If anybody says ‘investment’ today, the next word should be ‘bullet-proof’. With growing key rates and mortgages cost, gloomy predictions of the global inflation spiral, and shaky grounds for global economic development, there is a need to have a proven approach to the future of savings.
There are plenty of opportunities to invest today, and building a new home doesn’t strike as the most lucrative one. However, when you look closer and consider the long-term perspective, it happens to be much more efficient than many. We’ve summed up key reasons to build a house as an investment in 2022.
To become a net worth champion
Home equity wealth is a historically proven way of growing the money value. According to Schroders’ data, the average house in the UK now costs more than eight times the average earnings. It means that home equity, although demanding in terms of the initial cost of ownership, is a reliable way of wealth building. It has proved itself over the last 100 years. This is the case not only for the U.K.: according to the Federal Reserve’s 2019 Survey of Consumer Finances, homeowners’ net worth is up to 40 times greater than renters.
But will this trend remain for three, five, or 10 years? What are the chances the property prices keep growing? No one can make such a prediction, however, according to market experts’ estimation, there is no sign of home prices dropping in the next few years. UK house prices are expected to rise 8% over the course of 2022, followed by growth of 1.8% and 1.2% in 2023 and 2024, according to a report on the housing market by the EY. This is a global trend: according to CEIC, almost anywhere across the globe, house prices enjoyed double-digit value growth.
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This puts the home equity in a good position as an instrument for money saving. And it comes as no surprise that real estate ownership champions the list of the most attractive investments in the U.S. and many other countries.
To care for mental health and happiness
Building a home is a concrete step to living life on your terms. This was many times proved by COVID when the planet learned how important is to have your own space – in all its senses. Two years after, we can rely on scientific research. An estimated 31% of adults in Britain faced mental or physical health problems due to their housing conditions during the COVID lockdown in March 2020, with over 10% feeling depressed because of insufficient dwelling space. According to the Household Resilience Study, scores for life satisfaction and happiness declined and anxiety increased across all tenures during COVID-19, but owner occupants gave overall higher wellbeing scores than those renting.
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When building your home, you don’t take anything as granted. You don’t need to appreciate your neighbor’s son’s violin lessons or to approve the walls’ color when renovating. This is your own space as you’ve dreamt about it. A great inspiration for anyone starting to build a house – and it hasn’t changed over the years. 93% of homeowners from the survey conducted by Bank of America say that owning a house makes them happier than renting.
To care for the future
The next reason to build a house is projected into the future even more than the rest. Houses building is a greener way of life than renting or acquiring an apartment. The modern approaches to house construction allow keeping up to the green standards (including internationally certified ones – Leadership in Energy and Environmental Design (LEED), reducing greenhouse gas emissions (GHG) and making the planet a better place. A 2014 UC Berkeley study found that LEED-certified buildings contributed 50% fewer GHGs than conventionally constructed buildings due to water consumption, 48% fewer GHGs due to solid waste, and 5% fewer GHGs due to transportation.
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Besides that, a green building bites off hundreds of pounds from the energy bills. It also grows in value faster than a conventional one.
To sum it up – a bulletproof investment is hard to make, but when we talk about building a house, you have at least three dimensions where it is a life by choice, not by chance.
Sources
- Lamont, Duncan. What 175 years of data tell us about house price affordability in the UK
https://www.schroders.com/en/insights/economics/what-174-years-of-data-tell-us-about-house-price-affordability-in-the-uk/ (accessed on 1 July 2022). - Jacoby, S.; Alonso, L. Home Use and Experience during COVID-19 in London: Problems of Housing Quality and Design. Sustainability 2022, 14, 5355. https://doi.org/10.3390/su14095355 (accessed on 1 July 2022).
- Ministry of Housing & Local Government (MHLG). English Housing Survey Household Resilience Study, Wave 2 November-December 2020, Official Statistics; MHLG: London, UK, 2020. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/978991/Household_Resilience_Study_Wave_2_November-December_2020_Report.pdf (accessed on 1 July 2022).
- National Housing Federation (NHF). Housing Issues during Lockdown: Health, Space and Overcrowding (A Briefing on Research Supporting the Homes at the Heart Campaign); NHF: London, UK, 2020; Available online: https://www.housing.org.uk/globalassets/files/homes-at-the-heart/housing-issues-during-lockdown—health-space-and-overcrowding.pdf (accessed on 1 July 2022).
- Bricker Jesse, Goodman Sarena, Moore Kevin B., and Volz Henriques Alice with assistance from Ruh Dalton. Wealth and Income Concentration in the SCF: 1989–2019. https://www.federalreserve.gov/econres/notes/feds-notes/wealth-and-income-concentration-in-the-scf-20200928.htm (accessed on 1 July 2022).
- 2019 Fall Homebuyer Insights Report
https://info.bankofamerica.com/assets/pdfs/BofA-2019-HBIR-Fall.pdf (accessed on 1 July 2022). - House Prices Growth by Country Comparison
https://www.ceicdata.com/en/indicator/united-states/house-prices-growth (accessed on 1 July 2022). - Mozingo, Louise; Arens, Ed. Quantifying the Comprehensive Greenhouse Gas Co-Benefits of Green Buildings
http://escholarship.org/uc/item/935461rm (accessed on 1 July 2022).
