The British obsession with property as a means of building wealth is outdated, as today\u2019s house buyers will not match the gains of past generations, asset manager Rathbones has warned.<\/p>\n
The report, \u201cDon\u2019t Bet the House\u201d, found that residential property barely kept up with inflation at 3.7% per annum over the past nine years.<\/p>\n
In London, where buyers previously enjoyed the biggest gains, housing did even worse, underperforming inflation by 2.2 % a year, with house prices rising at just 1.3% a year.<\/p>\n
Oliver Jones, head of asset allocation at Rathbones, who led the research, said: \u201cThe idea that you can\u2019t go wrong with bricks and mortar just isn\u2019t true.<\/p>\n
\u201cThe data shows that diversified global investment has put to shame returns from housing over the last decade \u2013 and we believe this trend will continue.<\/p>\n
\u201cThe earlier boom in house prices was fuelled by factors which no longer hold.<\/p>\n
\u201cThe huge decline in interest rates from their generational high in the early 1980s won\u2019t be repeated. Homebuilding is rising after decades of very low rates.<\/p>\n
\u201cAnd government policy has become progressively less favourable to investors in residential property since the mid-2010s.\u00a0 The idea that money is safest in houses simply is not true any more.\u201d<\/p>\n<\/p>\n
Baby Boomers born in the 50s and 60s benefitted from a golden age of property ownership between 1980 and 2016, when UK house prices rose at a rate of 6.7% annually \u2013 rising to 8.5% in London \u2013 well ahead of inflation.<\/p>\n
Instead, since 2016, stock markets have risen significantly faster than property prices.<\/p>\n
The research found that \u00a3100 invested in UK property in 2016 would have been worth \u00a3134 in 2024, but if the same amount had been invested in an indicative portfolio of 25% UK and 75% international equities, that would rise to \u00a3174; \u00a3100 invested in London property would be worth just \u00a3111.<\/p>\n
Average house price hovered around four times average annual earnings between 1910 and the late 1990s. However, after 2000 this more than doubled, with house prices rising to as much as eight times average earnings, leaving property much more expensive for the typical buyer.<\/p>\n
Further, after decades of low interest rates, global instability has created volatility in financial markets and fuelled inflation, pushing up mortgage interest rates.<\/p>\n
This has further impacted affordability for most first-time buyers and reduced the appeal of buy-to-lets and second homes used for holiday lettings bought using mortgages, acting as a drag on house prices.<\/p>\n
Ade Babatunde, associate financial planning director at Rathbones, said: \u201cWe\u2019re being asked by many people who own second properties and buy-to-lets whether the time has come to sell up and invest their money instead.<\/p>\n
\u201cThis research should be a wake-up call to anyone relying on property to support their financial ambitions, especially when thinking about retirement or succession planning. The old idea that property will always deliver is for the birds and we strongly recommend taking advice.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
The British obsession with property as a means of building wealth is outdated, as today\u2019s house buyers will not match the gains of past generations, asset manager Rathbones has warned. The report, \u201cDon\u2019t Bet the House\u201d, found that residential property barely kept up with inflation at 3.7% per annum over the past nine years. In […]<\/p>\n","protected":false},"author":1,"featured_media":1085,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[2],"tags":[],"class_list":["post-1084","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-second-home"],"yoast_head":"\n