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Consumers move away from property as long term investment

Of the 2,500 people surveyed, 34% saw property as the best long-term investment in the last quarter of 2010, down from 49% just three months previously.  While property still remains the most popular asset class, the number of people who favour it is at the lowest level since the ABI started the survey in Q3 2008.

Helen White, the ABI’s acting Director of Life and Savings, said:

“For the vast majority of savers, a pension should be a fundamental part of their savings plan. Pensions attract generous tax relief, and through life styling, can reduce risk as people approach retirement.

“We know that over 40% of people are not taking basic steps to save sufficiently for their retirement. This may be as property, despite this fall from favour, is still seen by many as being their retirement nest egg. This is despite the dangers of investing in a single asset and the lower returns on property compared to equities for long term investments.” 

ABI analysis also shows that, between 1960 and 2009, the return for equities is higher than the returns on property for nearly all 20-year investment periods.  Even over a much shorter period, equities are the top-performing asset in 64% of 5 year periods between 1960 and 2006.

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0 thoughts on “Consumers move away from property as long term investment

  1. Sam Collett says:

    Not surprising given the illiquidity of it as an asset class – the difficulty tenants are having paying the rent – and if you need to sell it – the market is on a downer so right now it doesn’t feel like the most sensible investment choice!

  2. Major Landlord says:

    It’s sad to see how many innocent – if rather naive – private individuals have been lured into property as an alternative to other investments, particularly when they rely on it as a nest-egg for retirement.

    The truth is, property IS a good investment, but ONLY if you are a) in it for the long term and b) are prepared to roll up your sleeves and get on with the dirty work, of which there is plenty.

    Really, it’s just like any other business. You don’t buy an engineering company and then never go to work, or rely on other people to run the business and never take any interest in it, do you? So why should anyone think that they can just buy some property, hand it over to managing agents, and just watch their bank balance grow?

    I own many properties around the UK. The ones that are “managed” are a nightmare. The ones I manage myself work better and make more money. But I get calls at all hours, and on public holidays, and often end up doing repairs myself. Tenants do damage that’s not covered by the deposit, some leave with rent arrears, I’ve had problems with drug dealing and use, I’ve had to get court orders for eviction of unsociable tenants . . and sometimes properties stand empty for weeks until the right tenant comes along. All these things have a cost, and are hassle.

    Yes, I make money. And I’m not complaining. But anyone who thinks that owning rental property is easy money is a fool. It is a business, it’s damned hard work, and can be very stressful at times. It is not for the faint-hearted, nor for anyone who wants easy money. If that’s what you want, stick to investing in lower yield, safer shares.