It was once simple to sell or buy to make a profit. It was possible to purchase a home in the millennium , and have it earn money in several years, or in certain instances, in just the space of a couple of months. Many individuals (and mortgage lenders!) believe that house prices will rise. A few people (and mortgage lenders!) believed that house prices would rise for a long time and others predicted a bubble in the housing market but were unable to determine the timeframe for it.
The recession exploded, and it began in the United States and then hit the UK very hard. The recession was evident in the housing industry Taj residencia Islamabad with sales falling by 50%, and prices dropping by 20% in just a few months after a high in 2007. The usual increase in rental income as the house price drops is being shattered by the 5%-20 percent decrease in sales year-over-year. The tax rate has been increasing, as are arrears on rent owed by tenants.
We appear to be in a situation currently. There is no one who knows what the future will bring. It’s hard to imagine that a serious recession could occur within a short period of time. The talk of green shoots appearing in the housing market and in general economic activity is a common occurrence. The private sector has claimed that their orders are growing yet again, and the latest statistics show that unemployment is declining.
Are things beginning to improve? What about the huge amount of debt we owe as a whole nation, that is estimated at PS13,000 per individual? The credit crunch is affecting businesses however the public sector is still being squeezed. What impact will job cuts in the public sector as well as pay freezes (or reductions) impact our economy and the property market in the coming year?
What does this all mean for the property investor? What’s the best news? What’s the bad news? What’s the most troubling news? Are you able to earn quick-term gains from more property or is it only possible to earn the long-term profit through properties?
The positive news
Many investors who pulled their funds from the market in 2006 or prior to began to purchase massively since the end of October. The downturn caused an enormous increase in repossessions as well as an oversupply of properties. The buyers who bought in the first six months after the crash made money. The most popular property investment expression was “buy below the market value”. Investors who were nimble were buying properties for up to half of the worth.
The bad news is that it’s not good.
But the credit crunch meant these deals were available only to buyers with cash. Buy-to-let or commercial development finance was not easy to get and often impossible to obtain. The last couple of months, deals that are below market value have proved hard to finance and obtain financing due to the return of deposits of 25% requirements, increasing costs for financing and a drastic decrease in the supply of property in a variety of areas.
The six-month remortgage policy that prevents buyers from purchasing properties that are ‘below value’ and then refinancing them in order to obtain cash to purchase new properties creates financial problems. Although some say it’s possible, experts in the field believe that it is not possible in the event of mortgage fraud.
Do you think this is an appropriate time to invest if you have cash readily available?
There are currently two different schools of thinking. The one is that we are in a false condition of recovering. Interest rates have been artificially reduced. We haven’t witnessed the results of the government’s assistance in stopping repossessions. A certain school of thought suggests that the cost of property will continue to decline and remain low for a long time because of the effects of unemployment and the normal rate of interest.
A different school of thought suggests that, even though the supply and demand are both low, creating the current indications of “green shoots” however the chance of many homes returning to the market is very tiny. A lot of people believe that interest rates will not rise for a long time. The CEBR estimates that they will stay at 2% until 2014. According to their forecasts the prices of homes will remain steady and could even increase in areas that have an oversupply of homes like London and the South East.
Whatever scenario you believe could happen One thing is for certain: it’s impossible to determine the “bottom of the market”. It’s only when it’s recorded that you can be sure that it’s been achieved. The most recent statistics provided by David Sandeman, EI Group shows that the fourth quarter of 2008 was the lowest point in the market for repossessions, i.e. the time when repossessions were auctioned off through houses at their most expensive. It was almost one year back.
Investors who are smart can earn money in any market, and even poor ones. Although you may have missed some bargains in the last 12 months There are many areas and properties to look into. So long as you’re:
1. A thorough study. You thought about different strategies to earn money from your the property
3. You must accurately appraise the property that you’re purchasing
Research, Research, and More Research
I think that a small percentage of people conduct enough research prior to purchasing an investment property, especially in areas that aren’t well-known. If they don’t have the chance to tour a property prior to purchasing, they shouldn’t be investing.