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Is There Still A Property Market To Invest In

Sep 1, 2008
Investment property is a bit of an unsure market at the moment, given the threatened worldwide recession. The rich/poor divide is becoming ever wider with those that can afford investment property and those whose accommodation is subject to what others can afford. However, this situation, like every other recession the world has suffered, will eventually pass and if you can hang on to an investment property through the rough times, you are guaranteed of a decent income or, at the very least, a retirement home, later in life.

What is concerning most owners of investment property at the moment is the fact that if they make most of their income from a property that is rented out as a holiday home overseas, this income could dwindle. Rising fuel costs have brought about a hike in the costs of flights and more and more people are looking to holiday at home instead.

Surprisingly, it is the low budget airlines that have been seeing the harshest losses so far and this week saw the collapse of Zoom, one such airline company. Many holiday homes are established close to airports in order to provide quick, easy holiday places for people to get away to but with the loss of the cheaper airlines that cannot withstand a credit crunch, these holidays are no longer as affordable or as easy and this means that an investment property abroad may not be such a wise investment after all.

Normally, it is the passengers with the least money that will take advantage of cheap air travel and it is exactly these people that are favouring holidaying in their own country as opposed to travelling abroad at all. So, with less passengers and the rising cost of fuel, is it any wonder that budget airlines are fast disappearing. This will end up widening the rich/poor divide even further by ensuring that it is only the rich that can afford to travel overseas.

Investing in property is still a possibility if you have some spare cash. Admittedly, spare cash is a limited commodity these days but some good news is definitely needed these days and to that end, those who have had the foresight to carry out careful forward financial planning are in the best position to snap up repossessed property or homes advertised for a knock down price.

These homes will either serve as a future investment, for letting out to the ever increasing rental market or as a cheap main home or holiday home. At some point in the future the property market will pick up and these homes will then increase in value once again. The tricky part is seeing the hard times through without losing everything.

Mortgages are becoming increasing difficult to secure and a drop of seventy one per cent of mortgage approvals has been reported in the press compared to figures from last year. This can be quite frustrating given that there is a plethora of cheap properties currently available and it is thought that there will be many empty homes going to waste.

To combat some of the housing problems, the Government are taking steps to help people. Yes, you read that right - to help people. The plan is to buy up homes that are being repossessed in order to allow the family to stay in the home and rent it back from the council. This will be cheaper than their mortgage payments and also free up the council from the growing problem of housing homeless families.

If you factor into this the choice that council tenants have of buying their property once they have been in it for a length of time, this should, in effect, bring the market back round again at some time in the future so all is not lost.
About the Author
Property expert Catherine Harvey looks at how the current economic climate is affecting investment property purchases and the housing market in general.
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