Property remains one of the top performers

Will Leyland, 20 May 2020

In these times there was always going to be a very distinct set of winners and losers, as there always is in any recession or economic shock, regardless of the length and depth.

Having said that, despite our predictions, that have been fairly well documented, it’s always a nervous time waiting for the release of the actual economic data to support what you’ve said, lest you be completely and utterly wrong.

You’ll imagine the relief and satisfaction when some of the Quarter 1 data (January to March) was released to support what we initially said when the pandemic started, that property will remain a constant, and whilst it won’t immediately dive out of the blocks and see a huge surge, it will remain a steady and reliable performer.

If anything, those industries and companies which are seeing huge surges in performance, profits and share price are an even riskier bet than those that are bombing. Consider the performance of companies like supermarkets and take away sites that are currently surging, they’ll be fine to make a potential quick buck, but the risk remains that profits and share inflation simply won’t last.

As well as that, timing your foray into short-term market surges is notoriously difficult and if you get it wrong you stand to lose quite a bit of money. There’s a pretty good reason why CFD (Contract for Difference) futures stock traders are roughly 80% losers.

What, ultimately, the money makers are looking for are long-term or even medium-term gains in a world of uncertainty, and UK property certainly appears to be providing that.

Top performers

Data released by FE Analytics suggests that property is one of the top performing investment sectors of the year which, considering the turbulent times the markets have been experiencing, is quite an achievement.

Their top performers aren’t surprising given the current circumstances, but in at number one is UK Gilts (Government Bonds), which always perform well in an economic shock. Standard and short term money markets are next, which again tend to perform well when short term lending is required in economic uncertainty.

After that is UK property, coming in as one of the strongest performers across the entire economy. Judging specific percentage performance is difficult given that this can be divided down into separate property classes such as residential, buy to let, commercial, etc.

It’s also region dependent and yields can fluctuate depending on whether the property is in England, Scotland, Wales or Northern Ireland, given they all have different lockdown restrictions and laws.

Having said that, the evidence across the board is quite broadly positive, with The Guardian, for example saying this week that “is a relief for the housing market that should allow activity to progressively pick up over the coming months”.

Home Let’s latest data also reported that rents were still rising in line with inflation, which is a solid indicator that whilst we may be in the eye of the storm, that the market is still performing strongly and reliably with prices, demand and rents rising.

Whilst there are perhaps more classically ‘stable’ markets in government bonds, corporate bonds, etc there is a general rule of thumb that as demand surges for such safety the yields drop quickly and more often that not yields don’t match inflation, so you’re buying safety at 0% or even potentially losing money.

What we can say is that property has done not just as well as expected but seems to actually be outperforming predictions.

Interested in buying or selling a buy-to-let property? Take a look at our website or give us a call on 0330 124 2079.


Property remains one of the top performers

Will Leyland, 20 May 2020

In these times there was always going to be a very distinct set of winners and losers, as there always is in any recession or economic shock, regardless of the length and depth.

Having said that, despite our predictions, that have been fairly well documented, it’s always a nervous time waiting for the release of the actual economic data to support what you’ve said, lest you be completely and utterly wrong.

You’ll imagine the relief and satisfaction when some of the Quarter 1 data (January to March) was released to support what we initially said when the pandemic started, that property will remain a constant, and whilst it won’t immediately dive out of the blocks and see a huge surge, it will remain a steady and reliable performer.

If anything, those industries and companies which are seeing huge surges in performance, profits and share price are an even riskier bet than those that are bombing. Consider the performance of companies like supermarkets and take away sites that are currently surging, they’ll be fine to make a potential quick buck, but the risk remains that profits and share inflation simply won’t last.

As well as that, timing your foray into short-term market surges is notoriously difficult and if you get it wrong you stand to lose quite a bit of money. There’s a pretty good reason why CFD (Contract for Difference) futures stock traders are roughly 80% losers.

What, ultimately, the money makers are looking for are long-term or even medium-term gains in a world of uncertainty, and UK property certainly appears to be providing that.

Top performers

Data released by FE Analytics suggests that property is one of the top performing investment sectors of the year which, considering the turbulent times the markets have been experiencing, is quite an achievement.

Their top performers aren’t surprising given the current circumstances, but in at number one is UK Gilts (Government Bonds), which always perform well in an economic shock. Standard and short term money markets are next, which again tend to perform well when short term lending is required in economic uncertainty.

After that is UK property, coming in as one of the strongest performers across the entire economy. Judging specific percentage performance is difficult given that this can be divided down into separate property classes such as residential, buy to let, commercial, etc.

It’s also region dependent and yields can fluctuate depending on whether the property is in England, Scotland, Wales or Northern Ireland, given they all have different lockdown restrictions and laws.

Having said that, the evidence across the board is quite broadly positive, with The Guardian, for example saying this week that “is a relief for the housing market that should allow activity to progressively pick up over the coming months”.

Home Let’s latest data also reported that rents were still rising in line with inflation, which is a solid indicator that whilst we may be in the eye of the storm, that the market is still performing strongly and reliably with prices, demand and rents rising.

Whilst there are perhaps more classically ‘stable’ markets in government bonds, corporate bonds, etc there is a general rule of thumb that as demand surges for such safety the yields drop quickly and more often that not yields don’t match inflation, so you’re buying safety at 0% or even potentially losing money.

What we can say is that property has done not just as well as expected but seems to actually be outperforming predictions.

Interested in buying or selling a buy-to-let property? Take a look at our website or give us a call on 0330 124 2079.