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Episode 58: Does property value really double every ten years?

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You’ll have heard people say that property doubles in price every 10 years - but is it true? This week we dug into the data to get to a real answer, and explored what it means for us as investors.

 

We covered:

  • The different data sources, and the peculiarities of each
  • How long it really does take property to double historically
  • The longest and shortest times it’s ever taken property to double

And lots more! But you'll have to listen in to find out what.

 

Listen to the episode now: http://thepropertyhub.net/double

  • Do you make any assumptions about the increase in property prices when you’re planning your investments?
  • Were you surprised by any of the numbers we shared in this episode?

Join in the discussion below!

 

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It seems largely linked to inflation.

With the current low inflation I don't expect prices to double (outside London/South East).

In fact, where I am in Cumbria, I have bought my last 2 properties at 2005 prices - that's 9 years with zero growth !

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It seems largely linked to inflation.

With the current low inflation I don't expect prices to double (outside London/South East).

In fact, where I am in Cumbria, I have bought my last 2 properties at 2005 prices - that's 9 years with zero growth !

 

Me too. I bought my first house in 2004 for £80,000. It shot up to £115,000 in 2005/6, and then has plummeted to £70,000 or less (I'm not complaining - the mortgage is ridiculously low).

 

The thing with this area (Wavertree, Liverpool) is that it was once quite a desirable suburb (when I bought it). Now, the area has gone down as well as the price (perhaps due the low prices bringing more investors in?) so it'll take even longer to go up.

 

If we say that the peak was £115,000 in 2006, can I really see the price of my property going back up to this in 10 years, i.e. 2016? No. To be honest, I reckon this one is only going to be dragged along with inflation.

 

With all of the above said, I thoroughly enjoyed Rob Bence geekin' out...  :P


Nick Stott

Managing Director

Homesure Property

 

Tel: 07758 240 799

Email: ns@homesureproperty.co.uk

Follow me on Twitter @ncstott

www.homesureproperty.co.uk

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Yes Very interesting podcast - I invested in a property at the peak in 2007 in Anglesey. It was my one really bad investment ( no fundamentals ) - I reckon it went down may be as much as 40%. Maybe around 20 % lower now - so based on the national averages detailed on the podcast - may be I will break even in the 2017 ( after 10 years ) - any thoughts ?


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The Manchester Meetup takes place on the first Thursday of every month, find out more here

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Yes Very interesting podcast - I invested in a property at the peak in 2007 in Anglesey. It was my one really bad investment ( no fundamentals ) - I reckon it went down may be as much as 40%. Maybe around 20 % lower now - so based on the national averages detailed on the podcast - may be I will break even in the 2017 ( after 10 years ) - any thoughts ?

 

It's impossible to know Mark, but I would say areas that lack fundamentals are more likely to fall short of the average. Just as areas with great fundamentals are more likely to beat the average.

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It seems largely linked to inflation.

With the current low inflation I don't expect prices to double (outside London/South East).

In fact, where I am in Cumbria, I have bought my last 2 properties at 2005 prices - that's 9 years with zero growth !

 

Inflation plays a big part, that's why leverage is so important. As for your properties in Cumbria, it's a lovely part of the world but most would say it lacks the fundamentals that Rob and I talk about so frequently.

 

Areas and like Manchester and London are currently doing really well and both have very strong fundamentals.

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Inflation plays a big part, that's why leverage is so important. As for your properties in Cumbria, it's a lovely part of the world but most would say it lacks the fundamentals that Rob and I talk about so frequently.

 

Areas and like Manchester and London are currently doing really well and both have very strong fundamentals.

 

I invest and live in Carlisle which has pretty good fundamentals (new University, new companies opening etc) but still no growth, because of very low inflation.

 

I have a friend who lives and invests in Newcastle which has fantastic fundamentals but also no growth for 9 years.

 

And I wouldn't recommend anyone to invest in a location many miles from where they live, especially new investors.

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With all the recent uncertainty, I couldn't help but think back to this episode from the property podcast I listened to a while ago.

 

I'd like to start by saying personally, I'm still bullish on property and plan to build my portfolio in 2019, but just wanted to play devils advocate to see what everyone's views are.

 

From Rob and Rob's research, I believe the longest period stated for property prices to double historically, was stated at 13 years. If someone was to have bought at the peak in 2006-2007 time, and fast forward to 2019, they would be roughly breaking even, in many places (taking inflation etc into account). Unless we see an unprecedented event where property prices shoot up more than they ever have, we're within a period of the slowest price growth in UK history.

 

With all the uncertainty around the B word, general economic outlook, anti landlord tax legislation being brought in, it seems the most likely result will be the property market going sideways at least in the short term. As of Jan 2019 how long do we think it will take property prices to double? Because however long that takes, you'll need to add another 12 years assuming someone bought at the peak of 2006 and 2007.

 

When all is said and done we'll probably smash the previous 13 year record for prices to double, I wouldn't be surprised if we end up waiting 20-23 years if you started counting from 2006-2007.

 

I know there were always challenges in the past, but we've never seen such a slow long term growth and aggressive anti landlord rules. Do we need to adapt with the times and not rely solely on property as a retirement pot? I'm still confident property will grow over the long term, but how confident are you over 10, 20, 30 years that the government won't release a host of legislation that will severely hurt your investment? Rental caps? Additional landlord fees? Increased capital gains tax? Tougher more restrictive remortgaging rules? And whatever they think up. At the end of the day, what good is a property if you can't sell it due to prohibitive CGT, it yields poorly (or negatively) due to more and more fees, and you can't remortgage it.

 

You could argue same could happen with any asset class, but buying stocks for example is not an essential human need, and making life difficult for landlords, reducing property prices and making life easier for renters, will always be easy political points.

 

 

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