0:01 AM, 3rd July 2025, About A week ago 11
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Brits are being urged to rethink their wealth-building strategies after a study reveals that the UK’s property investment golden era is over.
The findings from asset manager Rathbones Group shows that residential property has lost its edge, with stock markets delivering far superior returns since 2016.
Its research, ‘Don’t Bet the House‘, looks at housing and equity performance over the past century.
It found that UK house prices have barely matched inflation, growing at a modest 3.7% annually since 2016.
In London, once a hotspot for property gains, the situation is bleaker, with prices rising at just 1.3% per year, lagging inflation by 2.2%.
The firm’s head of asset allocation, Oliver Jones, said: “The idea that you can’t go wrong with bricks and mortar just isn’t true.
“The data shows that diversified global investment has put to shame returns from housing over the last decade – and we believe this trend will continue.”
He added: “The earlier boom in house prices was fuelled by factors which no longer hold.
“The huge decline in interest rates from their generational high in the early 1980s won’t be repeated.
“Homebuilding is rising after decades of very low rates.
“And government policy has become progressively less favourable to investors in residential property since the mid-2010s.”
Rathbones says that the housing market’s poor performance marks a sharp departure from the 1980s to mid-2010s, when property was a cornerstone of wealth creation.
That’s when house prices soared by 6.7% annually, with London seeing even steeper increases at 8.5%.
However, the report suggests that younger generations face a different reality, with housing no longer a reliable path to wealth.
In contrast, stock markets have surged and the study shows that £100 invested in property in 2016 would be worth £134 by 2024.
The same amount in a diversified portfolio of 25% UK and 75% international equities would have grown to £174.
For London property, the figure is even lower, at just £111.
The study also notes a long-term trend in housing affordability and from 1910 to the late 1990s, house prices typically stood at four times average annual earnings.
Since 2000, this ratio has doubled, reaching as high as eight times earnings, making homes significantly less affordable for the average buyer.
Rising mortgage rates, driven by global instability and inflation, have further eroded affordability, dampening demand for buy to let properties and holiday homes, the study states.
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Ed Regent
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Sign Up10:59 AM, 3rd July 2025, About A week ago
The stockmarket, especially the US market is way overvalued and is due a massive correction anyway.. buyer beware! I wrote this on 19 February 2025 in reply to a piece on the pound at that time. "Still time to buy precious metals as fiat currencies get devalued against real money. J.P. Morgan stated in his testimony before Congress in 1912, “Gold is money. Everything else is credit.” Please remember this!"
In US dollar terms gold is up 14% in less than 5 months since 19 February and it has further to go along with silver and platinum as debt increases!
TheMaluka
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Sign Up11:14 AM, 3rd July 2025, About A week ago
Reply to the comment left by Ed Regent at 03/07/2025 - 10:59
“Gold is money. Everything else is credit.”
Every investor should be made to write this a thousand times before buying into the stock market.
Darren Peters
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Sign Up12:55 PM, 3rd July 2025, About A week ago
Isn't this just comparing _passive_ property investment with other passive investment like the stock market though?
It doesn't take into account the non-passive opportunities to add value. Ie inefficencies of the property market, possibility of remedying physical and legal defects to add value, repurposing to add value and of course access to cheap credit not generally available for having a go on the stock market. Finally if you're young and fit you can add value with your own sweat and tears
NewYorkie
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Sign Up18:58 PM, 3rd July 2025, About A week ago
I attended a webinar by my wealth manager, who said pretty much the same thing. Property plays a part in a diversified investment portfolio, but for many landlords who are approaching or in retirement, they need to think about why they entered the PRS in the first place, is it still the right thing to do now, or are there better options for your money and you time?
Personally, BTL was to be my pension supplement, but it was not my primary investment strategy, and I enjoyed the ride for 25 years. I started taking my profits from London in 2016, and can't complain, although my Yorkshire BTLs were a disaster.
I'm now retired and the PRS has served its purpose for me, so I don't need it anymore. Just as well, looking at the chaos coming down the line.
Jonathan Clarke
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Sign Up13:24 PM, 4th July 2025, About A week ago
I`ve got both .
Property though is 4 times as lucrative as stocks
( if you know what you are doing)
1.Leverage 75% LTV
2.Adding value 100% ROI
3. Rental Income 8% yield
4. Buying 10% BMV
Stocks are good but they just sit there looking pretty on a balance sheet . You cant decorate them, you cant add value to them and you cant get people to pay you rent for living in them
Property still wins hands down
NewYorkie
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Sign Up13:46 PM, 4th July 2025, About A week ago
Reply to the comment left by Jonathan Clarke at 04/07/2025 - 13:24
But they don't cost you £20k when a feckless tenant decides to stop paying rent!
Jonathan Clarke
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Sign Up14:04 PM, 4th July 2025, About A week ago
Reply to the comment left by NewYorkie at 04/07/2025 - 13:46Stocks take 20K off you in other ways - like when war breaks out overnight or Trump announces tariffs. One mate lost 125K in a week due to feckless people in power . I hand pick my tenants so I don't pick feckless ones. I like to retain control over my financial decisions .
Some tenants have been with me for over 20 years . But as I said you have to know what you are doing.
But even if i was to lose 20K from one tenant the fact that i have leveraged up to build a portfolio that loss is spread wide and thin i`m still well up being in property.
But do the Maths
1 stock for 100K
4 properties @75% LTV = 400K
I would rather lose 20K in property and still have 380K rather than 80K in stocks .
Pound for pound property is far better
NewYorkie
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Sign Up15:23 PM, 4th July 2025, About A week ago
Well done, JC, for never having a feckless tenant. I didn't think I did for 20 years... until I did. I've made more than £800k from capital appreciation, while my London rents were very profitable. The Yorkshire stuff is small beer; my mistake. My pension and stocks dropped £100k when the markets caught Trump Tariff, and a few months later they are £40k above where they were before Trump. Time to now start spending and gifting before Reeves gets her hands on it. Funny old world.
Lordship
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Sign Up15:35 PM, 4th July 2025, About A week ago
If you don't know what you're doing, you can loose money in stocks if you sell when the price drops. However, like properties, if you don't sell for many years and you've bought well, you should do well. Being paid a nice growing dividend is almost like being paid rent.
However, as JC say's, using leverage, adding value, buying BMV, is a big plus. Even with the ever increasing risks with tenants and taxes.
Ideally you have both
Jonathan Clarke
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Sign Up15:59 PM, 4th July 2025, About A week ago
Reply to the comment left by NewYorkie at 04/07/2025 - 15:23
I wouldn't say I`ve never had a feckless tenant . I`ve had a few in the early days while I was learning my trade . But they are long gone now . Sunk costs .
``Time to now start spending and gifting before Reeves gets her hands on it.``
Totally with you on that one . I`m remortgaging to the hilt and releasing equity and shifting and gifting funds and ownerships all over the place before the autumn statement.
But I`m also looking at buying as well as there are some who just have to get rid now come what may at prices that cant be refused