28 Feb WHY IS RESIDENTIAL PROPERTY CONSIDERED A GOOD INVESTMENT?

Firstly, it is a solid asset, subject to little deterioration or depreciation. With judicious maintenance it will last for many years in a similar state. Secondly, it is a home, the centre of family life. A place to raise children and have security together. Thirdly, it is a sound investment, which is unlikely to drop in real value, partly for the reasons already stated, but also because in a nation that aspires to home ownership, there will always be an imbalance of supply relative to demand. In some European countries, renting represents the larger part of the market, but even there, properties have to exist to be available to rent. The main difference in these economies, is that much rented property is in the form of Apartments, which are not necessarily appealing to home buyers. Lastly, it is a tax efficient asset that can be inherited by a spouse without tax liability and even subject to an Inheritance Tax, usually based on a moderate valuation figure, can readily be retained by other members of the family.

Just as the value of gold and diamonds is sustained by a limited supply, so the limited supply of attractive residential properties will retain underlying value, despite fluctuations in price and demand sometimes, in the short run, in certain economic circumstances.