This is very interesting: http://www.savills.co.uk/research_articles/141274/178600-0 - a comparison of the investment returns of property versus art and one or two other less familiar 'investment assets'.
Prime central London comes out on top followed by classic cars of all things and then other property-related assets like farmland and UK houses.
It is also what is not said that is as important to me however.
First - these growth rates are based on capital values only and ignore income derived from the assets - income from a classic car...I think not? According to another report on BTL returns by This is Money, the average total return from BTL over the past 18 years was 9.7% per year compounded...over the equivalent 25-year period that we are looking at here that would result in a 912% increase on the invested funds if invested into UK rental property.
Second - the power of leverage is not factored in...ever tried to borrow money secured against art? OK, theoretically it is possible but there is no established buy-to-let mortgage market equivalent for sure. Similarly, applying the results from the BTL research mentioned above, if we add leveraging to our property investment returns with a 75% loan-to-value mortgage then our returns over the same 18-year period would be 16.3% per year compounded...over the equivalent 25 year term that would result in a 4260% increase on the invested funds if invested into UK property.
Both of these higher investment returns assume that all income is reinvested over the period and the same level of return over 25 years as the 18 in the This is Money research period.
There is something missing from this analysis to be fair - maintenance, repairs and updates. As with maintaining a classic car, so too does a property need maintaining...I should know having had my second boiler failure in a month reported to me this morning...ouch! So, allow for these costs (oh and void periods!) in the overall returns calculations also.
Now, I am not saying that we should all go and invest the life savings into a highly-leveraged investment property and just wait for these massive returns to come rolling in quietly over time as that would be unrealistic...but if we only did 25% as well as the historical figures show us then maybe we would be quite happy with that?
Sources: www.savills.co.uk 18th September 2014 & www.thisismoney.co.uk 28th April 2014