Many of us dream of long golden years of retirement when, with work behind us, we’ll be free to travel or do whatever else has so far eluded us. One hurdle, of course, is how to fund this dream. With the state pension having never promised much more than bare subsistence, the doors closing on final-salary private pensions and defined contribution pension plans subject to the vagaries of the stock market, it is no wonder that many people are looking for alternatives.
Property as an Investment
Property has long been one option. However, where once upon a time homeowners might have downsized to free up cash when retirement approached, many people now look to expand their property portfolio. With a rising market, which promises both capital gains and an income through rent, investing in property makes sense to those who have the wherewithal to do so. And when even the Bank of England’s chief economist has suggested choosing property over pensions, it may be sensible to pay attention.
Some may worry that the property market is overdue a crash. Others may point to statistics suggesting that prices will rise by only two per cent during 2017. Meanwhile, optimists, or those prepared to take a longer-term view, might point out that house prices in south-east England rose by 37 per cent in the last decade. In London, prices have risen by 70 per cent over the same period. With figures like these, it is no wonder that property investors’ antennae have led them wholesale into the buy-to-let market.
Of course, nobody can say with certainty what the future holds. The Mortgage Market Review, changes to stamp duty, the as-yet unquantifiable Brexit effect and projected interest rate rises are all reasons for caution. However, they are not necessarily a reason to slam on the brakes. The buy-to-let market is still strong in many areas, particularly those with a high student population or young professionals. Another growth area is serviced apartments in Birmingham and London, as well as other large cities. If the latter appeals, why not look at Birmingham Serviced Apartments to get some ideas?
The Solution?
Like most things in life, there will be no one-size-fits-all answer. Some will stick with pensions, others will be happy to divert into property, while still others might sit on the fence and invest in both.