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January 19 2008Current market predictions are varying widely but it seems that industry leaders such as Nationwide, Experian and Intermediary Mortgage Lenders Association are all predicting negative growth in 2008, with the latest report from Capital Economics assuming a 5 percent downturn. House prices in the UK could be falling as fast today as they did during the property crash of the early 1990s, according to the report.
According to the The Royal Institution of Chartered Surveyors (Rics) the number of estate agents reporting falling prices is now at its highest level since 1992, when Britain was in the midst of its worst-ever house price crash. Last months interest rate cut which was intended to ease the strain on mortgage borrowers, but didn’t have much effect. Rics spokesman Ian Perry warned: “The Bank of England may have to cut rates further if the market is to remain stable.”
I’m not too worried about a property crash
If these media headlines are to be believed I need to sell up my portfolio now before its too late. Or maybe its already too late!
I would be silly to sell up my assets that are continually generating passive income, month after month. As long as people will rent my houses at a price that still makes me a profit then I should be more then happy.
Demand for rented accomodation is higher than ever in one of the areas I invest in. One of my houses will become empty at the beginning of February, so I’ve placed an advert in the local paper. On the first day of the advert going in my phone rang 12 times with people wanting to view the house. I would say that is pretty high demand. So as long as people are willing to rent my houses and interest rates do not go up (not likely now) my cashflow and passive income is safe.
Even if house prices DID drop more than 5% it wouldn’t effect me as I’m not selling. But as a keen hunter for bargains knowing that the house prices are falling may tempt me to buy many more houses this year!
There are 7 comments
I don’t think property prices are in for a downturn, Well at no least where I invest in the UK. I just sold a flat for £150k 6 months after I bought it for £122k
With the credit crunch even the FTSE is down 5% in one day!
Anyway, the more the properties fall the better.
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Looks like your housing prediction was over optimistic. Some towns are down 10% already, with Feb sales prices even lower. Meanwhile flats in places like Leeds have lost over 40%.
a 10% reduction already? whilst i’ll admit the market has slowed down slightly i don’t think we are experiencing much of a price drop.
city centre apartments are just a disaster waiting to happen. it’ll be many years until they rise or even level out in value again.
Good post. I agree. As a real estate investor short term value fluctuations should not matter much. Cash flow matters. And over the long term appreciation of course matters, but over a year or two if you are investing for the long term doesn’t.
Prices can definitely get inflated and then go through a period of decline or years of no, or very slow growth. But cash flow is the only real short term concern (or concern that forces you to care about the fluctuation in valuations).
John I agree entirely. Property markets will always fluctuate and those of us who are in it long term won’t worry too much.
Infact the present climate could benefit us by getting rid of a lot of short term investors leaving us in a good positition when the upturn arrives.