How_Money_Works_-_The_Facts_Visually_Explained

INVESTING IN PROPERTY

Buying and selling for profit

Knowing when to buy and sell is the key to amassing

wealth through property. As with the financial markets,

prices in the property market are cyclical, going up or

down depending on the state of the economy. Factors

such as interest rates and inflation, GDP growth,

employment, infrastructure, and immigration can all

affect property prices. The trick to successful property

investing is knowing how to assess the market and

identify the right time to invest, the right type of

investment, and the right time to sell.

COMMERCIAL VS RESIDENTIAL

Increasing

sales; property

prices rise

Property

investors buy

Easier to get

a mortgage

Construction

boom

Too many houses;

construction

slows; rents fall

High confidence in market

More buyers

than sellers

Affordability

crisis; too hard to

get mortgage

Rents

increase

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Commercial property

As an investment, commercial property can offer

much higher rental returns than residential property

and longer leases, but capital growth is less likely.

It can be harder to obtain a mortgage on a

commercial property, but investment can also

be made via commercial property funds.

Residential property

Investing in residential property generally offers a

more predictable return than commercial property,

both on rentals and resale, although location is key

as always. Residential property can be valued

more easily than commercial property, which

can help when selling.

The property cycle

Economics experts who have studied real estate

trends over more than a century have concluded that

property prices rise and fall in distinct patterns,

triggered by economic and social events and trends.

A property boom is followed by a slowdown and a

slump. Eventually the housing market recovers and

begins to boom again.

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US_178-179_Buying_selling_property_for_profit.indd 178 14/10/2016 13:06