Is property still the best investment?

AlanP_2

Do you have a pension in place for latter years or is this pot intended to last for 50-80 years possibly and cover the time you won't be working at all?

Are you on track for a State Pension and will you continue to make the required NI payments?

Any plans / hopes for a partner, children etc as that will affect how much you need and what your options could be?

eskbanker

timeuk wrote: »

Property was one of the top-performing asset classes of 2015, returning 13 to 14 per cent for the year – a significantly superior total return to that of other asset classes over the same period.

Why would measuring return over one specific 12-month period be relevant?

timeuk wrote: »

Global growth is predicted to continue to ease during 2016; this follows a slowdown in 2015 to 2.7 per cent, down from 2.8 per cent in 2014. These numbers are all considerably below the Organisation for Economic Cooperation and Development (‘OECD’) historical average of 3.6 per cent. This is despite the consistent attempts to stimulate economies through various means, such as quantitative easing.

Whatever you're cutting and pasting from was clearly from 2015 or early 2016! In any event investment growth (like property value) isn't directly correlated to overall economic performance, hence the lengthy bull run over the past few years.

dunstonh

Why would measuring return over one specific 12-month period be relevant?

You saying that and having your avatar right next to it is very apt

Whatever you're cutting and pasting from was clearly from 2015 or early 2016! In any event investment growth (like property value) isn't directly correlated to overall economic performance, hence the lengthy bull run over the past few years.

Exactly. 2016 turned out to be an extremely good year for equities for UK investors.

eskbanker

dunstonh wrote: »

You saying that and having your avatar right next to it is very apt

The same applies to that poster's enthusiasm for London Capital & Finance, which many would see as impacting on credibility! :eek:
https://forums.moneysavingexpert.com/discussion/comment/72868941#Comment_72868941

bostonerimus

MEM62 wrote: »

As an accidental landlord I can vouch for the fact that property is not some magical cash cow or get rich quick scheme. In my case I have reasons other than financial for hanging onto my flat and renting it so I am OK with my situation. However, once costs and income tax are taken into account the returns are far from the levels that most people would imagine. (In my opinion most people grossly underestimate the levels of costs that are incurred)

I am not sure where the myth started that property is the best investment but it isn't. It may not be the worst but you need to be realistic in your expectations of the returns you will achieve.

As with any investment, property needs to be evaluated and understood.
I've owned a rental apartment for 20 years and it's been almost continuously rented. The rent is $1600/month or $19200/year. After expenses are taken out I usually declare around $12000 on my income taxes. The apartment cost $110k to buy 20 years ago and is probably worth around $300k today....so around 5.5% capital growth and 4% yield on the $300k. Also, I just spent $30k on a major renovation and the place was unrented for 6 months and there is the worry of being a landlord.....property is an investment that requires commitment.

atush

Default Is property still the best investment?

It has never been the BEST investment, but owning your own home comes closest. Property has been out performed by equities over all time periods.

A recent study shows that only London property (not the rest of the country) has outperformed equities by just 2% in the last 10 years. It was equities 50%, property 52%.

chucknorris

atush wrote: »

It has never been the BEST investment, but owning your own home comes closest. Property has been out performed by equities over all time periods.

A recent study shows that only London property (not the rest of the country) has outperformed equities by just 2% in the last 10 years. It was equities 50%, property 52%.

I've seen these reports before, and I just can't understand how these claims are valid, unless there are areas of the country where property has massively been under performing (but why invest there?). I moved to London specifically to invest in property, because it was so cheap in the early 90's). There is no way that we would have made over £4m from shares, unless of course it was picking individual shares that were star performers. We made that from simply buying London property and renting it out, and covered our costs or even made a small profit in the first year.

Although right now I am starting to sell up and get out of property (mainly because of my age (I'm 59) and there is so much equity it needs to be sold to spend it before I/we die (we don't have children to leave it to).

OP, there are significant barriers now in place to invest in property, 3% extra stamp duty, reduction of tax relief on mortgage interest, loss of wear and tear allowance and political risk. if I was starting over, I would only buy a property for some portfolio diversity only.

lush_walrus

chucknorris wrote: »

I've seen these reports before, and I just can't understand how these claims are valid, unless there are areas of the country where property has massively been under performing (but why invest there?). I moved to London specifically to invest in property, because it was so cheap in the early 90's). There is no way that we would have made over £4m from shares, unless of course it was picking individual shares that were star performers. We made that from simply buying London property and renting it out, and covered our costs or even made a small profit in the first year.

Although right now I am starting to sell up and get out of property (mainly because of my age (I'm 59) and there is so much equity it needs to be sold to spend it before I/we die (we don't have children to leave it to).

OP, there are significant barriers now in place to invest in property, 3% extra stamp duty, reduction of tax relief on mortgage interest, loss of wear and tear allowance and political risk. if I was starting over, I would only buy a property for some portfolio diversity only.

Yes I agree with you, perhaps some high rolling brokers know how to generate returns people discuss on here but average person I imagine would find it more challenging. Where as property is a very easy in for most. Yes there is skill in picking the right area but it's easy if you stick with what you know. We still have plenty of property a lot more in commercial than resi now just because we have targetted something specific. There is no way I personally would have been in the position we are without property no way I could have achieved anything like what we have through other investments.

dunstonh

Remember that every asset class has hot spots and failures. London property is priced on the international stage and was in high demand. Other parts of the country have seen little movement in the best part of a decade. Most fall somewhere in between.

Same applies to investments.

We also have to look at the driving forces behind these things. The credit boom started in the 70s. It accelerated until the credit crunch. Mass immigration and becoming the most populated country in Europe (England, rather than UK in that respect) pushed up prices. So, for a limited period of several decades, property did have a boom. Is that going to be the same for the next few decades?

AnotherJoe

lush_walrus wrote: »

Yes I agree with you, perhaps some high rolling brokers know how to generate returns people discuss on here but average person I imagine would find it more challenging. Where as property is a very easy in for most. Yes there is skill in picking the right area but it's easy if you stick with what you know. We still have plenty of property a lot more in commercial than resi now just because we have targetted something specific. There is no way I personally would have been in the position we are without property no way I could have achieved anything like what we have through other investments.

That was then and this is now.