There’s no rational reason to expect property to always be a sound investment. As with stocks and shares, it’s the starting point that matters most. Both have proven something of a disappointment over the past decade - overpromising and under delivering.
A similar process has unfolded with residential property – a salutary lesson being the buy-to-let binge – which has left us with a glut of unwanted new-builds cluttering up the market. The illusion of housing wealth has also prevented many of us from noticing that we’ve been struggling to maintain our standard of living, as real incomes have stagnated over the past 30 years. Given that the housing market rarely spends any time at ‘the average’, your house will always be either ‘over’ or ‘under performing’ the market at any given moment, so don’t get too anal about it. In the end, you’re looking to get the best mix of financial and family outcomes from your property choice.
If there’s one thing we can be certain of – it’s another boom-bust cycle. Perhaps next time around we can look further ahead and hatch a smarter plan – recalibrate our expectations to more realistic levels: save more, value what we already have, and spend more time and money on productive investments with long-term value. Our houses are, first and foremost, homes, places where our lives are lived or missed, and in the end, our years of family fun will massively outweigh any financial leg-ups we may achieve along the way.
Laura Henderson is a property columnist, author and investment expert. Her latest book Tricks and Mortar: The Little Book of Property Wisdom (Book Guild Publishing) is out now on Amazon.