Landlord Basics

Will The Property Market Repeat The Cycle?

As a nation we have always loved the idea of owning property. Whether it is taking our first step onto the property ladder or as a developer building up our property empire; property has always played a key role in the success of our economy.

Yet the question on many property investors lips is: will the property market repeat its traditional cycle of growth or are we about to enter a new era unlike no other? Property advisors are pretty undecided…

During the last 50 years, commercial property has increased in value by 4% a year, whilst residential property has increased by a staggering 177% in the last decade. However, unlike previous recoveries where property prices have continued to grow, property advisors feel that the recent rise in property values is set to be short-lived because lenders are continuing to remain cautious with their lending.

And it is easy to see why they are being so cautious…

Following the government’s implementation of new strict rules on lending, lenders are now having to act carefully to ensure that they don’t  let their balance sheets fall foul of swelling too much like they did before the last crash. As a consequence, property advisors believe that the recovery of the property market is going to be different from previous crashes, especially as this is the first time that the property market has had to recover from: several of its biggest banks falling to their knees; interest rates being slashed to 0.5% and £200bn being pumped into the economy.

So how is our recovery going to be different from the rest?

During a recent report by Savill’s they have divulged that:

• Property prices are going to rise by 40% over the next decade – which although good is still less than the 67% peak of 2000-2007, the 43% rise in the 1980s and the 49% increase in the 1970s
• Deposit sizes for first time buyers has risen from approximately 20% of a homeowners annual income (in 2000) to 100% today

Related posts:

1. How Will The Emergency Budget Influence The Property Market?
2. Property Market Flooded By Councils
3. Will A People’s Bank Help The Property Market?
4. UK Property Market Beats European Deficit
5. Property Market Surges

Tags: commercial property, first time buyers, property advisors, property investors, property ladder, property market, property prices

This entry was posted on Monday, August 9th, 2010 at 7:52 am and is filed under News, property market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.