UK property replaces gold as investor safehaven

UK property replaces gold as investor safehaven

UK property is outperforming all other traditional investment safehavens amid the current market volatility.

Summary:

  • Property investment has replaced gold as the safehaven of choice
  • Real estate returns are driven by the structural undersupply of homes and accommodation in the UK
  • Can you afford not to diversify your portfolio with a property purchase?

Investors believe there is currently no better asset to buy than UK property.

Amid growing fears over the Greek debt crisis, the looming inevitability of interest rate rises and major stock market volatility, property investment has a track record of both long and short-term returns.

The wider FTSE 100 has recorded marginal gains so far this year, as homebuilders, estate agents and listing sites are currently achieving returns up to 30 times higher.

ROI is even more pronounced for investors who have purchased realty where ongoing property price growth has been coupled with record monthly rental yields.

Investors also favour purchasing complete real estate assets as opposed to investing in homebuilder shares as many housebuilders lost well over half their market value after the economic crash in 2007, and their prices continue to be more sensitive to consumer confidence and homeowner sentiment.

The strong foundation of property investment in the UK is the vast undersupply of homes. Growing populations, especially in cities such as Manchester and London, are driving both house values and rental rates up. These market conditions are not expected to change for many years and will ensure investors ride out much of the current volatility seen elsewhere.

The performance of property investment has been in stark contrast to other traditional safehavens so far in 2015. Gold prices have fallen, US treasuries cannot shake off the expectations of a rate rise, while the Swiss franc has struggled since January when the cap on its value was lifted.

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