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Posted:Abigail Andrews – Monday, March 26th, 2007
- 50% of the names mentioned on The Times Rich List made their money through investing in property
- Equities or Stocks can be volatile, as with the .com crash. Property however is a historically stable investment
- A property worth approx £66,000 in 1995 would have been worth £183,000 in 2005, nearly triple the initial investment
- UK property prices have risen in 36 out of the past 40 years, seeing an average annual increase of 10.3% (Halifax plc)
- Demand is outstripping supply - the current shortfall is around 120,000 homes per annum (The Barker Report, 2003)
- The UK rental market is growing - the number of households in England in temporary accommodation more than doubled between 1995 and 2003, from 46,000 to over 93,000 (The Barker Report, 2003)
- Both the population and the number of households is rising - the UK Government predicts an overall 14% increase in the total number of households by 2021
- By that date, Halifax predicts a shortfall of at least 400,000 homes
- Rents have risen on average by 13% per annum since 1962 according to the Office of National Statistics
- According to the Investment Property Databank, the average UK property price rose by 59% between 2000 and 2003
- This one will really surprise those of you who think there are too many city center apartments: People fear an over building and saturation of new build properties. Consider this. Fewer new houses are being built than at any time since the 1920's
- Many people think they have missed the boat, well consider this, a recent housing study shows that the average house price is set to increase from £100,000 to just over £300,000 by the year 2020. An average house today can expect to increase in value by almost 300%
- More millionaires in the UK have made their money from property than any other individual investment source. Other sources include stocks and shares. Which one do you think you could do well at?
Advantages & Disadvantages
Advantages
- No investment today offers the stability, simplicity and excellent returns offered by property investment
- While the Stock Market offers high returns, many novice investors have found it to be a volatile and dangerous place
- No other investment allows you to purchase with other peoples' money (The Bank's) and pay this back with other peoples' money (the rental income from tenants)
- Buy to let can generate a reliable rental income, incorporating substantial capital appreciation
- It is a well documented fact that on average the value of a property doubles every seven years
- Expenses, including depreciation on the property and interest on your borrowing's, are tax deductible
- You can leverage your investment
- For people who can't save, paying off a mortgage is an enforced savings program
Disadvantages
- Interest rates could rise
- The property could be untenanted for a period of time
- You could get "bad" tenants
- It could take up a lot of your personal time, though that is unlikely
- House prices could remain static, or even fall, in "normal" markets its not a short term investment
- Your deposit money is tied up in the property and it could take a while to release the money if you needed to
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