Property prices (and more importantly values) tend to increase over the long term due to a combination of economic, demographic, and social factors. Here are some key reasons:

Inflation. Over time, inflation erodes the purchasing power of money, making money less valuable and leading to a general increase in prices across the economy. This is why leaving money in bank accounts can be a really bad idea. Property is a tangible asset with intrinsic value and so is inflation resistant.

Population Growth. An increasing population, as well as net immigration, increases the demand for housing and commercial spaces. As more people need places to live and work, the demand for property increases, pushing prices up. Urbanisation trends also contribute to this demand, as more people move to cities in search of better opportunities, further driving up urban property values.

Limited Land Supply. Land is a finite resource, and desirable locations, especially in urban centres, have limited availability. As demand for these locations increases and the supply remains relatively fixed, property values rise. Additionally, if new regulations come in that restrict the development of new properties, this further limits supply and raises prices. What most people forget is that it’s the land underneath a property that usually determines most of it’s value. If you built 2 identical 3-bed semi-detached houses with the same build team and materials – one in the North of England and one in London – the one in London would be far more expensive. It’s not the building itself, it’s the land that it sits on.

Economic Growth. As economies grow, incomes generally rise, leading to greater purchasing power. When people have more money to spend, they spend more on property – as people generally buy what they can afford – not less. This creates another driver of property prices. Economic prosperity also attracts businesses, leading to increased demand for commercial properties, which further boosts the overall property market.

Infrastructure Improvements and Developments. Over time, infrastructure developments such as new roads, schools, public services and particularly transport hubs enhance the attractiveness and functionality of an area, leading to higher property values. Generally anything that reduces the time (rather than distance) for people to get to an economic hub will increase the property prices in that area. As communities develop and amenities improve, the desirability of properties in those areas increases, supporting long-term value growth.

These factors combine to create a trend of rising property values, making property a reliable long-term investment.

Married2Property are a family-run property company that aims to create social good through property.

These articles are written by Darren de Wal based on his 12 years of experience as an active Property Investor, and 16 years getting to a senior leadership position as an Officer in the Royal Air Force. They are for the benefit of those with a general interest in Property, as well as those wishing to start out investing themselves.