The direction of the property market is a divisive topic.
If you look at any social media platform, you’ll find a myriad of posts telling you how house prices are on the verge of collapse. Scroll a bit further down and you’ll find several others telling you they’re horribly wrong – and that prices will keep rising.
Whatever your view, the days of house markets booming appear to be over, for now.
Most forecasters are predicting – at best – sub-inflation price rises over the next year or so, which is a far cry from the 10 per cent annual growth we were seeing half a decade ago.
Whichever direction property prices go in, there are winners and losers.
When prices are booming, those looking to downsize or those that have big portfolios will likely get bigger returns if they sell, whereas when there is sluggish or no growth, first-time buyers may find themselves being able to afford more than they expected.
But if there’s one good thing that comes from the volatility we’ve seen since interest rates started to rise four years ago, let it be a change in how we view property as a whole.
We’ve likely all heard someone declare “my property is my pension” or that “property is the best investment you’ll ever make”.
What we’re seeing at the moment should show that this isn’t true.
Buying property, hoping for a growth in price, isn’t the sure bet it once was.
And nor should it be. We don’t want so many people’s future wealth to depend on price growth in a way that makes it essential for politicians to constantly wheel out policies that fuel demand.
Not seeing property as an investment works another way as well.
We don’t want to see people not buying a home they would like to live in, because they’re worried it might not grow significantly in price.
Scrolling on X this week, I came across an account pumping out examples of London flats that have fallen in price – or barely risen – over the last few years.
“You could get more for your money putting it into an S&P tracker”, read one reply, referring to the relatively large gains that investors putting money into a fund that follows American equities have received over the past decade.
“That’s brilliant,” came one reply. “The problem is the S&P tracker isn’t particularly great to live in”.This response summarised perfectly how our attitudes to property need to change.
We’ve had decades of people obsessing over property price growth and comparing growth to other investment mediums.
But we need to return to viewing homes as what they are – places in which people live.
If you’re buying a home, remember that its fundamental value is the value you place in it, rather than what might happen to “the market” in five or ten years’ time.
And if you’re selling currently and are annoyed you aren’t getting offers for as high as you expected, remember that you probably got a lot of value from your home that can’t be expressed in numerical terms.
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