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Eight in 10 property investors make a profit

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15/08/2018
Despite recessions, housing has proven a solid investment over time for landlords
Eight in 10 property investors make a profit

Over the past 50 years, and despite three major recessions, medium term property investments have enjoyed a success rate of nearly 83%, according to British Pearl.

The property investment platform revealed that average UK house prices over any five-year period in the past half-century would have resulted in a buy to let profit 83% of the time.

Rarely in the past half-century have house prices dropped over a five-year period, with average house price appreciation over that time topping an impressive 58.6% over five years.

The lean years

The only periods in which house prices fell were during some of the UK’s most challenging economic downturns. They included 1989, 1990, 1991 — while Britain was grappling with the recession of the early 90s — as well as 2007 and 2008, as Britain dealt with the fallout from the global financial crisis.

The best profit would have been enjoyed by the average landlord buying in 1969, resulting in a gain of £4,589 — a return of 148.6% as prices rose from £3,818 to £8,936.

The sharpest fall in house prices occurred between 2007 and 2012 when average UK values slumped by 7.9% on average.

That’s was the year of entry average investors would have suffered the worst loss, reaching £32,111 — 17.6% of the original purchase price of £182,2434.

James Newbery, investment manager at British Pearl, said: “This research shows investors who play their cards right and hold their nerve in the midst of economic or political upheaval are still likely to come out on top. History shows us that investors who are prepared to weather storms rather than run for cover are still able to make strong returns at times from investments that present a very limited risk of loss.

“While our analysis shows housing has been a solid investment over time, we know that returns can be bolstered with careful property selection, identifying regional trends and areas of rental yield strength.

“The message, not just for investors but homeowners, too, is to play the long game. UK property has a track record of returns and, no matter how tempting it is to think prices are unsustainable, the level of demand for housing in Britain makes property one of the most attractive asset classes on an ongoing basis.”

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