Is the UK property still a good investment?
This is Money UK take a look at how to get better returns
Over the past 20 years or so, the popularity of buy-to-let as a way to get additional exposure to the property market has grown substantially.
Those who got in early have reaped the return. A report written in 2015 by economist Rob Thomas showed that buy-to-let returns over the previous 18 years had beaten those from every other major asset class available.
Since buy-to-let mortgages were introduced in 1996, Thomas calculated that net annual returns have averaged at 16.2 per cent, compared to a lower average return of 6.2 per cent on UK equities.
Is property still a good investment?
Residential property is a cyclical market - like anything, it has ups and downs in the short-term. Uncertainty around Brexit has prompted many buyers and sellers to sit on their hands, choosing a wait and see approach to moving house.
As a result, the number of homes changing hands is a bit subdued at the moment and it's putting some pressure on house price growth. However, the uncertainty in the housing market is being largely driven by depressed confidence.
It's unlikely that will last forever.
In the long run, residential property still looks solid
Most of the experts point to longer-term trends that underpin the future performance of residential property investment.
The UK's population is growing, our building rate - while improving - is not keeping up with demand, and the number of people per household is falling due to a rise in divorce and fewer families choosing to live intergenerationally.
In short, there are too few homes for our existing population and that's a situation that's likely to endure for the medium to longer term.
That means, investors who have exposure to property as an asset are highly likely to be able to generate a return from it - demand outweighs supply.
Investing in buy-to-let particularly is also about both capital and income.
Posted: Mon 09 Sep 2019