The economic turbulence of the past few years has proved to be a challenging time for many investors. Yet while traditional asset classes such as precious metals or stocks have failed to weather the storm, property has gone from strength to strength.
"People expected house prices to plummet in early 2023 and that simply hasn’t happened"
Research by peer-to-peer real estate investment platform, easyMoney, reveals that during a period of uncertainty or a global crisis, property is among the most reliable investment assets as it continues to deliver good returns even when the wider economic situation is going through a difficult time.
And while looking forward, the outlook isn’t dire, things haven’t really started picking up in 2023. As such, easyMoney has looked at which investment classes performed best during these recent tricky years to understand the options available when navigating the potentially uncertain times ahead.
The research reveals that one of the best investment classes for amateur investors during times of crisis is property.
In 2021, the UK was still in the midst of the pandemic, while in 2022, things got even more complicated with the Russian invasion of Ukraine and Liz Truss’s disastrous mini-budget.
Despite this, the value of property increased significantly, with the average house price rising by 10.1% from £258,430 in 2021 to £284,407. Even in London, where the market failed to match the nation’s wider success during the pandemic, prices increased by 5.9% to hit a high of £530,807.
The only other asset class to surpass the strength of property during this period was dividend payouts. Dividend aristocrats such as Coca-Cola and RELX increased by 15.2% and 13.3% respectively. However, such investments are often more difficult to access for the amateur investor, reserved mainly for professionals with massive amounts of money to play with.
For the amateur investor, therefore, property remains the best bet. Certainly when compared to other classes that such investors have relatively easy access to.
This includes precious metals. From 2021 to 2022, the value of silver fell by -13.3%; the value of platinum fell by -12.1%; and palladium declined by -11.8%. Only gold enjoyed a boost in value, albeit a modest one of 0.3%.
The stock markets are another reasonable option for amateur investors, but they too could not match the power of property. America’s S&P 500 declined in value by an average of -4.7% while London’s FTSE100 fared better with an increase of 5.9%.
Jason Ferrando, CEO of easyMoney, says:
“Property is a reliable investment class and resilient in the face of wider economic struggles, as has been proven since the start of the pandemic and throughout the current financial situation we find ourselves in. People expected house prices to plummet in early 2023 and that simply hasn’t happened.
"But, for amateur investors, it’s not just a question of great returns, it’s also about accessibility. For someone who doesn’t have in-depth knowledge of the stock market and its internal workings, for example, taking advantage of stocks and shares can be daunting and unnecessarily risky.
"Meanwhile, accessibility to the property market once required investors to have enough money to afford at least a mortgage but now, thanks to peer-to-peer investment platforms, this barrier has been removed.
"Peer-to-peer property investment platforms enable investors to get involved with property investment for much smaller amounts of starting capital by contributing their investment towards a larger pot which is then used to develop property.
"At a time when traditional financial institutes are struggling to provide reliable investments for everyday people, peer-to-peer platforms are offering a genuine way for people to make their money work for them.”