Don’t bet against property: Investors are odds-on to win, and have been for half a century

Property investment platform, British Pearl, shows that property prices have only fallen in five periods since 1968.

“The message, not just for investors but homeowners, too, is to play the long game. UK property has a track record of returns”

• Average house price appreciation was 58.6% between April 1968 and April 2018 on properties held for five years
• Over the past 50 years, despite three major recessions, medium term property investments have seen a success rate of nearly 83%
• Findings serve as a warning to investors tempted to steer clear of residential property amid cooling market growth and higher taxes

Housing seems a solid investment over time

The best profit would have been enjoyed by the average landlord in 1969, resulting in a return of 148.6%. The findings come as a warning to homeowners who might consider exiting the market, with the intention of buying back in at lower prices.

In London, for example, the average house price has climbed 51% since 2013, rising from £320,921 to £484,5845. And the latest house price data from the Halifax revealed that the cost of the average property hit a new record high of £230,280.

Have property prices ever fallen?

The only periods in which house prices fell were during some of the UK’s worst economic downturns. They include 1989, 1990, 1991, as well as 2007 and 2008, as the UK dealt with the global financial crash. From 2007 to 2012 was the sharpest fall in house prices, by an average of 7.9%.

With Stamp Duty and conservative estimates for mortgage payments, legal fees and interest factored in, this identified a further three years in which investors who bought properties would have lost money over the following five.

James Newbery, Investment Manager at British Pearl, said: “This research shows investors who play their cards right and hold their nerve in the midst of economic or political upheaval are still likely to come out on top. History shows us that investors who are prepared to weather storms rather than run for cover are still able to make strong returns at times from investments that present a very limited risk of loss.

“While our analysis shows housing has been a solid investment over time, we know that returns can be bolstered with careful property selection, identifying regional trends and areas of rental yield strength.

“The message, not just for investors but homeowners, too, is to play the long game. UK property has a track record of returns and, no matter how tempting it is to think prices are unsustainable, the level of demand for housing in Britain makes property one of the most attractive asset classes on an ongoing basis.

“Those investors who ran for the hills after the dip between April 2007 and April 2013, only for growth to recover in the years that followed, will be kicking themselves for acting on impulse and abandoning property altogether.

“The secret to successful property investing is ultimately the same now as it ever was. The market consistently rewards those who remain level-headed, diversify portfolios and do their research.”