up in value if only because there’s such a shortage of it. Without a huge influx of new housing, especially at the affordable end, the market is unlikely to change that much. If house prices do drop, in most areas it’s simply a case of waiting it out until they rise again.
Yields remain high. If you’re a landlord then you still have the potential to make a good income despite recent changes to the tax position for buy-to-let. A typical buy-to-let investment offers 3-10% yields in rent. That’s still far higher than most people make on any other type of investment.