Is Property Still A Good Investment?

It's said that Zhou En Lai, (20th century Chinese leader) was once asked by Henry Kissenger about the historical impact of the French Revolution (which had occured nearly 200 years earlier). He replied "it's too early to say..."!? A bit surprising, perhaps, to many western people with our shorter-term perspectives. Well to really see the power of property it's not a bad idea to take a leaf from Mr En Lai's book.

People invest in certain things because they're a vehicle to money i.e.. when there's a demand for them their value increases...and reduces when the demand reduces...

The difference with property is that people live in it (can't really get a good sleep or keep out of the rain in pharmaceuticals, minerals or even gold!) so while demand/value in certain regions (exotic beaches, city centres...) can fluctuate and be affected by 'events' the fundamental need remains. In fact by investing strategically (and often much closer to home) many investors find the property market to be in permanent need and therefore long term growth. Even now while the headlines talk about dramatic drops in the value of houses the underlying demand is actually growing because building activity, which was already well behind demand, has almost stopped. This is where a shift in people's thinking will liberate them from both the fear of and to a certain extent, dependence on financial institutions. "My money is safe in the bank..." really? "Oh I have a great pension with managed funds spread all over the world of stocks and shares" better not look at the situation too closely just now...unless you want a shock. And what about annuities? Is that a rip-off or what? but that's a whole other topic.

In 1984-85 one generation of Brits discovered unrealized value in houses and went buying, for the first time in many cases. A boom resulted. About 5 years later there was a bang and values fell part of the way back. The expression "negative equity" entered popular vocabulary. However, those people who kept living in their houses rode through the next few years and by 2000 recovered the value. In the following 7 or 8 years there was even more growth. During this time the expression "remortgage" became commonplace and we became a nation of home extension and conservatory builders, and started taking better foreign holidays. And guess what, we still owned the houses that had enabled us to pay for these enhancements to our lives. Cash your shares in and get some nice cash. Good. Next? Manage your home well and the value (and control) stays with you and keeps growing, long term. Sure, external factors affect us all and unemployment, redundancy, rationalisation etc are constant clouds in the socio-economic sky. And, the taxman circles like a vulture eyeing up gains and inheritance. But you know what, there are ways to keep ahead here too and protect your home asset for your family. Just remember to keep looking past the headlines and scaremongers and you'll be encouraged to find the old adage about 'bricks and mortar' is just as true and applicable to these times and the future.

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