Inflation is on the rise: why property remains a solid investment hedge

Inflation is making a comeback, with financial experts warning that global economic and political developments are setting the stage for rising prices.

Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory and asset management firms, has highlighted the urgent need for investors to take action and protect their wealth from inflation’s eroding effects.

What’s driving inflation?

Green attributes the resurgence of inflation to several factors:

  • Trump’s return to power in the US: His infrastructure-heavy spending agenda and “America First” trade policies, including tariffs on imports, are expected to inject significant capital into the economy and drive up prices.
  • UK Labour government’s public spending plans: Increased spending on housing, green energy, and public services may stimulate growth but also risks inflating prices, especially if productivity gains fail to keep pace.
  • Middle Eastern tensions: Ongoing geopolitical instability could impact global energy markets, raising transportation, manufacturing, and utility costs.

“These developments mean inflation isn’t a hypothetical threat—it’s an imminent reality,” Green warns.

The dangers of holding cash

Inflation erodes the real value of cash holdings, making them a risky choice for investors seeking to preserve wealth.

“Cash, while perceived as safe, offers no protection against inflation,” Green notes. “In this landscape, holding cash is like holding sand that slips through your fingers.”

Property: a time-tested inflation hedge

For investors seeking refuge from inflation, property remains a standout choice.

  • Real estate appreciates: Property values often rise alongside or even outpace inflation, offering protection against purchasing power erosion.
  • Rental income benefits: As prices rise, rental yields tend to increase, providing an inflation-linked revenue stream.
  • Government spending alignment: Labour’s focus on housing and green energy could boost property markets, particularly for energy-efficient homes that meet upcoming EPC regulations.

Other inflation-proof assets

Green also advises diversifying into:

  • Equities: Infrastructure, energy, and green tech sectors are expected to thrive under US and UK policy agendas.
  • Inflation-linked bonds: These provide direct protection against rising prices.
  • Commodities: Tangible assets like gold often perform well in inflationary environments.

Act now to safeguard wealth

Green concludes with a stark warning: “Sitting on cash in an inflationary environment is a losing game. Investors must pivot to assets that offer a hedge against rising prices. Those who wait risk being left behind.”

For savvy investors, now is the time to consider inflation-resistant strategies, with property remaining a cornerstone of any resilient portfolio.