Property investment as a long term strategy
The real estate investment market is extremely volatile at the moment. Many small investors have seen as much as ten year’s accumulated profit wiped out in one short year. Largely thanks to over-borrowing when credit was cheap.
Real Estate investments should be seen as a long term investment only. Any wishing to get in and out quickly are at the mercy of the same market forces as any other commodity market. Values go up and down, but invariably the trend is a long, slow upward movement, with blips up and down along the way. 2006 saw the initial phase of the current decline in values of houses and this trend looks set to continue downwards for the immediate future. At some point this will change, but it is almost impossible to predict exactly when this will occur.
Some markets are seeing more volatility than others. Dubai for instance has seen drops of over 50% in value in a few months time. Some are suggesting that Dubai’s luxury property market is finished, and those wishing to invest in property in Dubai should consider carefully the implications of buying real estate in a foreign land.
The long term future should be good for house prices, but the short term certainly looks bleak. As with any investment decision, bear in mand that values go up as well as down, particularly over the next 5 to 7 years as global economies struggle to come to terms with the enormous losses of the financial services sector.
No one is in a position to accurately call bottom, or predict the future price of properties.
