One of the simplest ways to invest and make money from property is to buy property, rent it out and wait. Now I know this is a very simplistic view, but if you take a longer-term overview of property, you will see that property prices always increase.
Bricks and mortar always increase in value – despite the odd blip
As a graph* published by AllAgents illustrates, despite recessions and other economic crisis, actual house prices in the UK since 1975 have almost tripled, from £89,383 (in 1975) to £217,274 (in 2018), with average house prices peaking at £253,420 in 2007 (just before the Global recession).
Ten-year house price property growth
But you don’t have to park your money for nearly 50 years! Property prices tend to increase every ten years. Using the same data, the average property prices were:
- £151,976 – 2001
- £199,605 – 2011
- £217,274 – 2018 (the latest figures available).
This is supported by the Governments Land registry house price data which shows that average house price across all property types – semi-detached, detached, terraced houses, flats and maisonettes – have increased.
Average house prices:
- £84,620 – January 2000
- £167,469 – January 2010
- £234,742 – January 2020.
You can see the house prices nearly doubled between 2000 and 2010 – and nearly trebled in value by the time we get to 2020.
On this basis, you are nearly doubling the equity of the property every ten years.
Invest in property now
With interest rates being at a historical low, the cost of borrowing money to invest in property has never been more accessible or low cost.
Banks like security when they lend, and property is one of their favourite securities – again helping when you apply for finance.
Once you’ve bought your first property and it has increased in value – either over time or because of improvements made to it – you can refinance and take out the profit element and use that to reinvest into another property.
In this way, over a period of time, you are recycling your initial capital, taking it out of one property and then putting into a new one, then repeating the process.
If property prices double and you have used finance then you double the financed element too, which you get to keep.
If you have tenants in those properties covering the mortgage payments and fees each month, then this can be a great way to scale your property investment business.
Park your money in property
Then, just sit back and wait for your property to increase in value!
We know there are other ways to make money from property faster and with more leverage, but sometimes it is useful to remember that over time property prices continue to trend upwards.
There are still straightforward ways to earn money leveraging property and property finance, with increased rental demand, over the longer term.
Do you want to find out more about property investment?
Get a free copy of my Amazon Bestseller, House Arrest. This is a practical guide to buying HMO property. Topics include:
- How you can buy HMO property
- Which properties will you buy?
- Clear, straightforward strategies you can follow
Find out how to get your free copy of House Arrest here.
*The prices have been adjusted for inflation, and they are the initial prices at which buyers purchased their properties. The graph is based on the Nationwide’s data on UK house prices. Prices in the graph have been adjusted for inflation. The house prices included should be used as a guide only.