Welcome to this 2009 UK property market predictions page. This page will give predictions on what we think is going to be happening in 2009 as well as information on how to be successful as a property investor in the future. The information on this page is geared towards UK Property investors.
Forget about capital growth for now. Rest assured that if you are in this for the long term that in the years to come (probably five years plus…) you should be making massive gains again. This is the cycle and this is how it works, so don’t try to force it, just understand it and learn how to invest with it not force your way against it trying to squeeze out capital growth from properties that simply don’t have any at the moment.
You should be picking up bargains at significantly below market value and for much less than you could pick them up for just a few short months ago, so you are locking in equity and locking in more capital growth potential for yourself.
So focus on getting deals as much BMV as you can and then don’t worry about capital growth after that, that is something to think about again in a few years time. If you try to force capital growth now, then you might be making your life more difficult than you need to when you should be more focused on yield.
Who is Being Successful Right Now
Investors that historically have stuck to a buying strategy that is strong on yield and cash flow should be doing well right now. However, they would need to have been wise with any equity releases they have done over the last few years. The ones that are flying are ones that have not over stretched themselves and have cash or lots of equity to play with and have focused on the fundamentals of buying positive monthly cash flowing properties.
Other investors that are doing well, are ones that have been able to adjust their strategy. When these investors noticed that the mortgage market was getting difficult they learnt other skills like how to do rent to own deals or they have successfully adapted and done joint ventures to raise the capital to buy properties.
Where Did it Go Wrong For Many Investors
In the last few years one of the major problems I have highlighted time and time again is investors that where relying on price rises to make their money. There have been a number of investment companies that have sprung up with claims of easy money from property and that all you have to do is buy it at their “discounted rate” and then sit back and release equity in a few months time and become rich this way over time.
Some so called experts even had a system where they preached a plan of releasing equity every few years and how this would replaces your day job income and allow you to escape the rat race. This way of thinking has always been erroneous.
While these new comers where preaching this, the seasoned veterans where still saying the old mantra of buy cash flow positive properties below market value. Yes, releasing equity is part of most property investment strategies but equity should not be released just so that you can live a luxury lifestyle.
There should be a clear plan and ideally any equity release should be put into purchasing more property or into your property business in some other way and you should live off your monthly cash flow.
This thought is radical to some, because they want money and they want it now and if they can get their hands on £40,000 in equity release, tax free, then why shouldn’t they spend it all because next year they will be able to get their hands on the same amount, through another property in their portfolio.
This type of thinking worked for a few years and because it worked, in the sense that these individuals were making money, these people refused to listen to sense. It is only when the credit crunch hit and they couldn’t get their hands on any more money and their portfolio was in serious negative equity, that things began to sink in for some of them.
As I have preached for some time. If you want a robust portfolio that is going to whether any storms then you must buy below market value, cash flowing properties in the right areas. Then when you release equity in your portfolio you must do so wisely and make sure that the lion’s share is used to reinvest.
Do not spend all this money on life’s little luxuries. Instead buy more cash flowing properties that will then give you enough monthly income to buy these luxuries while building up equity themselves. I am also a big advocate of rainy day money and think you should put a portion of any equity release money away in a rainy day fund.
One thing that many people seem to be forgetting is that we still have a major issue in this country in that historically there has been an undersupply of property to the market. This is exactly why the government has pushed so hard in recent years to have more properties built. We simply are not building enough to deal with the demand as it stands and the expected demand for the future.
There are efforts been made to ease the burden by using such measures as bringing more empty homes into circulations, but the truth is the efforts aren’t radical enough to make any sort of dent in the problems we are currently seeing.
The house building business has been hit hard by the credit crunch and in many parts of the country building work has ground to a halt. In some places developments have been left uncompleted.
What does this all mean? Well it means that if the UK was struggling to meet the housing demand before the credit crunch hit, then now we have been set back even further.
In some areas things have been set back considerably further to the point where it will take years to get back to the schedule and speed of house building that was reached before the credit crunch and when you bear in mind that even that schedule was woefully inadequate for the speed at which we needed to be building properties, then you can see that a big problem is brewing in a few years time.
The good news from a property investor’s point of view is that when this economic downturn turns around and the economy gets stronger again, at some point everyone is going to realise that the housing shortage problem has got worse. So for the property investor who has been astute in these times, then things should only improve for them as the shortage of property becomes more acute and the demand for property increases.
At this time there will also probably be an increase in social housing organizations and the government wanting to use private landlords. You have to keep in mind that some of this is coming into effect already, since the amount of redundancies and repossessions have skyrocketed in the last year and the burden on social housing has escalated.
When you understand that we were already in a situation where social housing was not able to cope, you begin to comprehend that there is going to be desperate times a head for them.
The facts behind UK Property Market Predictions for 2009
The bottom line is that you should not get hung up on predictions. The truth is that nobody really knows what is going to happen. I for one get it wrong sometimes. At the beginning of last year I didn’t think that things were going to escalate and get as bad as they have done in the economy. But do you know what? I don’t lose sleep over it and neither should you, as long as you focus on the fundamentals of buying significantly below market value, cash flowing properties and as long as you don’t gear your properties incorrectly and risk being in negative equity or in a high risk situation.
So, turn off the news and any negativity and focus on the fundamentals, UK property market predictions for 2009 are only useful as a reference to give you an idea of what is going to happen. If you don’t want to leave things to chance and guess work (all be it educated guess work) then focus on the fundamentals.**Nothing on this website should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional. In addition, because real estate laws change all the time and differ from state to state, and even city to city in the same state, everything in these pages should be considered general marketing advice and ideas. Please see link to full Disclaimer at the bottom of this page.