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I'm going to make a controversial statement here: I don't care about capital growth!!!
I purely see property investment as a safe place to STORE wealth and a staple of a balanced investment portfolio.
Of course when capital growth does come, it's a Brucie bonus!
No one appears to have mentioned inflation ? Its ok for house growth to run at 3% per year average but if you don't take into account inflation, you are not getting the full picture. In my area, we are seeing house price growth due in part I believe to the amount of new build houses with high asking prices. However, the rental price growth is not keeping up.
3% is only covering inflation but it’s better than a bank account
we are in for years of stagnation or inflation rises at best
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
This is where gearing is so effective. Even if only 2% increase or keeping pace with inflation then if you are geared at 75% you are getting the equivalent of 8% compound growth on your investment. Also this growth is compounded tax free until the point of sale, another reason not to pay down debt whilst it is cheap. Far better to keep cash reserves held somewhere you have quick access.
Great thread here Dislexic_landlord!
Very interesting to see what everybody aims for in terms of capital growth and how it varies through the areas!
Transparency notice: OneandOnlyPro is a commercial partner of Property Tribes.
I am sure long term it will beat inflation
but it’s going to be a very slow growth rate inflation today is around 2%
but i I can see rents riseing higher than inflation with all the added costs landlords are facing
I've been using 2-3% for a couple of yers already and it seems to be realistic.
I don’t look at capital gain until the point i take it, i’ve seen the market collapse spectacularly in east kent twice (1989, 2008 ish) the first left me in negative equity on my own home for 7 years, the second wiped out paper gains to a large extent. My view is that if you work on holding property for the long term you’ll almost certainly make a gain , as to how much will depend on at which points in the cycle you buy/sell.
I’m pretty conservative by nature, had i been more bullish and called the peaks and troughs within 6 months or so, i’d be worth many times more than i am , BUT had i ( like a good number in 2008) assumed the only way was up then i could have been wiped out.
Its a bit like financial advisors and investing in stocks and shares , they produce very impressive graphs of what you’ll be getting 20 years hence, but the only guarantee is that the fund will deduct its fees every year, your final pot value is in no way certain. I’m more interested in my rental income, its far less volatile, changes much more progressive and very unlikely to drop substantially.
That is my view too
capital growth is worth nothing until you have the gain in the bank when you have sold
``capital growth is worth nothing until you have the gain in the bank when you have sold``
not quite true , capital growth is worth loads
its worth something if you remortgage.
Thats the beauty of capital growth . Get some cash released and keep the asset .
No selling required
Jonathan Clarke. http://www.buytoletmk.com