Have You Left It Too Late To Invest In Property?

A string of new figures suggest the UK house price surge is finally running out of steam.

Property prices fell 0.2% in England and Wales in September, according to the Land Registry. Mortgage approvals are down 20% since their January peak, Bank of England figures show.

Once-booming London is leading the slowdown. Luxury home prices in prime central London have fallen by 20% or more in the past six months, estate agency Strutt & Parker says.

Nationwide predicts prices will continue to “soften” across the country, as new buyer enquiries fall.

The boom is over, for now.


Your Rental Property Is My Pension

That’s good news for first-time buyers, who have watched prices soar further out of reach. But it’s a blow to the growing number of Britons who reckon investing in property is the best way to secure their financial future.

The buy-to-let scheme has turned hundreds of thousands of ordinary people into amateur landlords, and most have done well out of it.

The average landlord enjoyed an enviable total gross return of 13.4% in the past year, equivalent to £22,706, according to estate agencies Reeds Rains and Your Move.

They earned £8,379 in rental income on average, plus a capital gain of £14,327.

But these kind of returns will now be harder to sustain in future. 


No More Easy Money

With buyers reluctant to pay today’s inflated prices, and base rates likely to rise next year, you can’t bank on making a quick capital gain from rising house prices. You could even make a loss, if prices continue their recent decline.

Rental income growth is also slowing, up just 1% over the past year, according to the Office for National Statistics. As wages stagnate, tenants simply can’t afford to pay more.


Goodbye To Buy-To-Let?

I’m not predicting a dramatic house price crash or a buy-to-let collapse: given the UK housing shortage, tenant demand won’t suddenly disappear. 

Just don’t expect to make a quick buck from soaring rents and property values. This is now a steady long-term investment, rather than a fast route to riches.

And make sure you’re prepared for the effort of choosing the right property, doing it up, selecting a mortgage, finding honest tenants, and carrying out maintenance and repairs.

Investing in property may be less rewarding than before, but it will be just as much effort.

However, building a portfolio of stocks and shares is a lot easier and more affordable than becoming an amateur landlord. You can start with relatively small sums, and buy and sell your holdings in seconds.

Yet shares offer the same winning combination of capital growth when markets rise and regular income from company dividends.

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