Why Property?

There are many fundamental reasons why we believe at Progressive that property is THE best investment vehicle for long term wealth.

If you have not read Why Invest? then click here to understand Leverage

History:

History tells us that property is one of the soundest and most powerful investment vehicles available.

Since records began in the 1950’s property has performed remarkably, doubling in value every 7-10 years on average [for source see below].

According to The Halifax plc: UK property prices have risen in 36 out of the past 40 years, seeing an average annual increase of 10.3%. History is not the only performance indicator; demand for property is at a very high point currently

For more detail on the past success of property investment click history

Market Movements:

In the UK we have a far greater chance of success than the vast majority of the rest of the world due to strong property ownership rights, buoyancy of the market and long term demand based on an acute shortage of dwellings.

A question many of our investors ask us is what would happen to their portfolio should the market crash such as in the late 80s?

The majority of the UK’s housing stock is not held by investors. 91% of mortgages taken in 2006 were taken out by people on their own homes. This creates a situation where people cannot afford to sell their property and move if the value has gone down since its purchase. This forces an effective floor on prices below which they cannot afford to move.

Rents actually firmed during the last crash as more people became nervous about buying, deciding not to buy and choosing to rent instead. This meant that the demand for rental property was still very high; great news for investors.

History tells us that the value of the property will always return and increase over time: we can then start re-mortgaging and taking tax free money again.

So the moral of the story is hold, don’t panic & Don’t Sell!

For more detail on the UK market stability and affordability click UK Market

Demand Outweighing Supply:

The shortage in homes which we now face [great news for rental demand] has been brought about by a number of factors in our view:

Migration into the UK is significant in affecting demand along with an increased prevalence of people living alone, creating a smaller average household size.

The rate of house building in the UK is not keeping pace with demand. In 2005 193,000 new houses were built. Although this is the highest for 15 years, it is still only 3/4 of the number that the government’s independent report estimated would be required each year to bring house price inflation down to 1%.

The current shortfall is around 120,000 new homes per annum according to the 2003 Barker Report; by 2021 the Halifax predicts that the shortfall will have reached 400,000 per annum.

In simple terms the demand for property is far outweighing supply, keeping prices high. All positive evidence for future investment in property.

For more detail on the growth of rental property click Housing demand

The Biggest But To Let myths:

For the sensationalist things that people believe that aren't true, Click here

Growth in Buy To Let in the UK:

The UK rental market has grown significantly since the introduction of Assured Short hold Tenancies and the introduction of Buy to Let mortgages in 1996.

Between 1995 and 2003 the number of people needing to rent doubled from 46,000 to over 93,000 according to the Barker report.

This trend has continued with demand for the right type of rental properties in the correct areas remaining strong. Another effect of continuing price growth has been the increased difficulties first time buyers have in buying property. This has fuelled rental demand as more of the population need to rent for longer before being able to purchase.

Increased levels of personal spending have also created a situation where people save less and so don’t have deposit monies available to fund a mortgage.

Rents in the UK on average have doubled every 9 to 12 years through history and has one of the most competitive Buy To Let mortgage markets in the world meaning that interest rates are low and lending environments efficient.

This is All Great News for Focused UK Investment!

Full Progressive Market Analysis:

For a full Property Market Appraisal that you can print and read from the comfort of your own armchair click here for our Market Analysis media pack