house prices to fall 55 per cent, so they say

These were the headlines and boy I hope they are right!

If property prices were to fall by say 50% then that means everything you see now for sale could be bought for half price.

A £50,000 property could be bought for £25,000. This means if it yielded 10% it will now yield 20%.

If we look at borrowing rates predicted over the next 2 years then we are looking at sub 5% all the way.

So expect to make 15% on everything you buy IF these experts are right. So if you invest £1m you can expect to earn £150,000 per year. And to top it off you can do this with very little money in, roughly £50,000.

So house price fall predictions are great as income goes through the roof.

House price rise predictions are great as capital goes through the roof.

Either way the property investor wins.

If I be honest I know which I prefer. I prefer income. Capital is all well and good as you can use it as security to raise finance however income is great as you can spend it!

Do I think property prices will drop by 55%? I hope so! However seems very unlikely as us investors provide the cushion to the crash and I do not expect to see properties around me yielding 20%. 10% maybe but not 20%.

Also the biggest problem with all these stats that get reported is that the population of the sample i.e. the physical number of data items being used to calculate these stats have shrunk massively during this credit crunch.

Nation house price stats have little relevance if there are very few transactions making up the stat. You may see house prices falling in the stat but when you go to Rightmove you do not see the properties! If you do, you ring it up and it has gone (probably to an investor).

I hope you can appreciate that no matter which way property prices go it is ALL good for the investor.

Roll on 2009.

Ajay

PS need help? Contact us.

Posted on: 12th Mar 2009

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	Home Services Property News Free Resources Partners Contact Page you're viewing > Home Page > Property News > Ajay's Blog > house prices to fall 55 per cent, so they say These were the headlines and boy I hope they are right! If property prices were to fall by say 50% then that means everything you see now for sale could be bought for half price. A £50,000 property could be bought for £25,000. This means if it yielded 10% it will now yield 20%. If we look at borrowing rates predicted over the next 2 years then we are looking at sub 5% all the way. So expect to make 15% on everything you buy IF these experts are right. So if you invest £1m you can expect to earn £150,000 per year. And to top it off you can do this with very little money in, roughly £50,000. So house price fall predictions are great as income goes through the roof. House price rise predictions are great as capital goes through the roof. Either way the property investor wins. If I be honest I know which I prefer. I prefer income. Capital is all well and good as you can use it as security to raise finance however income is great as you can spend it! Do I think property prices will drop by 55%? I hope so! However seems very unlikely as us investors provide the cushion to the crash and I do not expect to see properties around me yielding 20%. 10% maybe but not 20%. Also the biggest problem with all these stats that get reported is that the population of the sample i.e. the physical number of data items being used to calculate these stats have shrunk massively during this credit crunch. Nation house price stats have little relevance if there are very few transactions making up the stat. You may see house prices falling in the stat but when you go to Rightmove you do not see the properties! If you do, you ring it up and it has gone (probably to an investor). I hope you can appreciate that no matter which way property prices go it is ALL good for the investor. Roll on 2009. Ajay PS need help? Contact us. Posted on: 12th Mar 2009 Bookmark: del.icio.us digg Furl Facebook Reddit Yahoo Spurl Smarking Simpy Stumbleupon Tell a friend Your name Friends email 2008 2009 January (16) February (7) March (9) FT reports on buy to let non-Rightmove estate agents and sub 25k propertie a nice deal came to me via text my month end reporting is in house prices to fall 55 per cent, so they say Some of my pages are getting viewed a lot new class divides are forming why are there so many grammatical errors bridge and remortgage is back April (4) May (4) June (3) July (8) August (7) September (9) October (8) November (3) December (4) 2010

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