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Archive for the ‘Property market’ Category

Property Appreciation

October 25, 2009

Before we discuss the benefits of property appreciation, we first have to define the concept of appreciation in terms of the property business. Appreciation is the positive effect of property investment in which the price or value of the property goes up as the years go by. The factors that cause the appreciation are supply and demand, inflation and capital improvements among others.

The first benefit of property appreciation is that the decision of renting versus buying a property is made easy. If you know that the property will soon rise in value in the next year or so, it will be more advantageous if you purchase it. Not only will you get your money back once you sell the property, you will also earn a sizeable profit by just waiting a couple of years or so.

Appreciation is not only a term for property value but also in personal value. If you currently have the money and you are deciding whether to buy a house or a luxury car, property appreciation can tilt the decision in favor of a property purchase. If you buy a car, after five years, the value of your car would have depreciated, meaning it will cost less than what you originally paid for it. However, if you buy a house, it is immediately considered as an appreciating asset. On the long term, properties will most likely appreciate than depreciate, and this will add value to your personal worth. Purchasing a property is sometimes the option exercised by successful investors to generate sizeable long term profits.

If property appreciation is high enough, and you buy and rent a property, you can actually buy a property at a minimal cost to you. If you buy a property on a mortgage and rent so that the rental covers the mortgages and property maintenance and taxes then you effectively end up owing a property without paying most of the cost. Given that the property market conditions are favorable, all you do is wait for the property value to appreciate to cash in on some healthy profit.

Property appreciation is out of the hands of a real estate investor. What he can control is his decision on what properties to buy and where. Make informed and smart decisions by researching the market and asking the opinion of the experts in the field.

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Time to Buy Property?

September 27, 2009

If you are new in the property investment sector, you will probably have read a lot of recent doom and gloom reports of the slowing property market that made many investors wary. In the recent months there was a slight increase in prices in certain areas and investors and house buyers are watching the property market eagerly to see which way the market is continuing to head.

The economic situation, and more specifically the banking situation, is definitely better than it was a year ago, but any signs of recovery seem fragile and a lot still needs to be done to build a solid foundation for the banking system and the world economy before we return to the good times of property investment. The buy to let mortgage lending from the banks is still very tight to give way to any significant movement in property prices and this has led to lower demand in property. There is less money for both residential and commercial mortgage products to allow any significant property buying activity that we witnessed during the peak periods of the property boom.

Now, this may be a cause for concern especially for house sellers but for property buyers and investors, it is a good thing because plunging property prices could only mean one thing, great deals for properties at below market value prices. According to RICS, a fall in property prices are mainly due to weak demand and not due to a surplus of properties. New buyer enquiries were falling and it seemed, many of them either could not afford to purchase properties at this time or they were just being extra careful due to the uncertain economic conditions, locally and internationally.

This does not mean there is plentiful supply of housing, new or otherwise, in the market. There wasn’t any glut at all. In fact, housing supply is still suffering a shortfall, but this very fact did not help the market because ultimately, the market depends more on the demand for housing. So for those investors

The property price falls, demand nose diving and less than buoyant market conditions could only mean one thing. Good news for investors! Yes, this is the time when investors could go right in and make a healthy profit amassing more below market value properties than you ever thought possible!

So if you are currently side lines watching the property market, now may not be a bad time to consider making a move into picking up a few bargains while the property market is down.

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Reading the property market

September 26, 2009

There are a few basic ways for new investors to study the property market conditions in any area without having to study endless number of surveys and statistics by housing experts. Of course, you could easily consult me for advice and tips but I am sure, most of you would prefer to do some background research yourselves every once in a while.

Let’s say you are interested in investing in a property at a particular area you have taken a fancy to. Perhaps you plan to live there or perhaps you just like the idea of adding one of the properties there to your portfolio. Whatever your reasons, it is important to first take note of the property market conditions of the area, regardless of the general property market conditions of the country.

The reason for this is simple. Property market conditions sometimes depend on the locality, the accessibility and the economy situation of the area. Take London for example. With the falls in residential property prices in UK and a gloomy outlook for the market this year the fall in London is not as severe as in other parts of the country. The property market in London still has a higher demand then that compared to other parts of the country despite the declining overall market conditions. For example,

Now lets get on to identifying the markers of whether the property market conditions of an area is thriving or dying. First, take a look at the developments in the area. Are there signs of a thriving area with plenty of new and old successful shops and a growing number of estate agencies? Are there large construction projects involving a mix of commercial and residential properties on the way? Is the area easily accessible with plenty of links via various public transportation? If the answer is yes to all these questions, then, it could safely be said that the area is definitely growing with an imminent increase in people moving there. You see, you don’t have to do in-depth research because the developers building the mega projects and the estate agencies have already done that before they set up base there. They are often quite good indicators, much like bees leading you to the honey.

What if the area is a derelict area but you feel that it has potential? What do you do to find out if it would be redeveloped and turned into a thriving area in future? Well, there are signs of a dying area being revived which can be spotted if you look carefully. It is almost the same as looking at a thriving area except that this area, you look for signs of growth. There could be some openings of new shops and businesses in the beginning. Then the huge chains come along such as Starbucks and McDonalds. Again, a sure sign, is the opening of new estate agencies all over the area. Check the local property websites and if there are signs of prices going up, then it is your chance to grab the opportunity before it is too late!

As for how to detect dying markets, it may not be as easy as looking for thriving markets. Sometimes, the property market conditions may seem slow on the outside but it does not necessarily mean that the market is dying. More obvious signs could be the lack of new developments such as construction of new buildings. Estate agencies are closing down instead of increasing. Also look at the demand for rentals, if the overall demand is low, then this could also be an indication of a dying market. Do remember that decrease in demand and a slide in prices could be due to several contributing factors such as higher interest rates, accessibility problems and most importantly, lower employment rates. Without enough supply of work, the economy of the area will tend to slide and this could affect the property market as more people move away to greener pastures and demand falls. These indicators should be good enough for investors to stay away unless there are signs that this area could soon be revived such as a future infrastructure project linking it closer to London or Edinburgh or something like that. Then it would be a good time to invest now and reap the rewards later.

I would like to end this by saying that these tips are merely general and broad term tips which may not apply to some market conditions with varying degrees of developments. As I have said, it is helpful to seek the advice of experts and professionals to be sure. After all, investment is about gaining long term financial success and not facing heartache from mistakes and badly made decisions.

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First time property buyers

April 27, 2009

With so much doom and gloom in the property market, what options do the first time property buyers have left? Although the property prices have slid, the tightening of mortgaging lending by lenders has meant that first time property buyers cannot make the most of the falling prices. The requirements of big deposits is not helping and the tight credit rating is squeezing masses of first time buyers out of the market.

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