Recent commentary by Rathbones a UK wealth and asset manager argues that the “golden age” of property investment is over (reported in This is Money) and that diversified equities have outperformed residential property since 2016. While this narrow snapshot may support a short-term view, it overlooks the deeper structural advantages of property investment — particularly when factoring in the power of gearing, long-term capital resilience, income stability, and the role of property in wealth creation across generations. We take a deep dive into this below for you.
1. Gearing: The Silent Force Behind Property Returns
One of the most compelling advantages of property — and one almost entirely absent from the Rathbones analysis — is the ability to leverage. Unlike stocks, which are typically bought outright, property allows investors to use a mortgage to control a larger asset with a smaller upfront investment.
For example, a 25% deposit on a £300,000 property (£75,000) gives an investor exposure to the full capital appreciation and rental income of the entire asset — not just the deposit portion. A 4% annual price increase on the full value of the property translates to a 16% return on equity when 75% of it is borrowed (before expenses). Equities, while offering compounding potential, do not offer this same level of controlled leverage with secured borrowing.
2. Capital Growth + Rental Income = Dual Return
Yes, property prices may have slowed in some regions, but property remains a dual-yield asset — offering both capital appreciation and steady rental income. The average UK rental yield currently ranges between 4% and 6%, and higher in select areas or for specific strategies like HMOs or short-term lets.
When rental income is reinvested or used to pay down a mortgage, it further accelerates net equity growth. Importantly, rents tend to rise with inflation, making property an inflation-hedged income stream — something few equities can guarantee.
3. Volatility and Risk: Shares Are Not a Free Ride
The Rathbones article implies that equities are a more reliable path forward — yet fails to mention the volatility and emotional risk of stock markets. Between March 2020 and April 2020, global stock markets fell by over 30% in a matter of weeks. The FTSE 100 only regained pre-Covid levels in 2023.
Property, by contrast, is less volatile, less liquid — and that’s an advantage for long-term investors. Home values don’t fluctuate daily on a screen. Even in downturns, most investors hold, collect rent, and ride out the cycle — a far cry from the panic selling often seen in stock markets during periods of uncertainty.
4. Structural Undersupply Supports Future Property Growth
The UK housing market continues to face a chronic supply shortage. Government targets of building 300,000 new homes a year have consistently been missed, while demand remains strong due to population growth, inward migration, and changing household structures.
This imbalance provides a long-term upward pressure on prices and rents, especially in high-demand cities and commuter areas. The very factor that made the ‘golden age’ of property lucrative — constrained supply — still exists.
5. Regulatory Headwinds Are Not Permanent
Yes, tax changes and tighter regulations have made some buy-to-let models less attractive. But investors have always adapted — through company structures, professional lettings, better tenant screening, or higher-yield strategies. The rise of Build-to-Rent, co-living, and green property retrofits are just a few examples of how the sector is evolving.
In fact, tighter regulation has had the side effect of reducing amateur speculation, meaning professional investors now face less competition and greater rental demand.
6. Property Is Tangible, Functional Wealth
Shares can disappear overnight. Property doesn’t. Bricks and mortar are real, useable assets that can house a family, support a business, or be passed down to children.
Moreover, for estate planning, property offers multiple tax strategies that aren’t available with equities, including trusts, gifting, and property allowances. For investors thinking generationally — not just for the next 8 years — property remains a cornerstone of legacy building.
Final Thought: A Balanced Portfolio Still Needs Property
No serious investor advocates a one-asset strategy. Diversification is wise. But to suggest that “you can’t go right with bricks and mortar” is not only short-sighted — it ignores the many ways investors continue to profit from property.
With the ability to leverage returns through gearing, generate rental income, ride long-term capital growth, and own a tangible, inflation-resistant asset — property investment is far from obsolete. For those thinking beyond the next market cycle, it may be more relevant than ever.
