Why you Should Buy a House, Even in Todays Market.
Russell Marsh
For the vast majority of people buying a property for a home will be the biggest financial decision they will ever make, and also the best one. It does seem to be more of a "British" thing than a European one though as a far higher percentage of Europeans are happy to rent their homes and don't see owning a property to be as important as the British do. Sometimes in periodic downturns in the market some people start to wonder if this concept is flawed but just by looking at a few facts we can easily prove that this is not the case.
Property consistently increases in value. This is an indisputable fact! Property in the UK shows an average 5% increase year on year although there are some 'dips' in the market there are plenty of surges too! If you put a 5% deposit down on a 150,000 property then you have spent 7,500. That house is like to go up between 7,000 and 8,000 in a normal stable year. If you could show a Stockbroker a virtually surefire way to make 7/8,000 from a 7,500 investment on the stock market year upon year he would probably bite your arm off to get to it.
Consider putting 15,000 into your stockbroker's hands and him getting a 5% gain for you which most would consider to be ok. Your profit would be 750. Compared to the average property increase figures previously mentioned it's not too hard to spot the better investment and this is just for an average year. There are periods when we are having a property boom (every 7/8 years or so) and some properties can practically double in value in the space of a couple of years.
There are also some lean times in the property market. Your property could possibly go down in value in the short term even if the overall trend over a period of time will ALWAYS be up.
If you look at it over a longer period of time, say you put 5,000 into the stock market in 1996 and the average S & P return would make that investment worth about 11,700 today which is an increase of 6,700. The average house price in 1996 was 70,000 and today that same house would have gained 50,000 in value if not more. The real estate market consistently shows itself to be a substantial investment method to riches.
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.
As the property owner goes through life and their careers they can upgrade their property at the right time and this can mean their investments can be Tax Free. Profits form a house sale ploughed into a larger house purchase are very ofetn not liable ofr Capital Gains Tax which is a really BIG bonus!
There is no reason to fear home ownership in the market in the current market with all the doom and gloom around. Simply look for the type of property and payment mechanism that you can afford and resist the temptation to use your home for a "bank" when you need money as in an equity line of credit. The home will be by far your best asset in your future financial portfolio and will continue to make you feel secure in your financial future for the rest of your life. Everybody's circumstances are different and a really important task is to make sure you are in the best mortgage for you! There are lots of different mortgage options out there and it can make a massive difference to your lif if the get the best advice for you.
As the economy takes a bit of a slump if you find your finances are getting a bit difficult to handle then a good option is to consider a debt consolidation mortgage. Your monthly outgoings can be significantly reduced by taking this option as opposed to paying other high interest loans and credit card balances.
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