Is the property market the new stock market for some investors?

In years gone by property was seen as a necessity as opposed to an investment with many people preferring direct or indirect investments based on the stock market. While there is no doubt that the stock market will always play the most pivotal role for worldwide investors, there are signs that the property market is fast becoming more popular than stock market investments for at least some investors.

There are many reasons why the stock market is so popular although there are also many reasons why others are beginning to think again.

Volatility

Even though it would be misleading to suggest that the property market cannot be volatile the fact is that in general the stock market does tend to be more volatile in the short-term although the long-term trend is perhaps easier to read. The markets react instantly to suggestions of immediate and future problems which can wipe literally tens if not hundreds of billions of pounds from investments portfolios.

The property market should always be seen as a more long-term investment strategy which will encounter short to medium term volatility but generally the long-term trend is upwards. When you bear in mind that the worldwide population continues to grow, with a greater housing necessity, with limited land available for development the general appetite for property will always increase in the longer term.

Steady income

It is no surprise to learn that the buy to let market in the UK, and indeed other areas of the world, continues to grow in popularity. Despite the fact that many buy to let investors, perhaps some of the more adventurous, have had their fingers burnt in the past it is still seen as a long-term “pension plan” to many people. The ability to acquire a property which has the potential for long-term capital growth while also receiving rental income along the way is perhaps the more preferred type of income for some investors?

The situation with regards to stock market investments can change very quickly although in general it is possible to create a portfolio which produces a relatively steady dividend income going forward. This can always be subject to fluctuations and individual company issues but if you spread your investments wide enough it is possible to create a relatively steady income. The capital situation is very different, compared to property investment, as the stock market tends to react very quickly to different situations whether specific to a sector, stock or indeed a worldwide issue.

Control

Many investors feel more in control when buying property assets with a long-term strategy in mind. There will still be fluctuations in prices, rents will reflect the underlying market but there is always the option to sell a property and reinvest or indeed wait with cash in the bank until an attractive option emerges. It really is a case of horses for courses with regards to property/stock market investment although volatile stock markets do tend to make many “savvy” investors think again.