House prices have reportedly risen by a whopping 0.04% they have, in reality, fallen as the rate of inflation according to CPI figures is a massive 5.2%, that means anyone sitting thinking that they have equity in their house and they are okay – is sadly wrong.
Following an evening event, I was listening to the Bank of England explaining policy, I understand why the Bank of England has not changed the Base rate – to do so would not effectively stop inflation and in fact harm the economy.
Moving away from economics to some common sense – why is the housing market so flat? We have not stopped having children (okay I have but ….), people still get divorced and children finally leave home (well some do).
Despite reports and recommendations too numerous to mention, the housing market and house building market have stagnated and I believe it is all about confidence. We all know buying a house is a massive decision and financial commitment – would you take on that risk if you were unsure about your job or house prices?
If houses are not being built and people further up the chain are not moving out or downsizing then there is no room for movement – reducing demand and with that, the prices.
I have seen several articles that lay blame at property investors buying the lower market value properties (like I do) as being the reason why the market has stalled – Why? Because they think that by buying cheap houses people can’t get on the property ladder – not true!!
It’s about confidence.
While individuals that are buying with their hearts for their families and futures lack confidence in the market, professional property investors like myself buy property based on mathematical equations about the amount of cash invested and the projected return – does it make a good deal? If you think investing £25,000 and getting over £200 per month profit is a great return (9.6%) then you would want to invest too.
If your money is in the bank or sitting as equity in your house then you are losing money! No doubt about it – you are losing an opportunity to build a cashflowing portfolio for your family, for your future financial security.