What makes residential property a good investment?

Hi All,

I thought it worth giving a brief update on what’s happening in the world of property. It’s an interesting picture!

While the world around is going through turbulent times, with high stock market volatility, the property Investment market has grown on several fronts.

1. Property prices rose by 0.8% in October, compared to October 2010, according to Nationwide 
2. The number of mortgages written in October rose to a three year high, helped by a strong growth in the mortgage products available. 

In fact it’s not unusual. History shows that residential property has very low volatility. When I look back at the major events of the past 15 years, (such as the 1991 recession, 9/11, the dot com bubble), while the stock markets invariably crashed, property either rose, or worst case went flat for a period. The attached graph shows the big picture.

The big impact was when mortgage lending was pulled back in 2008. The market went back by around 18%, and then rebounded by around half that figure. It’s been flat for the past 18 months, but now seems to be rising again.

But let’s not forget it’s a buyers market. On the ground we are finding several things.

1. We can drive a bargain. House sellers in need to sell quickly are more likely to accept a lower price, because of the Euro zone headlines. 
2. Yields are at a record high. Even in Prime areas we are able to get 7% - 9% yields (and 100% occupancy). 
3. Smart investors can smell a bargain. In November so far enquiries and purchases are up at record levels. 

I hope this helps paint a useful picture of what’s going on. It’s certainly a good time to cherry pick a bargain. If we can help, we’d be delighted to do so. The headlines all indicate investors becoming more active. The press has even been highlighting property as a safe haven – with high returns.

Visit our website for further information about us.

Kind Regards,

Peter Grant
CEO

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