A housing market crash could be approaching, not just in the UK, but abroad too. And the Covid-19 pandemic is partly to blame. It’s changing attitudes and making people question what matters in life. Throughout the UK, the housing market looks to be going through booms or busts region by region.
With working from home being encouraged across the board, people realise they’d rather spend their working lives in a pleasant location. This generally means trading the expense, pollution and confines of the city, for the space, fresh air and views of rural alternatives. This is why coastal villages, highland expanses and country retreats are seeing a rise in demand for homes, while major cities are seeing demand fall. The reasons make sense, but for those who have invested their life savings in city dwellings, the outlook is worrying.
Stock market investing
There are many reasons I prefer stock market investing to property, with the main one being its low bar to entry. Getting on the housing ladder, or purchasing a second home, is difficult. Most people don’t have the lump sum required to get started, nor the money in the bank for emergencies and unforeseen expenses.
But I can control my stock market investments relatively easily and getting started requires very little money. Anyone can buy shares in companies they like. And I think it’s a great way to generate a future nest egg.
Market crash concerns
Every investment carries risk, and the stock market is no different. Nevertheless, by following a few rules, the risks can be mitigated. Some stocks are riskier than others, and the level varies from sector to sector too.
2020 saw a stock market crash in March, and ever since, investors have worried that a second crash is on the horizon. Until a vaccine comes into play that prospect remains a possibility. But for stock market investors, a market crash could be the perfect time to pick up quality shares at bargain prices.
The most important thing to remember during a market crash is not to panic-sell. The market will inevitably rise again, and those who sell at the bottom will forever regret their emotionally-driven decision. Instead, it’s important to keep a level head and keep a wish list of stocks. This ensures investors are ready to snap up bargains when the market crashes.
Maintaining a long-term outlook
A housing investment is a long-term commitment, and investors buying stocks would do well to consider them in a similar vein. Many ISA millionaires have reached their goal by taking a buy-to-hold attitude. So, I’d avoid worrying about the intermittent fluctuations of day-to-day market movements and let the investments build in value over time.
Apart from the large outlay needed to buy property, there are many others. Think legal fees and agency fees, plus all manner of unforeseen problems that come along with the responsibility. Then there’s the possibility of a housing market crash.
But I can easily buy stocks in a Stocks and Shares ISA or Self-Invested Personal Pension (SIPP) though, protecting all my gains from tax too. The shareholder can put as much or as little effort into managing a market portfolio as they wish. Yet future gains can still be significant, particularly when buying during a market crash and holding far into the future.
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Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.