Scott Picken, CEO of International Property Solutions (IPS) believes a paradigm shift is occurring: 8 years ago, people would only invest in property in their own neighbourhood. Now, investors are starting to seek the best investments globally. IPS was created 5 years ago to facilitate international investments and provide an end-to-end solution to ensure that investors can invest with confidence!

Thursday, September 25, 2008

UK Property - is the time right, or should one wait?

Due to uncertainty from the Sub Prime Crisis and liquidity problems from the banks, mortgage approvals have decreased 70% in the last 12 months. The Royal Institute of Chartered Surveyors believes sales are at a 30 year low and that transaction volumes from 2007 to 2008 will drop to 17%. However interest rates are actually holding if not decreasing (currently 5% and expected to be 3.5% by the end of next year - 2009) and the property fundamentals are in place with demand far outstripping supply in the medium to long term.

The Housing Green Paper of 2007, showed the country need 260 000 homes a year built and yet for the last 5 years they have only delivered 170 000. Due to economic factors in 2008 they are only expecting 60 000 and so the gap between supply and demand continues to grow, even though the UK government has promissed an additional 26% or £1 billion investment in housing.

With this in mind a investor with a medium to long term view will understand that now is a great time to take advantage of this uncertainty as we can still get access to finance with a 70% to 80% mortgage like in 2007. An example of this is City Peninsula where the developer tried to purchase the site last year for £584 per square foot. They were going to on-sell for £650 per square foot. However with the uncertainty this year they have negotiated down the land owner and are now bringing the project to the market at £496 per square foot which is 26% below the price last year!

The Chinese only have one word for Crisis and Opportunity. Understand the fundamentals and you will understand this financial uncertainty represents great opportunity for the medium to long term investor!

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