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articles > Manage the Information and Influences you Have
Article> Manage the Information and Influences you Have

Article kindly supplied by Alan Forsyth

Property Investment Tips
53 Crusader House, Thurland Street,
Nottingham, NG1 3BT

What do I mean by this?

Especially in a market downturn the media will really make a big thing out of any negative information without often fully understanding it or analysing it - as long as it gives them a powerful headline!

A recent example is....
The media have generated headlines with the latest news from Nationwide with Sky News amongst others reporting that property prices have fallen for the first time in five months to signal a downturn in the UK housing market.
The mortgage lender quoted saying "the average house price fell 0.3% in November taking the annual rate of growth to its weakest level this quarter at just 0.4%." Their chief economist Martin Gahbauer said "There are early signs that the flow of new property onto the market may be slowing down again as potential sellers observe the recent weakness in prices and decide against marketing their properties."

Some people are calling this "lazy journalism" as prices always fall in the run up to Christmas, others looking at the bigger picture seeing a rise this quarter as opposed to a small seasonal fall.

With current borrowing rates so low, many people who were stretched significantly are now are in a far better cashflow situation due to mortgage rates dropping - or as Lord Young said, they "have never had it so good"! The most important thing here however is that as soon as credit improves - not back to what it was at in 2007, but to a more sensible level than now, the average price of the transactions will rise so in theory the headlines will say property values are rising...! The values will not necessarily be rising, there will just be far more people looking to buy and not the level of discounts that can be had now. So rather than being a negative headline, I actually take the headlines just now as very positive. Even with a lack of credit and all the negative headlines, and most sellers being forced to take very low offers - the overall transaction price is only 16% less than the peak - so the property market, which as a whole was overvalued by around 10% anyway has seen nothing like the levels of drops expected and is in a far stronger position to bounce back quickly as soon as credit improves.

I have written previously that the affordable level for UK property prices based on current salaries was around £150,000 but I still prefer markets at under £90,000. I think it will be good for the economy going forward if we get to around that.

It always worries me how many people are influenced by sensationalised journalism for their financial information! With any property market walking the streets, speaking to locals, getting a feel for local supply and demand and rental figures will make the difference to you and how well your property investments perform. Anyone relying on the Daily Mail for their financial news and property advice is less likely to do well and more likely to follow the herd mentality which sadly will never give strong results.

Sure, read the headlines and the stories, but take pride in the fact you understand the numbers, and your market, and what makes a good investment, and what doesn't. Buy when others aren't and negotiate the kind of discounts which we are seeing just now, which will give significant financial security within 3-4 years time. There is good immediate news for landlords as rents have risen as much as 10% on average in certain areas since January with the rise expected to continue in 2011 as a result of the difficulty in securing lending to buy and a general lack of saleable stock on the market - we are seeing rental yields as high as ever - if you have funds giving you limited returns currently then buying 9% plus yielding properties can give you a far higher ROI.

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email us at or call us on 0115 9853969.

Regards Alan
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