Capital growth: Does your house earn more than you?

Why capital growth from your property will probably make more than you do

It's something that I have been saying for decades, but very few people realise the power of owning a property (or many properties) over the long term. The fact is that for a large portion of the time the property you own will increase in value through capital growth more than the income you earn.

I find that investors who are just starting out cannot get a sense of what I mean here but as they start to see it happen; a broad smile comes over their face and they realise that there is no better investment that property.

Capital growth happens at different times in different areas…

As your portfolio grows and you have bought in different areas you will notice that some properties shoot up while others do very little, then they do a switch; the stagnate one starts to take off and the other settles in slow steady growth. That's the benefit of having a portfolio, your returns will almost always grow more than your income.

The reason for this is simple – investment fundamentals… the fundamentals in each area are different and changing so the prices change as well in accordance with the fundamentals in the area (with a little lagging). This is why I always say ‘buy the areas before the property'. It's a lot harder to change an area than to update a property but its the property (or the land that it sits on which is more important for capital growth.

Why not check out to see how much your property has made over the past year for you and compare it to the income you earn – You will probably be surprised (and a little disappointed at your 40, probably 60 hour a week job.

Does your home earn more than you do? Calculator

(This  is a BBC site so if it isn't working then call the team who can run a quick calculation for you.)

The fact is that most people work 40 to 60 hours a week for 48 weeks a year taking 2 days off a week and they get paid less than what their property earns in that same time.

Their property they have to commit very little time to and even less if they have it managed by a professional agent (like Ezytrac Property Management).

Now I am not saying that this will be the case every year, as we all know capital growth varies year on year and evens drops in certain years.

But the fact is that property held over time will generally go up (for about 9 years for every 1 year it goes down). Now, this is a massive simplification but understand the principle and you cannot lose.

If you're not sure of why this is happening in your area right now, or you want to know when its likely to happen in your area, then a simple chat with the team will reveal.

Part of what we do at Gladfish is predict the future market (3 to 5 years) in advance and adjust our strategy to accommodate this market and then source property to match this research.

For the past 10 years, we have been doing exactly that.

For questions call the team on +44 (0)207 923 6100.


James Cox

Himansu Joshi
August 2, 2014

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