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  • Property-a-holics

    Guaranteed capital growth required!

    Yes, I know, asking a lot but do any of you think it's still possible to buy an investment property now and be GUARANTEED substantial CG say in 10 years?

    For me, I think it is possible but only in areas that have had a low amount of development in the last 20 years and high demand. Sorry to say this, but that rules out the North for me.

    Inner cities that have had/are having a lot of infrastructure improvements and are still relatively affordable (such as Brum) I can see increasing nicely with CG over say the next decade.

    I'm not talking about forced appreciation here such as re-development, more a let-it-for-10-years-and-sell type scenario.

    Any thoughts about areas and strategies?

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    What a great topic for a discussion. Smile

    My vote : Coastal property and holiday lets within a 1.5 to 2 hour drive of a major city centre, to take advantage of the "long weekender" trend or single occupancy BTL in good quality coastal locations with good transport links.

    Coastal property rocks ... ! 

    Guide to coastal property for investment 

    5 factors indicating capital growth potential

    Anatomy of a property hotspot - 12 indicators 

    Targeting new areas to invest

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    Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **5 reasons to get your FREE portfolio review NOW**

    Adam,

    If you've got a crystal ball, please can I borrow it for 5 minutes?

    All the indicators I'm seeing and reading right now do not point to any CG anywhere right now.

    Brexit, MMR, PRA, S24, etc can only suppress any real CG for the foreseeable future.

    In fact, I'd take a bet on the opposite.

    I'd love to say something positive, but that's not the way I'm feeling right now.

    Apologies for being so negative!


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    I also do not think that you can guarantee capital growth in the next ten years.  It is likely interest rates will increase and property prices are probably at or near maximum affordability levels already.  That said if you can find an under-priced area compared with its neighbours you have a chance of making a modest gain.


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    Are you only considering the UK?

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    The trend in real house prices, according to Nationwide, is running at 2.9 % above inflation. This gives a projected average uk house price capital growth of 5.4% each year. Using the Rule of 72 (and a capital growth of 5.4%) this gives a doubling of house prices in just over 13 years. On average every £1,000,000 property portfolio will have a value of £2,000,000 in 13 years time. I will be more than happy to have my portfolio doubling in value over the next 13 years not to mention the positive cash flow it will give me during this time. If every £1,000,000 property portfolio has a yield of around 5% this would translate into an increased return of said portfolio by an extra £50,000 per annum. Surely that sort of return is well worth waiting for!

    The above reasoning does not even include any additional remortgaging or future property purchases. This is also only indicative of average expectations. Clever strategies and informed targeting of sweet areas should further increase this projected scenario. With Government policy to keep inflation around 2% (it's usually more) how can there not be property inflation over an average time span?

    Maybe I am being naive or too simplistic but with average property prices now actually 7% below the norm (according to Nationwide figures) average future capital growth would seem to me to be substantial enough to give us a very reasonable pension fund.

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    It's the law of compounding that property investors benefit from over time.

    Einstein called it the "eighth wonder of the world".



    The money that money makes makes more money ... and the money that that money makes, makes even more money!

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    Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **5 reasons to get your FREE portfolio review NOW**