Property and economic update

Could March have been the turning point for the property market? The main market commentators certainly think so and if they're right, that's great news for all of us.

The Hometrack March survey shows an overall decrease in house price inflation of just 0.1%. Although Hometrack have recorded price falls for the last 9 months, this is the smallest for 6 months. What makes this especially interesting is the way in which the price changes have occurred. During March, eleven survey regions recorded price increases with London heading the table with a significant 0.8% rise. A further eleven regions recorded static house price inflation and the remaining 35 regions recorded falls with South Yorkshire and Northumberland experiencing 0.9% and 1.0% respectively.

The survey also reports increases in the number of buyers registered, up by 6.2% and the number of sales agreed, up by 16.5%. So can we assume that we are seeing an upturn in the market? John Wriglesworth, Hometrack's housing economist comments: "House price deflation over the last 9 months looks set to end, with house prices remaining broadly flat this month. We are confident that house prices will start rising over the next few months and we are therefore raising our 2005 full year house price inflation forecast from 0% to 3%".

Reinforcing this, the Halifax house price index for March recorded an overall price increase of 0.5%, offsetting the 0.5% fall recorded in February. However, in contrast to this the Nationwide have recorded an overall drop in prices of 0.6% for March. Alex Bannister, Nationwide's group economist comments: "The uncertainty over interest rates may cause house buyers to be a little more cautious over the coming months, but the economic fundamentals still look fairly good. Recent steady growth in earnings and rising employment and equity prices has helped to underpin consumers' confidence". The Nationwide retain the view that overall, house prices will increase by between 0% and 5% in 2005 broadly in line with Hometrack's prediction of 3%.

Today is yesterdays tomorrow by Jim Rohn

The problem with waiting until tomorrow is that when it finally arrives, it is called today. Today is yesterday's tomorrow. The question is what did we do with its opportunity? All too often we will waste tomorrow as we wasted yesterday, and as we are wasting today. All that could have been accomplished can easily elude us, despite our intentions, until we inevitably discover that the things that might have been have slipped from our embrace a single, unused day at a time.

Each of us must pause frequently to remind ourselves that the clock is ticking. The same clock that began to tick from the moment we drew our first breath will also someday cease. Time is the great equalizer of all mankind. It has taken away the best and the worst of us without regard for either. Time offers opportunity but demands a sense of urgency.

Regardless of a person's current age, there is a sense of urgency that should drive them into action now - this very moment. We should be constantly aware of the value of each and every moment of our lives - moments that seem so insignificant that their loss often goes unnoticed.

We still have all the time we need. We still have lots of chances - lots of opportunities - lots of years to show what we can achieve. For most of us, there will be a tomorrow, a next week, a next month, and a next year. But unless we develop a sense of urgency, those brief windows of time will be sadly wasted, as were the weeks and months and years before them. There isn't an endless supply!

So as you think of your dreams and goals of your future tomorrow, begin today to take those very important first steps to making them all come to life.

Property development - a lucrative but risky business

Over recent years we have seen a flood of television programmes and associated magazines which have have lured inexperienced property developers into the market by suggesting that developing property is simple and is a guaranteed path to riches.

While property development can indeed be lucrative for experienced players there are many more amateur developers who have made very little money or indeed lost money from trying to play this game.

So what are some of the potential risks involved in property development? Some of the most significant risks include:-

• A downturn in the property market leading to lower property values or increased holding costs until the development properties are sold
• Increases in interest rates resulting in increased holding expenses;
• Increases in construction costs during the project. This was particularly obvious during the recent boom. Many inexperienced developers think they have entered into a fixed price contract yet are hit with cost variations;
• Changes in the supply and demand ratio for property;
• Unexpected disputes with building or trade contractors or unions which can cause costly delays to a project;
• Changes to the laws relating to property development such as the laws relating town planning restrictions on land use, environmental controls, landlord and tenancy controls, user restrictions, stamp duty, land tax, income taxation and capital gains tax. Changes to any of these could adversely affect the profitability and viability of your property development project;
• Not obtaining an approval or obtaining one on un-favourable terms is a growing risk for developers. The cost of obtaining approval or fighting council's rejection in a court of appeal is continually rising;
• Some inexperienced developers find that some of the improvements they have made to their properties do not result in an increase in value. They learn the hard way that increases in value do not necessarily occur in line with expenditure on improvements;

As you can see many of these risks are outside the control of the developer which further increases the potential for the unexpected.

So our advice is; by all means try to make money developing property BUT be aware of the extra risks and the time and effort involved to be in this business.

However if you are looking for a simpler and less risky route into the property investment market why not look at some of our new build and off-plan properties that we have available. Where else can you buy brand new property, ready to rent, at a discount with a very small capital outlay?

"To know what people really think, pay regard to what they do, rather than what they say."
- Rene Descartes 1596-1650, Philosopher and Scientist

"The first requisite for success is the ability to apply your physical and mental energies to one problem incessantly without growing weary."
- Thomas Edison 1847-1931, Inventor and Entrepreneur

Profits are Better than Wages by Jim Rohn

It's true, profits are better than wages. Wages will make you a living, profits can make you a fortune. You know it is a bit difficult to get rich on wages, but anybody can get rich on profits. Profits change your whole attitude, even if you start part-time.

Your profit may result from a landscape business in the summer or hanging Christmas lights in the winter. It can be your hobby such as painting, writing, crafts, woodworking, computers or cooking. It could be property investment. But once you start investing even part time effort into this, you will find how much more exciting it is to get up in the morning and go to work on your fortune, even if you're only spending a few hours a week doing it.

How empowering it is to be able to go to work on your fortune every day rather than going to work to pay your mortgage. Now - it is noble to go to work to pay the mortgage, but if you could also parcel out part of your time - go to work to make your fortune. Your whole attitude changes; your spirit changes. It is in your voice. It is in your face. It is in your gestures. And then you can say, "I am now working full-time on my job and part-time on my fortune because I found a way to make profits." Wow!

Investors retain buy-to-let confidence

Predictions of a mass exit from the buy-to-let market are unfounded according to a recent survey from Savills Private Finance. Based on a target of 3,500 private landlords, the survey found that rather than selling up in droves, investors remain upbeat about the future of the buy-to-let market and are in fact looking to increase their property portfolios over the coming months.

The survey found that 65% of buy-to-let properties were flats with 49% located in London and a further 29% in the South East. 25% of those questioned have owned property since before the introduction of buy-to-let finance in 1996 and nearly two thirds own fewer than four properties. Nearly a quarter of these properties had gearing levels of 75% to 85% but interestingly, 6% had gearing in excess of 85%.

Although the survey shows little evidence of a significant increase in sales by investors, it did find that 45% were subsidising mortgage payments. Even with this situation however, 76% are planning to expand their property portfolios over the coming years, with only 10% looking to reduce their holdings and just 3% looking to exit the market all together.

Around a third of those questioned stated 'pension fund' as their reason for investing. Another third were looking for quick capital appreciation and the remainder had various reasons for investing ranging from children's education to secure income stream.

Looking at the situation today for potential investors it is easy to see why the survey gave these results. With the rental market improving, the cost of funding still low in relative terms economic stability and high levels of employment buy-to-let is still proving to be an attractive investment proposition..

"One of the greatest discoveries a man makes, one of his great surprises, is to find he can do what he was afraid he couldn't do."
- Henry Ford 1863-1947, Industrialist and Founder of Ford Motor Company

"Adulthood is defined by the willingness to except full responsibility for where you are at in life; no longer blaming others or circumstances."
- Joe Westbrook Networker and Student of Philosophy

Need mortgage advice?

Maybe you're thinking of buying an investment property, or you need to release funds tied up as equity in your house. Perhaps you just want to find the best mortgage rate for your own individual circumstances and cut your mortgage payments. Why not call our mortgage department today? Our resident mortgage advisers will give you the best possible advice to suit your requirements. Call them today on 01252 737575.

Upcoming events

Over the coming months we will be developing our new seminar programme- the PFL Property Investment Academy. As these sessions will be longer than our normal seminars lunch will be included. The academy will soon become a chargeable event, but for a short time only you can attend absolutely free. Our upcoming sessions are listed below and if you would like to attend please email enquiries@propertyforlife.com stating the date of your preferred session and how many places you would like.

Saturday April 23rd - Milton Keynes - Courtyard Marriott Hotel

Saturday May 14th - Bracknell - Coppid Beech Hotel

What's available?

We currently have the following investment opportunities.

• Beauchamp House, Coventry, West Midlands
• Squires court, Bedminster Parade, Bristol
• Waterfield Mill, Balme Road, Cleckheaton, Nr Leeds
• Marco Island, Huntingdon Street, Nottingham

Please go to www.propertyforlife.com/discount_prop.php for full details and look out for more great opportunities coming soon!

Make some extra money?

The 'Property for Life' referral programme is a great way to make extra money. Take a look at the table below to see just how much. If you know of anyone who is interested in purchasing investment property why not refer them to us. It's simple, if they buy you make money, and the more they buy the more money you make. Take a look at our website for full details www.propertyforlife.com/tellafriend.htm

Back issues

Remember, you can read any of our back issues by following this link to our web site www.propertyforlife.com. If you missed one, or you want to read that really interesting article but can't remember where you put it, you will find it all here.