Residential Property: Best performing investment for two decades

Residential Property: Best performing investment for two decades

Happy New Year? Not for investors. With stock markets in the red and commodities at rock bottom, where should investors turn?

Despite all the tax and regulatory changes in the pipeline, the answer seems to be, once again, bricks and mortar.

Residential property investment in England and Wales has massively outperformed other major asset classes over the past two decades, according to a new property index launched today.

The Property Partner Residential Market Index presents the most accurate picture yet of the performance of residential property as an asset class, net of operating costs and capital improvement expenditure.

The Index shows that £100 invested in London’s property market twenty years ago would be worth £1195 today. This compares to:
 
●     £728 for property in the South East
●     £608 for property across England and Wales
●     £473 for the FTSE All Share index
●     £299 for gold
●     £224 for cash savings
 
Residential property investment in England and Wales has delivered average annual total returns of 9.34% over the last 20 years, far outperforming the other asset classes.  The make-up of these total returns differs across regions with London offering lower income and higher capital growth versus regions outside London where the balance is more even or the opposite is true.


The Index starkly reveals how the huge increase in property prices in London and the South East has squeezed yields for investors in these regions. While buy-to-let landlords in the North East can expect to earn a net annual income of 4% on their properties, the average net yield in London has fallen consistently over the years to an average of 2.7% in the year to November 2015.

The perfect hedge

The new analysis reveals that, over 20 years, residential property has represented a lower risk to investors, even when compared to gold, traditionally considered to be a safe haven.

In fact, the supply and demand drivers of the housing market mean that residential property is not closely correlated to the performance cycles of other assets, in particular equities, fixed interest and commercial property. This makes residential property a very strong hedge against wider volatility in the economy.

Take the Global Financial Crisis: from its peak in February 2008 to its trough in April 2009, residential property in England and Wales fell 14%. This compares favourably to the FTSE All Share total returns index which peaked in February 2007 and bottomed out in February 2009, falling 41%.  Although gold served as a safe haven during the Global Financial Crisis in the longer term this asset class significantly underperforms residential property.

Property Partner’s, CEO, Daniel Gandesha, said: “Residential property investment has long been considered attractive, but there has been a lack of objective and accurate data taking into account the typical costs associated with the asset class. The Property Partner Residential Market Index brings insight and transparency to the residential property asset class, enabling investors to both track the wider market and compare its ongoing performance relative to other asset classes.”

Until now, only a fortunate minority have been able to access the benefits of property investment due to the prohibitively high costs of entry.

But our crowdfunding platform is, for the first time, opening up the asset class to investors of all sizes; delivering innovation into a previously antiquated sector and allowing anyone to invest in better buy to let at the click of a button.”

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Latest Comments

ChristinaReedUK
ChristinaReedUK 20 Jun 2016

I don't understand why it's always a war between the two sides. Either, way the landlord is probably keeping a detailed inventory and will see the changes you've made. I just don't understand why there...

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NathanGreen
NathanGreen 16 Jun 2016

Seeing that the tenants are quite satisfied with their landlords and the properties is indeed great. I wonder, though, what is the situation in London alone? The tenants face sky-high rent levels in the...

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AndiMur
AndiMur 15 Jun 2016

TheGuardian published the same forecast. But on the other hand, professional brokers express different opinions. According totranio.com, an exit from the EU would not affect the demand/supply imbalance...

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Gary Holmes
Gary Holmes 14 Jun 2016

Having a professionally completed inventory at check-in and check-out is clearly (to me at least) of minor value. Tenants make un-authorised modifications and/or walk off with items that belong to the

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Violet Gibson
Violet Gibson 14 Jun 2016

Cautious people think buying off-plan is reckless, but over the past few years investors have literally made fortunes.Pre-release prices have obvious benefits for the developer, who gets instant finance...

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Kate Windleton
Kate Windleton 14 Jun 2016

An interesting research indeed. I guess that is in complete contrast with the United States where people often move from one coast to another. It will be interesting to hear the trends for people moving...

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NathanGreen
NathanGreen 14 Jun 2016

I think it all depends on the market conditions and how well your company is doing. You will agree that you can't demand more when you're killing yourself just to hang in there. Sometimes you need all

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ChristinaReedUK
ChristinaReedUK 13 Jun 2016

What does "detecting a bad vibe" mean actually. I've had certain vibes like these and yet have always found a reason , if there's any, why I don't like a certain property. The property maintenance might...

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keybanks estates
keybanks estates 08 Jun 2016

Great News for first time buyers, about time two!

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NathanGreen
NathanGreen 07 Jun 2016

I agree with #6 - you should maintain your garden according to the target buyer. One thing is universal, though - cleanliness and order. Having the yard clutter-free and clean will help people who do enjoy...

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NathanGreen
NathanGreen 06 Jun 2016

I will always say that London is overrated. Sure it is the capital, but it's too stuffed in there. It's more of a business city to me.

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Paul
Paul 25 May 2016

Estate agents are pathetic when it comes to fees. They have this 'I had to do it at 1% because that's what the others were quoting' mentality. We are the most expensive agents in our area, charging double...

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