Property Investment Market Update for September 2010
Commentary
Many property investors are struggling in 2010. There are two reasons for this:-
1. Finding bargains is becoming increasingly difficult
2. Securing finance is incredibly hard work
Property Investing in Below Market Value Deals
The best time since the credit crunch to secure a bargain on property was Q4 2008. Since interest rates have hit rock bottom, there have been far less distressed sellers, and a lack of property stock in general. As a result, even though buyers have been relatively scarce, so has the number of properties for sale, and although property sales' volumes have fallen through the floor, prices have stabilised.
With the new Coalition government however, this could help cause more distressed sellers and 'spook' people into selling between September and December 2010 - hence it may well be a great time to look for a property bargain that has alluded you to date.
Securing Finance
Trying to find the money to back your finance deal though is much more difficult than finding a property bargain yourself. Unfortunately lenders who helped cause the credit crunch by a lack of due diligence are now starving the property investment market of funds. For one reason or another mortgage lenders don't treat amateur investors any differently to property investors that have proved themselves for the last 20 or more years.
So if you do want to find a property bargain, start to build or add to your property portfolio profits, it is essential to find out what financial backing you can get for what type of projects before you make any offers.
What Property Investment Deals work During a Recession?
Much of the media is filled one minute with horror stories about property investment and the next saying 'it's the best thing ever'.
Most experienced investors know though that any time is a good time to buy a property. If you buy while prices are falling, you just buy at a discount equivalent to how much further you think the market will fall. If the market is rising rapidly, you try to buy at a discount, but know that you are likely to benefit quickly from captial growth.
Property Investments to Consider during the Credit Crunch
When investing in property while prices are unstable, it's worth considering investments such as buy to let which can deliver either a break even income yield or a cashflow positive yield until capital starts to grow again. Other investments such as self build which gives the opportunity of building in around 30% capital growth are also worth thinking about.
Other investments that seems to be working well are farmland and if you are keen to buy and hold, some overseas investments.
Property Investment to Avoid during the Recession
While there are some property investments that are worth doing, there are others which are either illegal, potentially fraudalent and may well be difficult to make money from in a falling market. Property investments to beware of include:-
- 'No money down deals'
- Buying properties in poor economic areas if you are hoping for capital growth
- Buying options without checking what works are required on the property/ies
- Property investment clubs selling 'get rich quick' schemes
Headline Statistics
There are no real statistics that regularly track property investment, however below are links to some of the most useful stats on property investment.
The Council of Mortgage Lenders (CML) has released its second quarter BTL results report. Savills have issued their latest residential investment research report
Investment in student housing points the way to future private sector residential investment.
Other useful Resources:-
PROPERTY SECRETS ASSETZ SAVILLS KNIGHT FRANK GLOBAL PROPERTY GUIDE
LANDLORD MAGAZINE PROPERTY INVESTOR NEWSCOUNCIL of MORTGAGE LENDERS
Their statistics supply a wealth of useful data, however since 2009 they now charge an enormous fee of over £7,000 per year to access their data. Clearly the credit crunch is also affecting CML funds! If you are a journalist you may be able to contact their press office for statistics.
For more market commentary on a national or local level:-
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