Property Investment Review 2011
So, another year has passed and despite the media hype and Euro crisis, property investment has remained resilient.
The Nationwide property index up to November 2011 indicates that property prices have risen by 1.6% year on year. Most commentators were predicting zero growth so this slight upturn is encouraging, of course this was helped by strongLondonproperty prices but performance was still better than expected.
In 2011, property investors enjoyed increasing yields as rents continued to rise. The net cash flow that property investment can provide means that even if you believe that property will never increase in value, you should still invest.
Our property investments are below market value and you can expect to achieve net yields of over 7%. Compare that to what the banks are giving you and you will see that it makes property investment an attractive proposition.
The doom merchants
Beware of the doom merchants, in particular Capital Economics and Money Week. Capital Economics predicted a 10% fall in property prices for 2011, which helped them attract headlines but the reality was markedly different. Capital Economics also predicted falls of 10% in 2010. In that year they stayed almost neutral at 0.1% up. A predicted 20% fall in 2009 was also way off the mark. According to the Nationwide house price index, prices increased by 5.9% for that period. So it might be best to ignore the doom merchants moving in to 2012.
What to expect for property prices in 2012.
Yields will remain impressive as rental demand grows, 2012 will also continue to be a buying window for property investors as prices remain low compared to their previous dizzy highs. We expect property prices to remain close to neutral again before kicking on in 2013. So 2012 offers property investors the opportunity to buy at the bottom of the property cycle, what action will you take in 2012?
What do you think will happen to property prices in 2012? Leave your comments below.
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