A decade of UK property investment
Between 1996 and 2006, UK property was everyone and his kid sister’s investment of choice. Property investment was portrayed as guaranteed-quick-buck. All you had to do was follow a property TV program or go to a would be millionaire property seminar, then buy properties and somehow whatch them soar in value. Bingo, you joined in “the property game” and so did I!
Where are we now in 2011?
On thisismoney, in the beginning of August 2010, I remember reading: “Petrol price to hit £1.26p a litre by 2011″. Though I still wonder where did they get their forecast from (perhaps they have a secret little crystal ball), there forecast indeed was correct. This week I checked in my area and found out that the average litre of unleaded or diesel was around £1.30 a litre with the highest prices exceeding £1.40 a litre!
What’s oil got to do with UK property investment?
You may ask.
If you’re still a property investor or a landlord. if you’re considering become one because you’re brave enough to face risk and uncertainties, the question oil price has link with UK Property Investment and indeed elsewere. Since our blog is focused on the dynamic of property in the UK, so let’s just explore that relationship oil-property for a moment.
Everyone and his kid’s sister property investor do not always pay attention to macro economical trends, currencies and commodities. This take more thinking than watching a TV program or attending a seminar; plus, you could get it wrong. Should you stop thinking? Obviously not, so let’s try.
First, if oil prices continue to go up and reach record highs, this will hurt all of us who are not filthy rich. The UK economy and indeed the world economy depend on much on oil, which means there will be direct consequences on transport (for people) and (transported) food; two key elements of every household’s budget.
Second, with less money available in household’s budget, property actors (tenants, investors and landlords), all of us outside the filthy rich club will spend less toward maintaining, buying, investing in or renting properties. Therefore do not expect house prices to go up even if suddenly the banks decide to massively turn on the credit taps to boost the UK economy. There won’t simply be enough cash in circulation to chase up the services that properties fullfil so not high house price inflation and actually other factors such as interest rates could even cause property prices dive deeper than 20% from what they are now. So sad?
How far up for oil – how far down for property?
Our opinion is that crude oil may well exceed $200 barrel in the next 12 months if not before. But unless you are investing in oil, you really want to know how far property prices may go down. Some say another %20, other another 40% and the optimistic even believe that we’ve reached the buttom. That’s all too confusing I agree.
I would like to say: “it doesn’t matter how far down or up property prices go”as long as you can sell it in pieces every month…
UK Property Lease Options Investing is the adequate cash flow investing strategy
Yes, we are bullish on moving from property capital investing to property cash flow investing. In time of recession, cash flow is even more king. If you can maintain a positve cash flow or enhance your position irrespective of the market price trend then who cares how far up, down or sideways?
Francis Emery
