PropTech: The New Way To Invest in Property?

2018-01-02


With the possibility of house prices continuing to rise for the upcoming decades[1], and the rate of increase for UK average wages falling[2] from 2.3% to 2.2% in a year, it seems to be the trend that wage growth does not even come close to matching the growth of house prices. For those trying to take their first steps into property investing, it may seem like the odds are stacked against you.

For the average London resident who saves 10% of their salary, it would take 97 years to afford a London home[3]. Home ownership is at a 30 year low, and according to Generation Rent, the number of private renters will surpass mortgage holders within the next five years[4]. The asset class of owning your own home has certainly become more exclusive, but with stamp duty affecting repeat buyers[5] and new legislation cutting landlords’ tax relief[6], you could argue that having to save up for a deposit, handle a mortgage, perform repairs and manage tenants is not as alluring as it may have once been.

Hence the formation of PropTech, a simple amalgamation of the words Property and Technology. It has innovated the way we deal with all things property, from home automation to property development crowdfunding, which is what Homegrown focuses on. The only steps you have to take are filling in a simple online form and investing, and then all of the hassle is handled by the team at Homegrown and any parties affiliated with your chosen development. From as little as £500 you can invest in developments that are focused on building brand new homes, with a percentage dedicated to affordable housing. Not only will you be making an investment into something tangible, but it will be helping to build new homes in a housing a crisis[7], with 13.8% average annual projected returns. Our developments are converting abandoned warehouses and industrial buildings into brand new homes and commercial spaces.

With diversification, you could mitigate some of the market unpredictability and possibly reduce any losses[8]. Using the simple and transparent online platform, you can look at our previous projects, and make a decision based on the statistics provided. You could spread your capital across multiple projects as they emerge and diversify your property portfolio.

PropTech has emerged out of the newfound desire for a different way of investing in property, and has breathed new life into a somewhat archaic real estate system[9]. The one issue PropTech faces is the image of its target customer. Homegrown welcomes people from any age and background, but there does seem to be a stereotype that you have to be a younger, technology breathing consumer. Exclusivity is what is creating issues in the traditional real estate market and it is crucial that PropTech can assure the wider audience that they are all included.


Homegrown is an online crowdfunding platform that connects experienced small to medium sized developers with financing from everyday investors, allowing you to diversify your portfolio beyond buy-to-let and into the world of alternative finance and crowdfunding. Find out more information by signing up or simply email one of our friendly team members at info@homegrown.co.uk.


Sources:

  1. Telegraph / House Prices Stay High Forever
  2. Independent / UK Average Wage Growth Rate Falls
  3. Financial Times
  4. Generation Rent / Home Ownership At 30 Year Low
  5. BBC News
  6. This Is Money / Landlords Losing Tax Relief
  7. Guardian / Capital's Housing Crisis
  8. [Investopedia / Importance Of Diversification]
  9. Guardian / Estate Agents

Your capital is at risk if you invest in property. This includes illiquidity (the inability to sell assets quickly or without substantial loss in value), and the loss of invested capital if the wider property market or an individual property suffers a reduction in value. Investments on Homegrown are not covered by the Financial Services Compensation Scheme. Past performance and forecasts are not indicative of future performance. For more information see our full risk warning. Homegrown Group Limited is authorised and regulated by the Financial Conduct Authority (FRN: 694952). Investments through Homegrown are equity investments.
Future performance is not guaranteed and is based on projections only. Your capital is at risk if you invest in property. For more information see our full risk warning.