03:10PM, Tuesday 07 August 2018
Property is considered the top investment product to invest in for the future, according to results from a recent survey by leading property developer SevenCapital.
Nearly half of the population in the South-east cite property as their preferred investment product if money was no object, with more than a third (37 per cent) stating they would choose property to help save for their future. A further 32 per cent said they would choose to invest in property to ‘make money’.
This isn’t surprising when taking into consideration the rate at which house prices have risen over recent decades in comparison to the steadier interest rates offered with most ISAs and funds. But with other investment products such as stocks and shares offering equally high potential for returns, what is it about property, aside from the obvious benefit to leverage capital with LTV, that still holds greater appeal?
Whilst no investment can be guaranteed, property is generally considered less volatile amongst other high yielding options, such as stocks and shares, with the ability to appreciate significantly over time. Over the last 20 years alone, average house prices have risen by around 152 per cent, so that means, anyone who bought a property for £90,000 in the mid to late 1990s could now easily be more than £135,000 better off.
In Slough, the story is even better; according to home.co.uk, the average residential property price in Slough in January 1995 was £75,000 against the average price of £320,000 in April this year – a growth of 327 per cent. Higher than Maidenhead or Basingstoke.
And it’s not just the capital growth that can pay dividends in the long run. Whilst other popular investment and savings funds may provide an ongoing and steady AER, outside of compound interest these will struggle to provide any long-term passive income. With residential property, this income begins to flow as soon as the property is tenanted, and typically requires little effort from the owner.
Providing the property is of good quality, in a high demand area and the right type to meet this demand, this passive income should cover the cost of the mortgage repayments, service charges and leave some extra income as profit – ie net rental yield. Once the mortgage has been repaid in full, this passive income will become even more valuable as an income stream or retirement fund. Current average rental yields across the UK sit at around 3.6 per cent, however rental yields as high as 7 per cent and above are possible on properties in particularly popular areas and developments.
As a tangible asset, property can also be relatively easy to sell on to draw down funds should the need arise, or to pass down the family generations to help secure their future with a home or as an inheritance.
Andy Foote, director at SevenCapital said: “Property is currently one of the best ways to accumulate wealth without ongoing significant effort - past the initial purchase stage. Once the property is under ownership and providing homework has been done into the current and future demand in the area, it’s a case of ensuring the property is maintained well and continuously tenanted, and hopefully watching its value appreciate over the next few years.
“At SevenCapital we are committed to helping our clients to generate value through property investment - whether their reason be to secure their retirement, secure their family’s future, or to accumulate enough wealth to allow them to retire early. And, as many of our clients have busy lives and careers, our aim is to make their investment as easy as possible. We identify development opportunities that are attainable for most investors based on initial cost, coupled with a location that holds significant potential for increased demand over the years to come.”
SevenCapital currently has investment opportunities available at its Steel House development in the heart of Slough, as well as Basingstoke and Birmingham.
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