Where should you invest in a pandemic – Streaming Sites or the Property Market?

Where should you invest in a pandemic – Streaming Sites or the Property Market?

Film board next to investment graph

There are few people who haven’t thought about investing in property in the UK.

We’ve all heard stories of parents who managed to get a 300% return on investment when selling their house 25 years later, and that can’t help but spark envy.

But in 2020, is it as prudent an investment as it has always appeared to be?

As financial markets tumble and economies grind to a slow crawl, investors throw up their hands in alarm. What is going to happen to their current investments? Will the markets ever return to their pre-coronavirus days? Are their planned investments now a terrible idea?

It’s not all doom and gloom, however. Many business models have thrived in our new world of Zoom meetings, grocery deliveries and sub-par home office setups. One of these is streaming sites, which have exploded in popularity globally as lockdowns sent us scurrying back into our homes.

Let’s take a look at how the property market holds up against streaming sites as we adjust to a new way of life.

Property markets during a recession

Although seemingly stable, the UK property market has seen its ups and downs. When looking at how property reacts to a recession, it’s important to note that it can take just days for the market to crash. However, it usually takes years for it to recover. Here are some examples:

Early 1980s

House price growth fell by 12%, and it took five years for prices to reach the same peak again

Early 1990s

The recession of 1991/92 was not a good time for the property market. House prices fell by 30% and it took them over 10 years to claw their way back up to pre-recession prices.

2008 Financial Crisis

The most famous financial crisis - until now - also slashed house prices by 30%, and they never returned to the heady days of the early 2000s

How has the coronavirus affected the property market in 2020?

The UK Office for Budget Responsibility’s (OBR’s) coronavirus crisis centre anticipates a drop in house prices due to the pandemic, but finds it difficult to ascertain by how much.

They’ve set out three different forecast scenarios; the best case scenario would have house prices fall by just 2% this year. However, the worst case forecast suggests a 22% fall in real house prices observed by Q3 2021, with prices only rising to hit 90% of the trend previously forecasted for the property market. That would be disastrous for a property investor.

The OBR’s forecasts are all dependent on various factors, such as unemployment, inflation-adjusted wages and the cost of borrowing. All of these factors are currently in flux due to the pandemic, so although house prices have not yet fallen in the UK, it seems unlikely that this situation will remain stable. And if house prices do fall, there is no way to accurately predict how long it will take for their value to increase again.

How has coronavirus affected the streaming market?

Streaming sites across the world saw a huge uptick in subscriptions and use from the start of the pandemic. This was so pronounced that streaming giant Netflix had to reduce their picture quality temporarily to allow the existing internet infrastructure to cope with rocketing demand.

From a small company that sent you DVDs through the post to one of the world’s best known streaming sites, Netflix has been one of the pandemic’s most obvious success stories. In the first quarter of 2020 they accrued 16 million new subscribers worldwide, and in the UK alone we have increased spending on streaming by over £100 million a month during lockdown – with 76% of that going to Netflix.

But after the pandemic, surely we’ll go back to previous streaming habits? Not necessarily. First of all, there is no real “end” in sight for the current situation we are in, and it is likely that it will have multiple long-term consequences even when it ends. According to a Hoxton Mix study, 43% of business owners believe an office is now an unnecessary expense, and over half of Brits say they’ve seen an increase in work-life balance since the pandemic hit. Those who keep working from home will have no commutes and therefore more free time to spend on streaming sites.

A GrabYo report highlighted that 80% of UK streaming consumers who have bought extra streaming services during lockdown plan to keep them all moving forward, regardless of lockdown measures. This shows how our entertainment habits have changed, and, after six months to a year of increased streaming, that habit will be hard to break.

Streaming services

Which is the best investment?

We understand that 2020 has been a year of surprises, and most of them bad ones. A craving for normality may have you running back to well-known investment opportunities like the property market, but it might not be the best choice.

Even though we don’t like it, it’s likely that the coronavirus crisis will have lasting consequences, not only on the financial market, but also on society. The way we entertain ourselves, the way we communicate and the way we work have all drastically changed – and many don’t want to go back.

Streaming services have shown their value to people all over the world, and we have developed the habit of paying for and consuming streaming services on a regular basis. Streaming services saw a gap in the market and muscled their way in – and they’re not going anywhere soon.

The housing market, on the other hand, is in a state of flux. Not only do we not know how much the property market will fall by, or how long it will take to recover, people’s housing preferences are changing. As more turn to remote working, many will start to value space and proximity to the countryside rather than compromising on expensive inner-city flats in a bid to reduce their commute.

Uncertainty in investments is something to be avoided or mitigated as much as possible. The current unpredictability of the property market makes it a far less attractive investment opportunity than it has been in recent years

What we know about the film industry

At Films4U, we have decades of experience in the film investment industry, and we have seen first-hand how  coronavirus has kickstarted the growth of streaming sites. With direct distribution rights to streaming giants such as Netflix and Amazon Prime, we are in a great position to help you make prudent investments in the film and streaming industry.

With stringent film selection processes and guaranteed distribution, we can offer you a 60% return on investment in just three years – something the property market just can’t do. We’ll talk you through possible tax-relief opportunities like EIS and show you how films and streaming are a great place to put your money – pandemic or not!

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