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Buying residential property – into perspective
Thursday, 28 August 2008
We live in changing and exponential times.
This isn’t going to stop, and the wealth generators of tomorrow are being educated into this environment. When you contemplate that tomorrow’s millionaires have not yet earned their first pennies, pause for a moment and think of the dynamics they are already beginning to take for granted.
- The top 10 in demand jobs in 2008 did not exist in 2000 - We are currently preparing students for jobs that do not yet exist, using technologies that have not yet been invented………in order to solve problems that we don’t even know are problems yet. - The US dept of labour estimates that today’s learner will have had 10+ jobs by the age of 38 years. - 1 in 4 workers has been with their employer for less than 1 year; 1 in 2 for less than 5 years. - The number of internet devices in 1984 was 1,000; in 1992 it was 1,000,000; in 2008 it is around 1,000,000,000 - The amount of technical information is doubling every 2 years. For students starting a new technical degree this means that half of what they learn in their first year of study will be outdated by their third year of study.
Green light
If ever there was a green light to go out and buy it was November’s immense base rate reduction of 1.5%. With little or no incentive to save in banks, or risk the stock market, now is the time to put money into bricks and mortar. Housebuilders are offering price reductions just too good to resist, while sellers generally have an air and understanding of harsh reality that only extreme economic turbulence can bring.
For businesslike buyers who are in a position to proceed, the current environment could prove to be the best time in a generation to pick up a genuine property bargain. In many cases, new homes developers are offering dynamic incentives, financial and otherwise, in order to clinch sales and aid ailing cash flow.
Buyers have to take a view of where the market is; are we close to the bottom? Probably, almost certainly, yes. Property is a tangible asset, more so than shares, and most people recognise it comes good over the medium to long term. What we do know for sure is that there will be a huge undersupply of homes in the future.
Any current “overcapacity” will eventually disappear, meaning fewer opportunities to buy keenly priced new homes. The general expectation is that there could be a significant shortage of these in the South-East within a year or so. The number of new private homes to be built in 2009 is expected to fall to a record low of less than 50,000; about one third of 2008 estimated output.
“Many receive advice – only the wise profit from it”
Syrus
More people = more demand for housing.”
The UK has a growing population, increasing steadily in the last 30 years or so, reaching some 61 million in mid 2007. It is one of the largest populations in the European Union (EU), accounting for 13 per cent of the total, with more people in the UK aged over 60 (12.4 million), than there are children under 16 (11.7 million). We have an inherently wealthy populace, as home ownership and prudent mortgage repayment by the ‘baby boomer’ generation, combine with their own wealth inheritance from parents who were the first significant generation of home ownership.
UK population continues to grow by nearly 400,000 a year. Combine this with an inherently ageing population, with demographic change resulting in more and more single people, and this supports the expectation of increasing housing demand even further.
Population Estimates UK population grows to 60,975,000
Population: by gender and age, mid-2007
Sources:
1. The Optimum Population Trust - leading think tank in the UK concerned with the impact of population growth on the environment.
2. UK National Statistics office
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