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JUNE 2004
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us Feedback & comments Did you know? Lighten up - George W Bush Vs Dan Quayle "A low voter turnout is an indication of
fewer people going to the polls."
"Welcome to President Bush, Mrs. Bush, and
my fellow astronauts." "I was raised in the West. The west of Texas.
It's pretty close to California. In more ways than Washington, D.C.,
is close to California." "Rarely is the question asked: Is our children
learning?" "We have a firm commitment to NATO, we are
a 'part' of NATO. We have a firm commitment to Europe. We are a
'part' of Europe." "What I am against is quotas. I am against
hard quotas, quotas they basically delineate based upon whatever.
However they delineate, quotas, I think, vulcanize society. So I
don't know how that fits into what everybody else is saying, their
relative positions, but that's my position." "The Holocaust was an obscene period in
our nation's history. I mean in this century's history. But we all
lived in this century. I didn't live in this century." "It's clearly a budget. It's got a lot of
numbers in it." "Quite frankly, teachers are the only profession
that teach our children." "One word sums up probably the responsibility
of any Governor, and that one word is 'to be prepared'." "It isn't pollution that's harming the environment.
It's the impurities in our air and water that are doing it." "If you're sick and tired of the politics
of cynicism and polls and principles, come and join this campaign." "It is wonderful to be here in the great
state of Chicago" "We must all hear the universal call to
like your neighbour like you like to be liked yourself." "I was recently on a tour of Latin America,
and the only regret I have was that I didn't study Latin harder
in school so I could converse with those people." "The most important job is not to be Governor,
or First Lady in my case." "I love California, I practically grew up
in Phoenix." "If people can judge me on the company I
keep, they would judge me with keeping really good company with
Laura." "For NASA, space is still a high priority."
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Property and economic update The Nationwide have released their figures for May showing a rise of 1.9%, this is also slightly less than April’s 2.1% rise and brings annual house price inflation to 19.5%. Although there seems to be no sign of a slowdown it is widely believed that further small increases in the base rate will have the desired effect. Alex Bannister of the Nationwide says “Whilst we agree with the need for the MPC to gradually raise rates, we expect base rates of 4.75% by year end will be sufficient to meet the inflation target”.
Do Your Research There are a number of key questions that
you need to answer, such as
In order to answer these
questions you should be concentrating on many factors, for instance:
There are plenty of information resources available for this type of research. Libraries, local Estate agents & letting agents are a good place to start. Of course there is no better way to get a feel for an area than physically going there, although this is not always possible. Probably the best and easiest research tool is
the internet. There are countless web sites containing a wealth
of constantly updated information. Some of the most useful are: Good luck and happy investing.
"The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires." - William Arthur Ward. Author, Editor and Pastor
Focus on Sunderland The City of Sunderland has a population of just under 300,000, and is the largest city between Edinburgh and Leeds. Situated at the head of the River Wear Sunderland became an important port in the early 18th century. The surrounding around was once the nation's chief coal-mining area. The abundance of work both within the pits and the port areas created huge population and economic growth and the town grew rapidly. The 19th century also saw Sunderland become a major ship-building centre and by 1840, with 65 shipyards on the river, Sunderland took its place as the biggest shipbuilding port in the world. In 1988 Sunderland witnessed the closure of its last shipyard. At the same time, the recent location of Nissan in Sunderland was to act as a catalyst for new jobs in the automotive sector, both at the Nissan plant itself and with the firms which supply it. The City Council began to look at other sectors to help diversify the local economy and the development of the huge Doxford International Business Park was to be the beginning of service sector employment in the town. The closure of the City’s last coalmine, Wearmouth Colliery, in 1994 brought to an end the traditional industries on which Sunderland had so long relied, but Sunderland is resilient and the transition to other ‘cleaner’ industries was already well underway. Sunderland has benefited from great success in attracting new businesses and can boast such names as Nissan, Nike, Rolls Royce, Philips, LG Electronics, T mobile, Barclays PLC, Lloyds TSB and Northern Rock. Manufacturing now accounts for 22% of the job market with Finance accounting for 14%. In 1992, to mark Her Majesty the Queen’s 40th year of reign, and in recognition of the way in which Sunderland had dealt with the blows of its industrial decline, and its efforts to reconstruct itself for the future, she graciously accorded Sunderland the status of ‘City’. Now Sunderland is aligning itself as a 21st century city, exploiting all the advantages that technology can offer to enhance all aspects of its social, economic and environmental well-being. Re-development of the
city is well underway with new housing developments springing up
at a surprising rate. Sunderland is particularly focused on the
redevelopment of ‘brown field’ sites and 44% of current
building is based on such sites, a figure of which the city is particularly
proud. As the rebirth continues Sunderland is looking increasingly
attractive as a location in which to purchase investment property.
House price growth in the last year stands at 31.1%. With no signs
of a slow down Sunderland is a real property hot spot.
Will there be a repeat of the 1990 housing crash? We don’t think so and here’s why. Let’s look at the facts. During the very late 1980’s and early 1990’s several factors were responsible for the crash in property prices. Inflation stood at 9% and actually peaked at 10.9% during September 1990 mainly as a result of 10% earnings growth. During October of 1989 interest rates peaked at 15%. Affordability stood at an average of 36.3% of gross income (much higher in the southeast). After nearly 2 years continuous falls, unemployment rose sharply at the beginning of 1990. Serious economic problems were further compounded by the UK’s membership of the ERM. As a result of this, monetary policy was now linked to Europe and severely hampered by the state of the German economy in particular. The result was devaluation in pound sterling, retail sales became very depressed and the UK economy plunged into recession. In 1997 responsibility for UK interest rates was passed from the Chancellor of the Exchequer to the Bank of England monetary policy committee (MPC). The days of huge rate changes in the region of 1% and 2% were gone and replaced by more modest .25% and .5% changes as the MPC attempted to balance rates against inflation without damaging economic growth. The MPC have recently indicated we won’t be seeing a return to the huge rate changes of the late 1980’s and early 1990’s. Today we have the lowest unemployment rates in a generation, strengthening economic growth following several slow years and a relatively stable housing market. Inflation is well within the target parameters, if anything a little too low. Interest rates are at historically low levels and predicted to settle at around 5% - 5.5% in a years time, and today’s mortgages are far more flexible than 15 years ago. One of the most important indicators of housing stability is that of affordability. Although house prices are high and still increasing, affordability is far better than it was at 27% of gross salary instead of 36.3% during the early 1990's. One other point is that changes in social behaviour during the last 15 years have resulted in increased housing demand; whilst supply remains significantly lower (we have all heard the conclusions of the Barker report). The main social changes are the increase in single occupant households, greater age expectancy and increases in immigration. Some of this demand is being satisfied though the increase in buy to let properties, but buy to let mortgages account for just half a million of the total number of mortgages – not exactly a high figure. All these factors are responsible for the continuing buoyancy of the housing market. And this is why we, and indeed the chancellor firmly believe that there will be no house price crash. Our advice, keep investing. (Main sources of information:
Office of national statistics; houseweb.co.uk;
icaew.co.uk;
themovechannel.com;
cml.org.uk)
Meet a fellow ‘Property for Life’ investor Meet Rachel Pooley. Rachel is an amazing lady who some time ago fought and won a battle against cancer and decided to turn her life around. Finding strength through her faith Rachel fostered 4 problem children, a commitment that so enriched her life and those of the children that she has since adopted them. With a view to giving the children a secure future Rachel decided to invest in property. By drawing down on the equity within her Norfolk home she purchased 7 flats in West Bromwich at auction 3 years ago. These cost an average of £23,500 and have since increased in value by more than 50%, further more they each return £350 - £370 per month in rental income. Driven by this success Rachel joined a well known property club and purchased 2 off-plan apartments in Spain to create more of a geographical spread and so reduce risk. Rachel then discovered ‘Property for Life’ and more purchases followed, 4 in Nottingham, 2 in Ipswich and so the list goes on. Today her portfolio stands at 39 properties with an estimated value of £3.75 million and equity of around £600,000. Rachel says “When it comes to buying off plan I only deal with ‘Property for Life’. It is so reassuring to deal with people that I know I can trust, and ‘Property for Life’ have proved themselves time and time again”. She went on to say “I truly have the property bug, I love it, and I will definitely continue to increase my portfolio”. We wish Rachel and her family the very best of luck.
What’s available? We currently have the following investment opportunities. - Leeds
43, Leeds Please go to our website
www.propertyforlife.com
for full details
The power of leverage – a case study Congratulations to those people who have now completed on their apartments within the Water Royd, Mirfield development. This was a great opportunity to purchase within a small development, with huge potential. The original market value of these apartments averaged £117,000, but by purchasing through ‘Property for Life’ investors were able to benefit from a 15% discount resulting in a purchase price of £99,450. This is a great example of the fantastic returns that can be achieved through leverage. For example, the discount gives an immediate 300% return on the initial investment of £5,000. In addition an increase of 5% per year in the properties value would result in a 100% return year on year. If you had 10 of these properties, you would have a portfolio in the region of £1.15m earning a passive income of £50,000 per annum for an investment of £50,000. That’s the power of leverage. If you missed out on one of these properties, take a look at our website, www.propertyforlife.com for details of current investment opportunities.
Recent events
Upcoming events Saturday 10th July – We will be holding one of our very successful property seminars in the South East region. If you are in the area, I strongly advise you to register for this event. The location will be the Holiday Inn, M4, Heathrow, and will start at 10.00. This will be a very educational seminar packed with detailed information and advice and as with all of our seminars, it’s absolutely free! Saturday 24th July – Following the success of our Spanish property seminars in Cobham and Derby, we will once again be teaming up with our partner ‘Alchemy Estates’ to bring you another Spanish seminar. This is a great opportunity to come and learn more about one of the fastest growing property markets in Europe and perhaps even purchase one of the properties available on the day. The event will run at the Holiday Inn, M4, Heathrow, starting at 10.00am. If you are interested
in attending either of these seminars, please contact me by e-mail
at adam@propertyforlife.com
or phone on 01252 737575.
New registrations
'Property for Life' Referral
programme The payments are made on an increasing percentage scale based on the number of purchases. These percentages are as follows:
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