Property and economic update

So interest rates are on hold at 4.75% for another month, which can only be seen as a clear indicator that the volatility has been removed from the market and we have entered a more stable period of limited growth. This is re-enforced by the Hometrack houseprice survey for September which shows an overall drop of 0.6% across the country. None of the Hometrack regions recorded growth during September, with much of London recording a fall in excess of 1%. The worst hit region was Avon with a recorded fall of 1.6%.

The Hometrack survey is echoed by The Nationwide monthly houseprice review for September. This report shows a national fall of 0.4%, broadly in line with Hometrack. Alex Bannister, Nationwide's group economist comments: ”Late Summer and early autumn is normally a weaker period for house price growth and much of this fall can be explained by normal seasonal movements rather than underlying price falls”.

Interestingly The FT House Price Index indicates a small rise in average house prices at 1%. However, their data still shows the underlying trend of house price inflation has been steadily declining since June, lending even more evidence to a clear slowdown in the market.

So one thing is certain, we have reached a more stable period of house price growth and this is good news as it greatly lessons any risk of a house price crash. If prices were to continue rising in double figures we would undoubtedly have witnessed a crash.

What's new?

We welcome Andrew Stott who joins the ‘Property for Life' finance division as a mortgage consultant. Andrew has substantial experience within the mortgage industry and will be working closely alongside our resident mortgage expert, Daryl Melia. If you need help with a mortgage issue, why not give Andrew a call on 01252 737575, he will be pleased to help.

Become a leader not a chaser

We recently had a stand at the Property Investor Show in London and of all the hundreds of people that I met I soon came to realise that there are two very distinct types of property investor, the leader and the chaser. Let me explain:

The leader is someone who has a structured plan. They know where they want to be and they have a clear idea of how they are going to get there. They have built up a high level of research, they have spoken to experts, they have studied the trends not over the last few years but over decades, they have monitored political and economic cycles, and they have built an in depth understanding of the market and how best to use it. These people will be the next generation of millionaires, not just in portfolio value but in real money, true millionaires.

The chaser is someone who doesn't really know the market at all. They read and believe all the scare stories. They hear of emerging markets after the leaders have already invested there, and believe they have some form of inside information. They have no plan except to get rich quick yet have no idea of how they will achieve it. They leap onto any deal that looks ‘too good to miss' and end up with very burnt fingers. They basically chase the market without knowing what they are doing or where they are going.

I mention this because I was little less than shocked and surprised at the number of people who have totally discounted the UK property market, believing that it has little potential. Instead they are leaping into high risk, potentially dangerous overseas deals without having the faintest idea why, except that they have read it in the paper or their next door neighbour knows someone who says it's a great investment.

Now don't get me wrong, there are many great overseas opportunities and some potentially mind blowing new markets. In fact we deal with some of the better ones ourselves. But the fact is that the UK still offers some of the safest and greatest returns anywhere in the world. You may not make huge returns immediately, but over the long term the UK property market will generate simply stunning profits, and the leaders know this. This game is not about concentrating on short term gains, it's about making serious long term wealth, and this is why those people with a plan continue to buy UK property, whilst others simply chase the market, more often than not arriving too late.

A sensible portfolio will contain a mix of geographically diverse property in a range of styles, and for this reason the UK must form the basis of any sound property portfolio. We are lucky to live in a country that has one of, if not the most stable, predictable, high growth property markets anywhere in the world. That is why so many overseas investors choose to purchase here. So do your research, look at the last 50 years of UK property trends and think to yourself, is this a cake that I want a slice of?

"As you grow older, you'll find the only things you regret are the things you didn't do." Zachary Scott - 1914-1965, Actor

"I have had dreams, and I have had nightmares. I overcame the nightmares because of my dreams." Dr. Jonas Salk - Discovered The First Vaccine Against Polio

Buy to let is changing

Buy to let is changing according to the latest figures from The Association of Residential Letting Agents (ARLA). Their most recent investor profile survey - covering the period June 2004 to September 2004 - shows a distinct change in the way investors view buy to let. The survey looks at 5 main areas, here is a short breakdown of the results for each.

Length of time as a landlord

The figures show an increase in the average length of time that investors have been landlords, indicating that fewer first time investors are becoming involved. Currently 25% of the market are novice investors (having purchased within the last year). This has reduced from 28% back in June.

Size of portfolio

Investors portfolios are growing, especially for those who have between 3 and 10 properties. This appears to show that more experienced investors, clearly unafraid by the slowdown, are adding to their portfolios at an ever increasing rate.

Length of time you plan to hold investments

This has seen a huge swing in favour of long term strategy. Those people planning to hold their properties for more that 20 years has increased from around 23% to a staggering 35%.

Initial reason to invest

There has been very little change in the reason why people choose to buy investment property except the small minority who are looking for short term capital gain. This has dropped from 3.5% to just 1.6%.

Do you expect to buy more buy to let properties?

This has changed very little. While the number of people planning to add to their portfolio has increased, we can also see an increase in the number of people planning to stay out. This has been caused by many of the ‘don't knows' crystallizing their thoughts and coming down on one side or the other.

So what can we conclude from this? Well it seems pretty clear that with the slowing market many first time investors are deciding to hold back, yet the more experienced investors are snapping up the bargains that a slower market creates. This increase in market experience is also reflected in the numbers of people who are viewing the game as a long term wealth building strategy and not a get rich quick scheme.

This reinforces what we have been telling investors for years. In order to build serious wealth you must view this as a long term investment. Property always increases over the long term and by buying now, it is possible to grab some great bargains as developers reduce their properties further to maintain sales momentum.

Don't sit back – 2004 still has a lot to offer

Today - right now - remains an exciting time for the property market. When you strip away the hype, very little has actually changed of late. Instead the property market still seems to be looking for direction. It's like there's been a substantial 'deep breath', and in the absence of any obvious collywobbles (like an interest rate hike, or a profound impact of high oil prices), this means the status quo may remain until well into 2005.

The possibility of a sustained 'nothing' doesn't mean that there are fewer opportunities though. No - it simply reinforces that profits are made rather than bought. Now more than ever it's your skill (in terms of making the deal) rather than luck (i.e. relying that the market will go up) that will determine your success.

What we expect will happen, in the short term at least, is not so much that people will lose large sums of real money, but that:

1. Equity (or unrealised) gains will be eroded by the effects of inflation and small but not insignificant price falls; and

2. Those with investing skill will continue to increase (or multiply) their wealth while those dependent on the market will see their progress stall.

Overall, it all boils down to a matter of trying to maximise your existing gains, and in doing so, making every effort to get the most out of what you already have.

And that's why we feel it's an exciting time for the property market - because those who know what they're doing are poised to use the lack of direction to their advantage by continuing to build a strong financial position on the following two fronts:

1. Looking inward at their existing investments and, in doing so, increasing the efficiency of performing assets while also casting out the duds while there is still time; and

2. Making competitive offers on niche deals that the speculators now hesitate about, since they rely on luck, whereas savvy investors use skill.

From a practical perspective then, a great way to reinforce this point is by looking at opposing perspectives for the remainder of 2004.

To begin with, there will be many investors who are now thinking 'just another 45 days until Christmas and a well earned holiday'. By shutting off their minds to the possibility of business they have capped their progress and, for all intents and purposes, stalled.

On the other hand, those with the required mindset for success in these stagnant times are working harder than ever to use the remaining days to transact and complete business before the party season hits full swing.

It's certainly not too late to take control of your investing. Sure, 45 days doesn't seem like a whole lot of time, but that also represents 12% of the year! So, like many things, it's how you view what's remaining that counts. At the end of the day, it's your action or inaction that will drive your investing results. There remains plenty of time to achieve a great deal prior to the end of 2004.

"View a negative experience in your life like you'd look at a photo negative. A single negative can create an unlimited number of positive prints." Gerhard Gschwandtner Founder of "Selling Power" magazine

"Go confidently in the direction of your dreams! Live the life you've imagined. As you simplify your life, the law of the universe will be simpler." Henry David Thoreau 1817-1862, Essayist and Poet

Mortgage mind
The financial services section

Do you know your mortgage rate?

A recent survey carried our by moneyfacts.co.uk reveals a surprising picture of UK mortgage borrowing. According to the survey 27% of mortgage holders have no idea what their current mortgage rate is. The survey also showed that over a third of borrowers would incur a penalty if they switched their mortgage. With regard to the types of mortgage that people hold, 50% of borrowers have a variable rate mortgage, 43% have a fixed or capped rate mortgage and 7% have an offset.

When it comes to home insurance, 24% have a policy with their mortgage provider, 74% with another provider and 2% have no idea who it is with. What is clear from the results of this survey is that consumers need to start looking carefully at their finances and shopping around for better deals. It is estimated that at least 40% of borrowers could save significant amounts of money on their mortgage interest repayments simply by switching their mortgage to another provider. Most people can save money by switching mortgage provider even with penalties.

If you would like to speak with a mortgage consultant to see if you could save money, call Daryl or Andrew on 01252 737575.

Need advice?

Maybe you're thinking of buying an investment property, or you need to release funds tied up 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.

What’s available?

We currently have the following investment opportunities.

• The Warehouse Apartments, Victoria Street , Preston
• Duke Street Mansions (Phase 2), Duke Street , Leicester
• Waterfield Mill, Balme Road , Cleckheaton
• The GM Building, Fore Hamlet, Ipswich
• Tramway Heights , Pollokshaws Road , Glasgow

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

Recent events

On Saturday 23 rd of October we held a property workshop at the Hilton hotel in Leicester. We had such a large turnout for this that a number of people actually had to stand during the presentation. We traveled into Leicester and had a look at a number of developments that we have sold as well as a new development that is currently available. Although it rained for the duration of our tour the feedback was very positive and the attendees found the experience very beneficial.

If you were unable to attend our Leicester workshop, don't worry because we have more of these events planned for the coming months. If you are interested in coming along to one, book right now. For details, read on.

Upcoming events

We have a special workshop event planned for December 4 th at The Holiday Inn hotel in Nottingham city centre.

Come along and you will learn how to invest in property using the quickest, cheapest and easiest strategies whilst still maximising your return.

You will hear from some 'Property for Life' members who have already achieved this.

We will look at relevant issues such as tax, property management, how best to deal with developers and the best way to finance your investment.

We will then take you by bus to see property that our members have actually purchased, and we will also look at some new developments which we have available in the area.

If you are interested in attending this event, please e-mail me at adam@propertyforlife.com . If you are bringing guests could you let me know their names?

'Property for Life' Referral programme

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 http://www.propertyforlife.com/tellafriend.htm .

Back issues

Remember, you can read any of our back issues by following this link to our web site http://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.