Property or banks, which is better - Harry Hill would know

Where do you invest your money for any decent secure return now?

03rd December 2009 published by Website Administrator

If I only all had a crystal ball" It is saying I hear so often from many people. Property prices go up and go down, like a rollercoaster and seem to follow a ten year cycle. We now seem to be approaching the bottom of this cycle much earlier then we all thought based on what we in at the frontline are seeing now. We are living in unprecedented times, banks being bailed out, major high street business disappearing and the lowest interest rates ever.

In this industry we have seen 18 months of continued price falls and there has to come a point where circumstances point to a change of activity, interest rates is it. House prices are now on a par with 2004/5, an average fall of £50,000, but interest rates are 0.5%!. This is great news if you are a borrower on a tracker mortgage that follows the bank base rate, but horrendous if you are a saver. Where do you invest your money for any decent secure return now? There are no returns or confidence in the banks, shares are falling and the mention of a Mr Madoff or a Mr Stanford means that the sales of safes will continue to rise, up 300% this year. So property is where people are turning to again.

We are finding that buyers are looking with renewed confidence, they all want a better return and property is offering this, as long as it is for the long term and not for a short term gain. Sellers who were lucky enough to sell up in the peak of 2007 and went into rented with the interest from their savings paying the rent were all waiting for the market to bottom out and then buying bargains as cash buyers. Now these renters are re- entering the property market much earlier than they would have liked to as they are having to use their own money and not the interest to pay the rent and therefore are now looking to buy rather than waste money on rent. Also the people who are lucky enough to have large sums of money are withdrawing their money from the banks and are buying houses for the long term. For example £250,000 in a bank paying 1% interest equates to £2500 per annum. A 4 bed house bought for £250,000 now, if let for 52 consecutive weeks will return @ £16,500. (there will be fees to take off this figure).A huge difference and even if prices fall a little further it will still equate to a very good long term investment. Also the more buyers out there buying will mean we will hit the bottom of the market much sooner. The number of cash buyers looking confirms this, up 500% from the end of last year.

My advice if you are lucky enough to be able to buy a home whether it be your first or ninth purchase, is it to do it soon. The more people who do this and then tell other people to do the same will mean prices may go up again soon. These extremely low interest rates will mean there will be more people buying and there is not a huge number of properties available at present. Simply economics, supply and demand. Demand this time is to buy and not the other way round. So if you want to buy or sell a property locally please do call into Wheelers, we know we can help, it is what we do! Hanover has so much to offer everyone, it is the real Brighton.

Best wishes

Joe Wheeler