Is Property a Good Investment?Property Investment Basics
With so many different investment strategies out there to consider, many investors are weighing up the information to decide if property is a good investment in the current climate.
With the many benefits on offer compared with a limited number of downsides, property is definitely a good investment for anyone. Here are a few of the reasons why it has become such a popular investment class, and why it is appealing for a wide range of investors.
Reasons Why Property Is a Good Investment
Multiple Income Streams – Property is unique amongst investment classes as investors earn returns through two different methods. Rental income is collected from tenants who live in investment properties, while capital appreciation will see the value of properties investors own rise over time, which will give them a major profit if they choose to sell.
This means investors benefit from both a consistent cash flow of passive income from rents, while also awaiting a major payout from the sale of their property after capital appreciation has risen its value.
High Growth Potential – The past performance of the UK property market, and current industry projections, indicate that there is serious potential for growth in the coming years.
With certain cities in the UK like Liverpool having seen prices rise by over 40% in the last 5 years, the performance of the property market throughout difficult times like Brexit and COVID-19 has been outstanding.
Property experts Savills predict some areas of the UK will see further growth of up to 11.7% by 2027, showing that this potential for growth isn’t over.
Strong Levels of Stability – As a physical asset, property doesn’t fluctuate in value the same way other investment classes like stocks or shares do.
In fact, it tends to outperform other competing investment strategies during times of financial uncertainty, as proven by the record recovery and growth the property market saw in the wake of the COVID-19 pandemic.
High Demand – The number of available properties is still far below the amount needed to keep up with demand, even with it cooling off slightly in 2023.
This means that quality buy-to-let properties often have no trouble finding tenants, meaning there is a decreased risk of void periods to worry about.
It also helps to drive growth in terms of house prices. As long as demand remains high, there will continue to be a rise in house prices.
Variety of Strategies – Property is one of the most flexible ways you can invest money, thanks to the wide range of strategies available to investors. On top of traditional buy-to-let property investment, many choose to invest in student accommodation to make the most of the high demand.
As well as this, serviced accommodation is on the rise as an up-and-coming property investment method, offering a much higher potential for rental income than standard buy-to-let, but with added maintenance involved.