Why is property a good investment? 5 reasons
1. Property is a proven wealth-creating vehicle
While property values, like any prices, fluctuate over time, the general trend has been reliably upwards since medieval times. The reasons for this are grounded in basic demand and supply economics. There are always more people wanting to live in houses – either as owners or tenants – than there are homes for them to live in. This exerts a steady upwards pressure on house and rental prices.
To put some numbers into this picture, the average property investor enjoyed a return on investment of 16.3% per year every year from 1996 to 2014. That equates to £12,000 for every £1,000 invested. In comparison, the average shareholder made 6.8% per year and the average high street saver benefited to the tune of 4%.
While every responsible financial advisor will warn that property can go down as well as up in value, it is nevertheless perfectly realistic for a dedicated professional property investor to make a million or more in a couple of years – with the right advice and support!
2. Society needs property investors
Why is property a good investment even during hard times? One reason is the relentless demand for housing. After all, what other product or service has a potential market of 100% of the adult population?
There are also relatively few alternatives to meeting the needs of that market. People can either buy a home, if they can afford it, or rent one. In 2018, the number of properties owned by private landlords (around 20%) outstripped those owned by the council and housing authorities (which added up to around 17%). Private home ownership has also fallen since the early 2000s, to just under 64% in 2018, so the demand for rental properties is increasing.
Combine these statistics with an increasing UK population, and it is easy to see why housing waiting lists are so full and why the government tends to support professional property investors (with tax breaks, reduced red tape, etc.).
3. Property investing is flexible
Why is property a good investment for almost any type of person? There are simply so many different ways of making money through property. To start with, there are the two main strategies of property investment: buy-to-let (BTL) and capital appreciation. The first strategy involves making a profit from letting out property to tenants. The second works by selling a property for more than you bought it for.
Within these broad strategies, there are many different markets, each with unique benefits and challenges. These markets include houses in multiple occupation (HMOs), student accommodation, eco-friendly housing, homes for people with disabilities, business lets, city flats for professionals, three or four bed family homes, and the list goes on.
As a property investor, you can find a profitable niche that works for you or vary things to keep life interesting. The choice is yours.
4. You can enter the industry with very little capital
Why is property a good investment for people without much investment capital? One of the myths about property investment is that you need to be comfortably off before you can even make a start on your portfolio.
The truth is that you only really ever need the money for the deposit on your first property. Even if this is beyond your means, there are ways to get started with very little money at all. Providing sweat equity, as part of a joint venture, or sourcing properties for other investors are just two creative ideas for those on very limited budgets.
5. You will improve your investment skills over time
Like learning a sport or playing a musical instrument, your property investment skills and knowhow will improve with experience. Providing you take a professional approach from the outset (and Fielding Financial can help you with that), you will very quickly climb the ladder of experience and increase your potential to turn a profit.
Why is property a good investment? Considering all the factors mentioned above, we believe no other asset offers a better potential for profit and personal and professional growth. It’s also a lot of fun and you get to meet plenty of like-minded people.
Let Fielding Financial give you the perfect start to your property investment journey
Are you keen to get started but don’t know where to begin? Fielding Financial host regular FREE property seminars up and down the UK. Our property experts will be on hand to answer any questions and set you moving in the right direction. See what dates are available on our seminar page, and book your place today.