Hard to believe isn’t it, well that’s because it didn’t happen. In fact UK property prices have never dropped so violently in such a short space of time. However shares and more specifically the FTSE 100 did drop quite dramatically last week. Shares are the other main investment vehicle for investors in the UK and many pension funds are reliant on the performance of shares so today we look at
Property vs Shares
As I have already mentioned, shares last week took a sharp fall not just in the UK but across the world. This was prompted by uncertainty in the US and European economies. Already steps have been taken to offer certainty to investors to stop the rot, but why such dramatic losses
Shares are liquid assets, meaning they can be bought and sold in an instant. The movements can swing heavily in one direction or another if panic ensues. Property can not be bought or sold in an instant, this means that the property market is driven by supply and demand
In the UK the demand is rising but the supply is not great enough, in the long term this means growth. Shares will however not always be volatile so let’s look at how Property vs Shares have performed since the turn of the millennium.
Property vs Shares – Property
Property values dropped after the credit crunch so you would expect the performance over the last 1l years to be subdued. You may be surprised to see that even accounting for this dip, property values have more than doubled during that period. At the beginning of 2000 average property prices stood at just below £80,000 but today they stand at over £160,000. An impressive return but actually a regular return based on past performance as property on average has doubled every ten years.
Property vs Shares – Shares
The performance of shares is important for millions of people in the UK as most pension funds are invested in the stock market. This graph therefore makes for unpleasant reading. As we can see, the FTSE100 stood at just 6500 points last week. It has now fallen below 5200 points – a loss of 20%. This is a catastrophic blow for anyone investing in a pension fund based on shares as it will force investors into rethinking their retirement options and make retirement less likely for millions of people.
Property vs Shares Summary
This blog is not designed to make you abandon the stock market as an investment completely, but it is designed to open your eyes to how safe, stable and impressive property investment is over the long term. If you want to understand how property investment may be able to help you secure your financial future than give one of our property consultants a call on 0207 148 3164 or sign up for our free newsletters below.