Live Markets: Pensions pip UK property for returns
LIVE MARKETS-Pensions pip UK property for returns Adds blog post
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PENSIONS PIP UK PROPERTY FOR RETURNS
Brits are property-mad and have traditionally preferred to put their money in bricks and mortar than in stocks.
But Schroders argues in a new note that pensions, not property, are the better investment and the stocks they invest in have historically delivered much stronger inflation-adjusted returns.
“In the five years to the end of 2025, UK house-price growth was 3.3% a year, well short of inflation which came in at 5.1% a year,” says Duncan Lamont, head of strategic research at the London-based investment firm.
“In contrast, global equity prices were up 10.9% a year in sterling terms, 13% a year in total returns if dividends are included.”
Even over the last 20 years, British house prices have failed to beat inflation. Meanwhile, the UK FTSE 100 stock index .FTSE has notched returns of around 260% and the U.S. S&P 500 .SPX has returned a huge 700%, according to LSEG data.
Most people buy property with a mortgage which means they can make a big investment with just a small deposit. But Schroders says this sort of leverage also magnifies downside risks if house prices fall.
Of course, a home has more value than just as an investment. But if you’re lucky enough to have spare cash, perhaps the pension pot is the best place to put it.
(Harry Robertson)
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