Is Property Still A Safe Bet For Short, Medium - And Long-Term Investment?

Is Property Still A Safe Bet For Short, Medium - And Long-Term Investment? Are People Still Investing? And Why?

Is Property Still A Safe Bet For Short, Medium - And Long-Term Investment? Are People Still Investing? And Why?

When the banks are offering such paltry interest rates, people are always looking for a safe haven for their cash. Alternative investments such as Bitcoin and other cryptocurrencies have hit the headlines in investment circles. But these feel speculative and risky at the best of times. Mark Twain said, “Buy land – they’re not making any more of it.” But has property hit something of a saturation point? Is London property a safe bet for the savvy investor? Let’s take a look.
Current Trends Show Growing Confidence

Over the last year or so, confidence in the housing market wasn’t on the agenda. People found selling a property was difficult and investing in property was something many put on the back burner while they considered what was going on in the world.
Knowledge Bank is a database of mortgage lending criteria, user by mortgage advisers to find the right deal for their clients. They publish the most popular search terms. And we’re seeing some interesting searches right now.

‘First-time landlords’ has been a popular search term for some time now, meaning that people are looking to get into an investment property that have never done this before. And many of these don’t have a residential property either. With house prices in London meaning residential mortgages can be hard to come by for first-time buyers, some are turning to buy to let in order to get on the housing ladder. The criteria for buy-to-let mortgages are different and the fact that they take rental income into account may mean that young Londoners buy an investment property before they buy one to live in.

Undersupply Is Still A Massive Issue

Right across the UK, there in an undersupply of housing. It’s why successive governments have made pledges to build hundreds of thousands of homes a year. But these promises haven’t always materialised into action. And in London, the issue is even more acute than the rest of the nation. We’re limited with available plots to develop for starters. So, the undersupply issue is a great reason to invest in property in the short term and medium term. There’s no sign of this issue being resolved in the next decade or so. And that indicates that property prices will show strong growth.

Demand for rental properties as well as properties to buy in London means that price growth looks set to show robust returns for the foreseeable future. And with companies such as Google setting up large offices in the capital, there are more people looking for the same property. With 4 out of 10 millennials still renting by the age of 30, we’re experiencing a generation rent that will continue for a generation at least. People’s attitude towards renting rather than buying has shifted. It’s no longer considered a no-no, as it was in the past. This means there will be a steady supply of tenants for anyone investing in residential property in London.

The Pension Pot

As we were given more flexibility with what we could do with our pensions, property became something that people looked at to provide them with income in retirement. And that hasn’t changed. Buy to let has been hit by a tightening of tax laws and further regulation over the last few years. But landlords continue to enjoy returns on their investment way in excess of anything you can get from a bank, no matter how long you tie your money in for.

In London, the average rental return is 2.83%, but the growth of London property prices means that this figure is likely to be much higher at the point in time you come to sell the property. Whilst there are no guarantees, if you do your research and buy right, London rental property can be a great pension investment.

So, Is Property Still A Safe Bet?

Well, there’s no such thing as a guarantee in investing. But property is still hugely popular with many investors, Demand is strong and that has been the case in London for many years now. The salaries in the city plus all of the other attractions of living in a global capital look like they will keep this demand robust for the future. People are still investing – and they are doing it for various reasons, as discussed above.

Written by John Rigg

Source London Estates

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