House prices compared to other investments

Between 2020 and 2021 prices have risen by 8.3%, far lower than the majority of other commodities on the investment market, Warwick Estates analysis shows.

Bitcoin has seen the highest increase at 430%, while Corn (133.8%) and WTI Crude Oil (85.1%) have also seen big rises.

However in the longer-term house prices beat some other investments. While homes have seen their values appreciate by an average of 3.1% annually over the past five years, the cost of natural gas has fallen by a typical -3.9% per year, while crude oil has also dropped in value by -1.6% annually.

Emma Power, chief operating officer of Warwick Estates, said: “The UK property market has proved a consistent platform for investment in recent years, despite a prolonged period of Brexit uncertainty, and more recently, the problems posed due to the pandemic.

“The ability to invest in bricks and mortar ranges from professional investment at the top level to the amateur investor opting for the buy-to-let sector. So it is far more accessible as an investment class for those with little to no investment experience.

“While returns might not match that of other investment options, UK real estate is far less volatile asset class compared to the likes of cryptocurrencies and this suits the long-term approach to investing in property.

“Unlike a number of other assets, the government also has an interest in keeping the UK housing buoyant. Property market prosperity has long been claimed as an indicator of economic success and the ability to demonstrate this has seen the government introduce various initiatives to keep house price growth climbing.”

Despite the strength of house price appreciation, a number of commodities have seen stronger average returns over the last five years than property.

At 226% a year on average, Bitcoin sits top of the table with silver (8.2%), corn (5.9%), gold (4.4%) and wheat (3.6%) also bringing a better return when compared to UK property.

However, these assets are arguably more prone to fluctuations than house prices, which have tended to rise consistently since the recovery from the global financial crisis.

Unlike with these other commodities, if you purchase a home as a buy-to-let landlord you’re able to recoup costs in the form of rental income from tenants.

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