Weather the inflationary storm with a P2P investment in property
The key question for investors in the current market is: how can I find a way to maximise returns when inflation is eating into the real value of my money? And the answer? Find an asset class that can withstand, or even thrive in a high inflationary environment.
In case you’re thinking there is no such asset class, look no further than retail property which has, time and again, proved its resilience as an investment.
Thanks to its essential nature – people always need somewhere to live – housing is able to withstand short-term shocks better than other, non-essential assets even during periods of market turbulence and inflationary pressure. Consequently, property tends to benefit as other types of investment lose value in real terms.
Read more: Assetz chief says P2P is “essential” in the race to the fund new homes
Even allowing for inflation, the average cost of a house in the UK has risen nearly 350 percent since 1955, when a house cost just over £65,000 in today’s money (or £1,891 at the time) to almost £290,000 today. And in actual monetary terms, over the last 50 years, house prices have risen a staggering 4,000 percent, from just under £7,000 in 1972 to almost £290,000 today.
Few asset classes can match that level of growth.
Post-pandemic, property has seen another exponential rise, with average prices increasing by an incredible 20 percent in the three years to January 2022 (from £228,300 to £273,700). Some property hotspots, such as Padstow in Cornwall, saw prices rise by 20 percent in 2021 alone.
With hybrid working firmly established as the new norm, proximity to a place of work has become less of a priority and as a result, many people that were previously committed to an area have become potential purchasers in a new location.
Read more: P2P sector smashes milestones in 2022
The current strength of both the sales and rental housing market is a reflection of this and is showing little sign of slowing down, particularly in rural and coastal locations where buyers are willing to pay a premium for a better quality of life.
So how can an investor diversify into this vibrant market and weather the current storm?
Investing in property itself is not for the faint-hearted, requiring a significant upfront investment. Plus the barriers to becoming a buy-to-let landlord keep getting higher as increased regulation, a reduction in tax benefits and rising mortgage rates combine to make it harder to achieve good yields.
Equally, given that opportunities to buy low and sell high are in short supply, and labour and material costs are at record levels, successfully buying and flipping a property in the current market is extremely challenging.
Fortunately, nowadays there are far easier ways to invest in property. For a comparatively minimal outlay, a fixed-rate, fixed-term peer-to-peer investment offers investors increased certainty in a changing world. Investments can be monitored at the click of a button, and won’t require emergency funds for repairs, or a Sunday afternoon call-out for a broken boiler.
Read more: Second charge lending soars in April
With Acorn’s latest P2P loan in Sherston, a beautiful village in the Cotswolds, investors can help fund a new development of 45 contemporary homes and earn a fixed rate of nine per cent per annum over a two-year term.
Investments can be made using cash, or with an IFISA wrapper for tax-free gains; there are no set-up or management fees for investors; and investors have the security of a second charge on the property.
The loan is provided in association with Simple Crowdfunding, one of the first online platforms in the UK to be regulated for P2P lending, offering property investment opportunities to everyone.
Acorn have already completed over 40 developments in the South West of England, where demand for property is at an all-time high.
P2P investors can join forces and benefit from Acorn’s knowledge and expertise, funding a development sensitively designed to enhance its local community, with energy efficiency at its core. All the homes will be built according to Acorn Green’s sustainable principles, with an EPC A energy rating and heating provided by air source heat pumps.
There’s never been a better time to invest in property and maximise your portfolio growth.
For more information on Acorn’s peer-to-peer loan in Stanbridge Park, Sherston, click here.
Your capital is at risk and not all investments will be suitable for all investors. Projections are not a reliable indicator of future performance and tax treatment depends on individual circumstance.