House prices are rising. They have been for the last 6 months and no matter how much talking down by the press is done they have still been rising.
They were all claiming a W shaped recovery. A double dip. Now they are talking about an L shaped recovery which is basically a slow path upwards, a bit like Japan.
Just goes to show that us lot, being the property buying public, are a beast that cannot be tamed. If we want to buy we buy. We do not care about house price predictions.
A property buyer will ask themselves two vital questions when they view a property to live in:
- Do I like it?
- Can I afford it?
The first question is taste. This is personal opinion. If the buyer likes the property then the buyer moves on to question 2, can they afford it?
Well with rates fairly low and the mortgage costing less than the rent then it is really a no brainer. Why rent when you can own? So a property buyer will do whatever it takes to get a deposit so they can get on with their lives.
So where does this leave the investor. Well if you are an investor of high yielding low value properties then you are ok. Properties that are typical rental properties and usually let to the DSS are avoided by first time buyers. If anything they can be bought pretty cheap in times like this. They only get dragged up when the boom for the nicer properties takes hold.
I saw a repossession property in Grimsby for £20,000 on Rightmove yesterday. I put a bid in for £20,500 to find out it had gone. It was a 3 bedder and boarded up. It was well worth the chance. Even if it was a shell it could have been rebuilt for another £20k and rented out for £400 per month. That's a 12% yield.
So whether it is an L shaped recovery, W shaped recovery or even an S shaped recovery (work that one out!) it is always a good time to buy.
If you want help with adding to your portfolio request a call back.
Ajay
Posted on: 8th Nov 2009
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