Why You Should Buy Property When Everyone Else Is SellingAnalysis, Background
While the market is pretty much on pause right now it’s sensible to consider what you might do once things restart. Here we’ll offer a few thoughts on whether or not the rest of 2020 will be a time to buy.
Famous and super-rich investor Warren Buffett is credited with a quote something along the lines of “buy when everyone else is selling.”
Buffett is also credited with the line “Be fearful when others are greedy and greedy when others are fearful.”
Of course, Buffett probably wasn’t talking specifically about property. But those very wise words could indeed apply to property as much or not more than any stock market investment.
Over the last decade it seems everybody has been investing in buy to let property. It’s fortunate demand for rentals has been rising too, as otherwise there could have been a massive glut of property available for rent. Just lately, however, it seems that fewer people were buying property for investment, and there were also more and more reports that some landlords were selling.
So does that mean you should join them, and avoid investing in property too? Or even start selling your investment properties too?
We think not. And here are just a few good reasons why we think you should consider taking Warren Buffett’s advice and keep investing in property.
* Property prices are softening relative to recent trends, and in some places are static or even falling. They could fall further. It could be a very good time to make offers, perhaps to those landlords who are getting out.
* Housing is still in short supply, and there’s unlikely to be mass new building anytime soon. It’s hard to imagine values won’t go up long term. Maybe not as much as in the recent past, but still up.
* Property is still very good value in many parts of the country. In 20-30 years people will be amazed that you could buy a whole house for, say, £100,000.
* Money is ultra-cheap. Chances are it will never, ever be as cheap again this century (and even further beyond). It seems that lenders still have the appetite to lend.
* The tax benefits of buying and letting property are still pretty good. OK, maybe not quite as good as they were but still good – and better than many other businesses and investments. There could even be some tax incentives in the months ahead to boost or support the economy.
* And this is the main reason: The underlying demand for rental property is still very strong pretty much everywhere. Yes, there are some tenants who would rather buy if they could, but renting is still the solution or more appealing for many people.
So, while some people may think that property isn’t such a good buy anymore we agree with Warren Buffett’s overall sentiment: Buying when everyone else is selling could be a very good idea, AKA the time when everyone else is fearful could be a very, very good time – in the best sense of the word – to be greedy.