My predictions for the next 12-18 months…
Wow, what interesting times we live in! Property Prices seem to be on an elaborate rollercoaster depending on the area that you live.
One day prices are rising, the next falling, i think the property investment market needs some stabilisation so investors can find their legs again!
Personally i think this may be right around the corner.
I believe that for once the government may have actually got the result that they wanted, even if they will achieve it in a way i doubt they could have expected!
What do i mean?
It’s quite simply a matter of demand and supply and it’s one which could impact us all so pay attention!
Around 12-15 months ago the vast amount of new build property developers stopped starting new developments and started land banking. No property developer would start a site that they thought would actually lose them money!
This was fine at the time, there were more than enough new build developments going to keep most property investors happy, in fact if we are honest there were probably too many!
It’s easy to say that the UK needs to build x amount of housing to keep up with demand, but if that housing is mostly luxury apartments in city centres, way out of the price range of joe bloggs then it does not really equate!
What we are now seeing is the end of many large property developers redundant stock, most sites are now finished and developers are just about to start building again.
This will dramatically impact on property investors and property investment companies, how? because for the next 12 months + we will see little to no new build developments being offered.
“What of all the off plan deals” i hear you say.
Well if you put your hand in the fire and it gets burnt, you don’t go back for a second go do you?
If developers start offering off plan opportunities that is exactly what they will be doing!
It is a lose lose situation for a developer.
- They offer the property off plan and the prices continue to rise – Result – they have lost out on potential profit.
- They offer property off plan and prices drop – Result- what seemed a smart bet turns into disaster as property investors decide not to complete as the promised 25% discount has been eradicated by price decreases!
Summary – Developers can’t win!
So we are faced with developer not offering discount on their property until they have completed the site and explored every other selling option!
This has to be at least 12 months from now for even the quickest builders!
So what would i do?
Buy now!! Were on the way to a mini price rise where property investment demand suddenly rockets past supply!
If you can get it right you can grab the last of the good discounts now and sell or remortgage in 12 months time when prices have risen.
A property chain reaction
Anyone remember the speculation that was around only a couple of months ago with regards to the property price increases? “Yes they are increasing, but there are no new homes coming on to the market which means it cannot be sustainable”.
Well the average estate agent had 64 properties on their books during the traditionally slow month of August, up from 59 in July and the first rise since April, said the National Association of Estate Agents.
Well of course they did. Those people that were looking during the first quarter of this year were also very likely to have homes of their own, ready to go up for sale once they had tested the buyer’s market.
Now I know what you’re going to say… “Yes but these are second, even third-time buyers. We need first-time buyers back in the market before we can see a prolonged recovery.” Ok how about this “The number of first-time buyers who were actively looking in the market also rose during August, with this group accounting for 36% of all agreed sales, up from 22% in July.” With the availability of credit easing with more and more mortgage products coming onto the market, there are definitely a lot more opportunities for first-time buyers to jump on that first rung of the ladder.
Then of course we have the property Investors who have been coming back to the market recently, giving further uplift in demand. Obviously investors have been seeing hard times but investing in this climate can be highly lucrative you just need to research your investment opportunities properly (or let us do itJ). One market which has actually benefited from the recession is the Student buy to let market, with uni applications rising dramatically throughout the recession. For more information on the student property market please click here.
However if you are not looking for investment opportunities in the UK then you need to be looking towards emerging markets such as the Cape Verde islands or Brazil. Or if you’re not looking for property in particular then you should be looking towards carbon offsets (set to be one of the biggest commodity markets in the world) or If you would like to be more defensive take a look at our farm and forestry funds or vineyard opportunity with guaranteed returns.
Things are definitely starting to look up!
