Reading the property market

September 26, 2009 in Property market by Kez

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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