Nottingham Letting Agent Property Blog
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Think your property has increased in value? Factor in inflation
You might think you have done relatively well at the property market game, and that it hasn’t lost value since you bought it, but the truth is that rising inflation means that anyone who has bought a property after 2006 is likely to have lost money on it. According to figures from LSL Property Services, the average house price has increased 11% since 2006, which all sounds pretty good, until you take into account the fact that inflation has risen by 17% during the same period. Average salaries have gone up by 15%.
In certain areas of the country the situation is more extreme, as prices in certain areas have stayed static or decreased, while many of the statistics being released are completely skewed by the London property market.
Ray Boulger, a mortgage broker for John Charcol thinks that the majority of the population are unaware that they have lost money even if their house is valued as having stayed the same. He points out that the price falls in the early nineties were much worse than realised because of high inflation, and that anyone who sells a home for more than they bought it just considers it to be a real gain, even if it hasn’t kept up with inflation. He thinks people should take this into consideration, especially as with interest rates set to remain low, inflation is expected to increase.
The situation is slightly different for buy to let investors, as at least their properties managed by Nottingham letting agents are producing a reasonable yield, and the majority tend to regard their portfolio as being a long term investment.