Imagine, you’re all set. Ready to move onto the next stage of your life and buy your first home. The planets have aligned and it’s finally time to secure your dream house. After a few tentative steps, however, it soon becomes apparent that this pipedream isn’t quite as in reach as you first thought. Financial stumbling blocks appear out of every avenue, placing the notion further and further out of your reach. Game over. Or is it? Could the introduction of The House Crowd’s Innovative Finance ISA (IF ISA) provide those of you looking to clamber up the property ladder an encouraging solution to their financial troubles?

                                                                                The millennial property gap

Millennial Property Gap
In 1999 more than 60% of 25-29-year-olds were homeowners. Today this figure stands at just 31%.

Owning a house is one of those things that most people aim to accomplish at some point in their life. A place of security, shelter and respite, your home acts as a constant in a world of chaos and uncertainty.  In today’s harsh reality, however, 78% of the nation’s young people don’t envision themselves as being financially cap

able of even owning a home within their lifetime.

This startling report came to light following a recent survey conducted by VoucherCodesPro who evaluated the imagined housing prospects of Brits aged between 18 and 30 years old.  This financial strain could be whittled down to three primary reasons: deposits, earnings and credit history. Moneyfacts suggests that the average British adult has around £6,700 saved in their deposit fund, not nearly enough to contest with the current average house price.

Considering that the Halifax house price index values the average house at around £225,021, these comparatively meagre savings prove as inadequate right off the bat.

Hope on the horizon 

However, all is not lost. Don’t give up hope just yet. According to Peer 2 Peer Finance News,  many millennials are now investing their money by new and diverse means. Whilst two-thirds of UK adults see themselves as savers, the remainder identify as investors i.e those who look to acquire capital by investing in either liquid or illiquid assets. The Cambridg

The House Crowd IF ISA

e Centre for Alternative Finance calculates that around £10.6bn has been advanced through these transactions since 2011. (2017)

One illiquid asset that has gained much traction in recent years, (especially with younger generations) is property investment. Thanks to its massively democratised nature and potential for high returns, property investment has been able to present itself as a more obvious source of income, supplementing savings accounts and mortgage funds alike.

With the introduction of The House Crowd’s IF ISA, you can now invest £20,000/year in a tax-free wrapper and earn an annual interest rate of 7% over a 3-year period. Passive by its very nature, the Innovative Finance ISA takes all the hassle out of investing. With The House Crowd’s IF ISA , your money is automatically diversified and your funds are spread across a varied portfolio of peer to peer and development loans, effectively minimising your risk.
Offering investors two payments throughout the year (April & October), The House Crowd’s IF ISA provides investors with several advantages over traditional investments. With so many cash ISA’s offer minimal returns, IF ISAs present themselves as a much more obvious and viable alternative- especially to those looking to the future.

Please note that your investments can go down as well as up, Please associate yourself fully with risk warnings on our website.

A solid investment

Whilst the IF ISA might sound attractive, why choose to invest in property at all?

A comparatively solid and stable asset, property has proven to be far less volatile than stocks and shares, which require a much more thorough understanding. Unlike stocks and shares, property prices tend to rise and fall in unison making it much more predictable, and easier to navigate. Investing in property in the UK can be extremely rewarding- especially when one considers the timeless magnetism of property in the UK.

For example, let’s look at the current situation of supply and demand in the UK.  The Office for National Statistics estimates that there are 65.6 million currently living in the UK. By the year 2039 we can expect this number to rise to 74.3 million. With this increase in population comes a natural increase in the demand for residential housing. Supply and demand. Simple! Additionally, society’s growing detachment from the traditional ‘nuclear family’ means that it is now not uncommon for people to live alone and want their own residences.

Nationwide UK House Price v FTSE 100 (indexed)
The Nationwide Average UK House price compared to the FTSE 100 (indexed) from Q4 1999- Q4 2017

 

As illustrated by the graph on the left, the difference between the trajectory of  UK house prices and the valuation of shares over the last 18 years is vast. A comparison of the Nationwide valuation of UK House Prices and the FTSE 100 Shares indicates the overall stability and comparatively positive trajectory of property values next to other types of investment. Whilst property was still affected by the recession that hit the UK in 2008, the average UK House Price has still remained consistently on the rise. The whereas the more unpredictable stocks and shares have peaked and troughed

Needless to say, those looking to supplement their income or increase their current cash flow, alternative financing can be an extremely plausible solution. We’re here to make investing easy for our customers. For more information contact our member support team or register an account.