Property does not always make sense. The argument that property never falls in value is a nonsense, even the assertion that it doesn't fall by much, or that you would be paying rent anyway. Property is a market just like any other - except that its considerably less liquid. It can take 2-3 months to transfer property title. So buying property is a matter of timing. The best evidence of falling property markets is Japan in the 1990s and the USA in 2007-8. Between 1990 to 2003 Japanese commercial property prices averaged falls of 7-9% per annum for over a decade. These are huge drops. You can't argue that you should 'hold' investments because your yield was improving, as your capital was being grossly undermined. Many Japanese buyers realised this, and sensibly gave their properties back to the banks rather than pay off loans that were larger than the value of their houses.
The biggest determinants of housing prices are:
1. Rising employment - increasing the number of renters becoming landlords (buyers)
2. Rising immigration - increasing demand
3. Rising incomes - increasing the capacity of buyers to buy more & more expensive properties
4. Rising population - increasing demand
5. Regional migration - shifts between regions even within cities
6. Falling interest rates - increases the confidence of buyers, as well as lowering the cost of interest payments
7. Supply constraints - increasing in the Philippines (albeit slowly)
Of course all these factors are part of the total picture giving buyers a lot of confidence, as well as holding off sellers. But the power to expand wealth from property is far greater when you consider the following:
1. The capacity to leverage your property value by borrowing money from a financial institution
2. The capacity to spend on incremental capital works to lift yields on your total investment
3. The capacity to subdivide the lot into smaller lots
All these elements make property a very good investment, and a very lucrative one if your timing is good. Apart from replacing rent, it can also be a great income earner, whether you rent the asset fully, or just a portion (a bedspacer or granny flat).
'Buying Philippines Property – Download a free sample chapter!
The Philippines property market is positioned to generate the strongest property price increases over the next 10 year thanks to ongoing economic and administrative reforms by the Arroyo government. The ASEAN countries have yet to exhibit the price gains of Western markets, which is just another sign that this super cycle is far from over. The current credit crunch will provide a great opportunity to profit from property foreclosures.
Japan Foreclosed Property 2011 -2012 - Buy this 4th edition report!
You can view foreclosed properties listed for as little as $US10,000 in Japan thanks to depopulation and a culture that is geared towards working for the state. I bought foreclosed properties in Japan and now I reveal all in our expanded 200-page report. The information you need to know, strategies to apply, where to get help, and the tools to use. We even help you avoid the tsunami and nuclear risks since I was a geologist/mining finance analyst in a past life. Check out the "feedback" in our blog for stories of success by customers of our previous reports.
Japan Foreclosed Property 2011 - 2012 eBook - $19.95
Download a copy of the table of contents.
Sunday, December 30, 2007
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'Buying NZ Property – Download the free sample readings!
The NZ property market is shaping up as one of the most attractive property investment markets for the next few years. High yielding property and the collapse of the NZD make NZ the perfect counter-cyclical investment if you buy right! In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!
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