From Sarah Beeny to Kirsty and Phil, over recent years numerous Brits have jumped on the property development bandwagon, seeking to upgrade their home and build equity. However the recent sub-prime mortgage debacle, which kick-started a widespread and precipitous drop in bank lending and, as a result, property prices has left many investors feel less than confident about the market.
While it is only right and proper of us to remind you that investments can go down as well as up, there are a lot of signs that this could be an ideal time to invest in the British property market. Indeed, with so many investment opportunities – from investing directly to using a tax-free savings tool like the Wellesley Listed Bond – earning impressive returns from property is more achievable than ever before.
We’ve crunched the latest numbers relating to the British property market on your behalf. Here are some of our most interesting findings…
British Property Demonstrates Resilient Growth
Property may have dipped significantly in value during the crash, but as any successful investor will tell you the returns need to be calculated over the long term. As Warren Buffet famously said “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”
So how has British property performed over the medium to long term? The data tells us that since 1975 property prices have increased by 126% on real terms. During that term, house price inflation has run at an average of 3.2%.
Since the crash, the Office of National Statistics reports an increase in property prices of 11.4% across the UK as a whole, showing significant resilience.
The long-term outlook therefore suggests that property makes a resilient and reliable investment source, even despite the short-term fluctuations.
Property Prices Are Expected To Grow by 25% in the Next 5 Years
Of course, past performance is no guarantee of future growth. But what do the experts believe will happen? The Royal Institute of Chartered Surveyors (RICS) is on record stating that they expect property prices to rise 4.5% per annum over the next five years; a total growth of 25%.
This isn’t an isolated prediction from the experts. Earlier this year the Telegraph predicted growth of 22.8% over the next five years, with London growing by almost a third (29.4%).
The experts seem to agree – property prices will likely continue to grow for the foreseeable future.
Britain’s Population is Expected to Continue Growing
In 2014 the British population amounted to 64 million people. By 2020 the government expects this to rise to 67 million. By 2027 this is anticipated to reach 70 million people.
Put another way, even the British government expects ever more people to be packed into our small islands.
Of course all these people will need somewhere to live. Thanks to the laws of supply and demand, unless a significant growth in house building is rolled out, this is likely to impact property prices, pushing them ever higher.
House Building Isn’t Keeping Up With Demand
The only way to ease this squeezing of the market is by significantly ramping up house building. The BBC reported in August this year that the current rate of house building is roughly half of what is needed to keep up with demand.
With just 125,110 new homes built in the year to March 2015, the CBI is pushing to ramp this up to 240,000 new homes per year. This just goes to show the massive gulf between the current situation and the optimum required for Britain’s continued growth.
Conclusion
The evidence seems pretty clear. With an increasing population, a growing demand for limited property numbers and, as a result, rapidly growing property prices there is an awful lot of evidence to suggest that now might be an ideal time to consider moving capital out of under-performing low-interest savings accounts and into the property market.