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Banking on a Rising Market

Wednesday, 4th September 2013

Categories: Market Analysis Property Prices Sales

Author: Peter Barry

With property prices rising more steadily than stagnant interest rates, many people continue to believe that bricks and mortar offer a far better return on an investment than the paltry rewards gained from a savings account. This means that buying a property with a view to enjoying long-term capital growth is no longer the domain of professional landlords. Savvy investors are now looking further afield and becoming more creative when it comes to securing their pension pot and making their hard-earned savings go further.

Doing it for the kids

Some people use the opportunity of children flying the nest to invest in a property. If you are planning to support your kids through university, it can often make financial sense to buy a flat or house – which they live in for the duration of their course – rather than shelling out on monthly rental payments. Extra rooms can be let out to friends, thus reducing the mortgage repayments and there’s the added benefit of sleeping safe in the knowledge that your kids are living somewhere decent.

Holiday home

Another option is to buy a holiday home, which you can let out and also enjoy the use of yourself. If you’re planning to downsize later on in life, this could also offer the opportunity of a hassle-free move and mortgage-free living further down the line. You can choose to use the holiday home in the meantime as a bolthole for cheap breaks, or you might decide to rent it out and enjoy the income it generates.

Streets ahead

If you’re on the ball when it comes to rising property hotspots, another option is to take a punt on an area that’s ripe for regeneration, or that you know is on the up already. Whilst many house-hunters are looking to buy in areas that already tick most of their boxes, the long-term investor can afford to play the waiting gain and enjoy the greater financial rewards of snapping up a bargain and watching prices rise. Be warned though – this strategy requires nerves of steel and plenty of local knowledge. Rents will also reflect the area as it currently stands, rather than how it might be in ten years’ time.