UK Mortgagez – UK Home Loans Information

This is a graph of the UK Property Prices. Whaty I find interesting is that many people do not believe that property prices can go down. I hear arguments about how it won’t happen and the market will just flatten out at a worst case scenario. Prices have gone down in the past and they will go down in the future.

Property is not an immune asset class to falling prices. What is obvious is that many people have not seen a property fall in about a generation. They believe because property is an immovable asset it will hold it’s value and go up. They have been right for the last 10 years but 20 years ago people from a previous generation felt the affects of a price fall on the property market.

Let buyer beware that property is not a stable asset class over the long run.

I do not like to make predictions about the future but what I can say with some certainity is that property prices will come down in the future and your investment is never as secure as you believe. One of my favourite investors in the modern area always goes back to the same speach which goes something like this, “Investing is based around fundamentals the core of which is return on investment and free cash flows.” Property has free cash flows in the form of rental and one must consider the rental incomes in working out the ROI and value of the asset class.

Next time I’ll try to write about rental incomes in the UK.