Toward the end of 2007 UK property prices had reached their peak and the two groups of buyers that stimulate the market (first time buyers and property investors) had stopped buying due to the prices being too high. This lack of demand caused UK property prices to fall to the level they are at today. No one really knows if the UK property market has now bottomed out or indeed if there are further price falls to come, but judging by our experience last weekend I believe we are starting to see the green shoot of recovery…..So what was this experience……
Last weekend saw the return of the Property Investor Show at ExCel in London. I was not sure what to expect but I have to admit I was blown away by the reaction! This was the first large Property Investor Show since September 2008.
Understandably, with house prices falling, unemployment rising, and all the doom and gloom peddled in the national press, the average person in the UK has not been that interested in property investing over the last 18 months. In reality, the UK falling house prices have created a buyers market and the serious investors have been snapping up incredible bargains whilst “the sale has been on”.
However, over the last few months we have seen a noticeable increase in the level of interest in property investing. This was definitely our experience at the Property Investor Show last weekend. I have been speaking and exhibiting at these shows since 2004 and I can honestly say we have never received as many enquires as we did at this particular show. All of the 5 seminars I held were standing room only and we have had a lot of interest in our monthly network meetings currently in 8 cities around the UK, our one day property seminars and of course my Property Mastermind Programme.
There were less people at this show than in previous years but the quality of the investors was much higher than previously.
The feeling amongst most investors I spoke to at the Property Investor Show is that the market has bottomed out and there is a genuine feeling that prices are on the rise. There were still two major concerns and they were:
1) The availability of mortgages (which I agree may be a limiting factor on the recovery of the market).
2) The high probability of interest rate rises in the future.
Whilst these are both genuine concerns let’s considered each of them in turn. First of all, banks only make money when the lend money so as the UK property market starts to recover and the banks gain confidence they will have to make lending easier and more available if they are going to survive.
Secondly, interest rates are relatively very low at the moment but as the UK economy recovers I am sure the Bank of England will increase interest rates to control inflation. The view of most finance professionals is that interest rates will probably stay where they are for the next 2 years or so before they start to rise. It is important that as investors we do not spend all the extra cash flow we are getting at the moment. Also fixing interest rates in the next 18 months or so before they start to rise would be another way to protect yourself against potential interest rate rises.
It is worth remembering that inflation is actually a good thing for property investors as it means that rents and property prices all increase whilst in real terms the value of mortgage debt decreases.
We shall have to wait and see what happens but I believe we have a unique opportunity over the next 12 months to make the most of the current market conditions before everyone jumps back into the property market.
Founder, property investors network