A House is STILL the Best Investment - Even in 2008

submitted: Apr 21st 2008 | by: RussellMarsh | Total views: 5 | Word Count: 649 | PDF View | Print Article

Buying a home should be the largest wealth creator for people young and old. Many people rightly believe that having a home is their financial leverage and something that they can enjoy at the same time. The British dream is having a home of their own which is very different to on the Continent where most people are happy to rent their homes. Many people are trying to keep a dream alive today in what they think is an unfortunate real estate market. However, just checking a few facts here and there will bring the importance of this financial decision into focus.

The Property Market has consistently shown appreciation over the years. Real estate has generally appreciated about 5% a year overall. Having 5% down on a 200,000 house is an investment of 10,000. That house would increase about 10,000 to 11,000 for the first year in normal growth years. Earning 10,000 on an investment of 10,000 is equivalent to 100% earnings which would be virtually impossible to do in the stock market unless you were extremely lucky.

If you put 5,000 into the stock market and got a 5% gain, you would receive a 250 profit. Clearly, the property market lets you come out much further ahead in average years. It must be stressed that we do have some exceptional years where the value of your property could possibly go up by even a 1/3rd! but this is exceptional.

Of course there are some lean times periodically when property prices take a temporary downturn due to other economic factors. It's unfortunate if you're just starting out when this occurs and it could be a struggle. If you're established in your home when this happens then just sit tight and wait for it to end. It Will!

Looking at investment over a medium to long term situation if you had invested 10,000 in the stock market in 1996 your balance would stand currently at around 22,400 which is a profit of 12,400. A typical house in 1996 was approximately 70,000 and that house would be worth 120,000 or more today. Time and Time again the property market shows itself to be the best and most consistent investment in the medium to long term.

The beauty of the property market is that home values tend to increase more or less steadily over the period of time. There are spikes and troughs but these are nowhere near as dramatic as those when you are dealing with stocks and shares. It is a true fact that the housing market has NEVER yet failed to recover from a slump in prices. The British attitude to owning property will always ensure that this remains constant.

If people are careful about when to trade up on their property they can also avoid the necessity of paying Capital Gains Tax which means over the years a person can develop a small house into a much larger one or even a portfolio of properties without paying Capital Gains Tax. Tax free investments is definitely the way to go!

Now could be a good time to buy a home as there will be some people who will be prepared to reduce their asking price to get the sale they need. Don't be put off by all the gloomy forecasts around at the moment, the property market will bounce back when the time is right just as surely as the moon will rise tonight. Make sure you get the absolute best mortgage deal you can find. There are lots of different options for mortgages out there and too many people do not take the trouble to look around sufficiently.

If you are in your home already and your finances are getting a little stretched by the current downturn in the economy then why not consider a debt consolidation mortgage? You can really reduce your monthly outgoings as opposed to paying monthly credit card bills and the like.

About the Author

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