Pensions and Property

Defying conventional doctrine, BoE Chief Economist Andy Haldane stated in an interview with the Sunday Times that the best way to save for retirement was to buy a property, rather than invest in a pension. Investment in a single property has liquidity risks, physical risks, and lacks any form of diversification. However, one only needs to look at London’s SW postcode to see the logic behind Haldane’s comments. Land Registry house prices have risen at an average 10% pa in this postcode over 20 years, which when geared at 80% sees a return of almost 20% pa, ignoring any income component. With seemingly no end to the supply drought, and UK 20-year bonds struggling to yield more than 1%, where will you put your money?