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| Why
Property? |
Property
is a tangible asset that gives people control
over their future. Historically, residential
property has doubled in price every 7 years
and should therefore be viewed as at least
a medium-term if not long-term investment.
Although there will inevitably be short term
fluctuations in market prices, property has
always provided a consistent long term store
of value for anyone who owns it
There are a number of different reasons why
residential values have seen such strong growth,
but most of them come back to the simple economic
principle of supply and demand - there is
an overall shortage of suitable housing in
most parts of the United Kingdom. This housing
shortage has been caused by a number of social
and demographic factors, including:
House building at its lowest level since 1924,
as the gap between supply and demand widens
by 60,000 each year.
An average of 220,000 extra households created
each year through longer life span, increased
solo living (whether from choice or an increasing
divorce rate), and an increasing number of
students in higher education away from the
parental home. Another factor is the population
growth resulting from immigration into the
UK.
In contrast, the past 5
years have seen shares and pension schemes
performing poorly (at least until mid 2005)
and the public has witnessed one scandal after
another. This has left many people worried
about their future financial security because,
with the demise of final salary pension schemes,
they are no longer guaranteed a comfortable
retirement income.
In the early
part of 2006, however, Stock Market performance
has been good enough to allay some of the
fears about endowment policies falling short
of their anticipated pay-out, so a degree
of balance is being restored.
Confidence in the Government and the financial
services industry is fairly low, and unlikely
to change in the foreseeable future. Shares
(and therefore pensions) are still very volatile
and have never been a low risk investment
option. Government sponsored tax-free investments
like ISAs have quite low maximum allowable
values and will not in themselves lead to
financial freedom.
Large financial institutions and pension funds
are now investing more heavily in property
(particularly commercial) because it offers
sound long-term gains with minimal risk, compared
with exposure to the Stock Market.
The property market is relatively stable and,
unlike many investments, is not subject to
rapid overnight fluctuations. Property offers
a safe investment provided the correct approach
is adopted. |
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