Conflicting daily reports from the media and multiple market indices continue to show UK housing market growth slowing/ accelerating/ freezing in a seemingly semi-random cycle. The detail below the attention grabbing media headlines rarely supports the controversial “spin”....

No wonder many first time buyers are scared and everyone else is confused about investing in property or any other asset class at the moment.

“Where is the safest place to invest for capital growth? How do we pick through the deluge of conflicting media comment? What are savvy investors doing today? Are we now in a buyers market?” asks Nick Hopkinson, Director of specialist property firm Incito.

Not surprisingly, the recent Post Office strike was mainly about pension rights and guarantees as the Union leaders understand their long term future all too well! As we head into the busy pre-Christmas period, these events only serve to underline how concerned we should ALL be with our long term financial futures. “I never meet anyone in their 30’s-50’s who is happy with their personal pension these days” comments Hopkinson from Incito Property.

The much criticized pre-budget report by Alistair Darling, Chancellor of the Exchequer, is “systematically undermining people’s long-term investments” according to The Institute of Directors. This follows decades of short term thinking and poor investment “leadership” by successive UK Governments who choose to ignore the impending old age “time bomb” we all face.

It is clear we ALL need to take responsibility for our own financial future as our Employer’s and Government are probably not interested! However, with the wall of media hype and misquoted information we receive daily it is very difficult to get a clear view on what to do now. “As always, I prefer to look to independent data and expert opinions rather than media headlines for investment insight” says Nick Hopkinson.

Downward pressure on interest rates

Firstly, in the “real economy” the Office of National Statistics (ONS) continues to track positive news for “UK PLC”. Virtually full employment remains: latest ONS data shows we are currently experiencing “equal to the lowest (redundancy) figure since comparable records began in 1995 and is down 0.3 over the quarter and down 0.8 over the year”.

This is better than recent forecasts and is clear evidence that “UK PLC” is still growing solidly. Balance of payment figures actually improved in the last quarter. September 07 figures show Inflation is currently running at 1.8% (below the long term target of 2%) indicating a generally downward pressure on Interest rates in the next few months.

Secondly, the financial markets have not collapsed, despite the summer “fiasco” over Northern Rock. The FTSE is back close to a record high of 7,000 as I write. Who would bet against those City boys generating substantial bonuses this year for themselves after all?!

Yes, it remains volatile and the only people really making money are the Brokers and tipsters who make money regardless of market movements. If you have the stomach to ride this rollercoaster there is still much money to be made in the stock market but it is high risk in the short term and individual investors can’t benefit from “gearing” in the stock market. “I don’t think many people regard the FTSE as a safe Haven for investing at the moment”, Hopkinson comments.

Thirdly, regarding the UK housing market; the current financial market volatility is causing a state of concern amongst first-time buyers and traditional second home “movers” as they struggle to know which data to believe and see their dream getting harder to achieve. Interest rates have risen over the past 12 months and sub-prime shakes overseas have also made mortgage finance harder to secure for many people.

Short term confidence takes a hit

Short term confidence in house prices has inevitably been hit. The major property developers still have quarterly sales targets to hit, delivering some unique buying opportunities for savvy investors. Now is definitely a buyers market if you have the right buying power and are able to exploit this short term “window” before New Year optimism brings everyone else back into the market. Nick Hopkinson underlines “at Incito Property, we are seeing some very exciting investment deals at the moment that simply have not been available for the last couple of years”.

Longer term, the UK housing market continues to suffer from a chronic supply shortage: despite the Governments plans to increase building to meet the chronic shortage of supply (particularly in the SE) latest quarterly figures (to May 07) from National House Builders Association (NHBC) responsible for developers insurance on nearly all new build residential property show that the number of private sector applications to start new house builds actually DECLINED by 1% to only 44,297 versus a year ago!

Meanwhile, the Government is targeting 150,000+ new homes per year. The “not in my back yard” planning approval approach that is all pervasive, in England particularly, means that any move to seriously address this massive supply side shortfall would be lead to political suicide for any Government!

According to the Royal Institute of Chartered Surveyors (RICS): with sustained strong demand, and real shortages of this type, it would appear unlikely that prices will drop back or slow down in real terms in anything other than the immediate short term regardless of recent interest rate rises and affordability.

There is a shortfall of 1,000,000 new homes versus the required figure of 3,000,000 over the next decade! That of course, ignores population growth from such factors as immigration and the regional nature of the shortage (i.e. the real shortage is concentrated in geographic pockets and is not everywhere).

Interest rates, according to Bloomberg’s latest economic “experts” survey will move down next, potentially by as much as 0.5% by February 2008 and not up, as hyped in the media throughout the summer. Early 2008 will see an inevitable New Years optimism as the economy continues to grow, residential property supply shortages continue unabated and any downward interest rate changes encourage traditional movers back into the residential market.

Exploiting the buyer's market

Incito Property and our savvy investor clients are exploiting this buyers market while it lasts to secure their long term future. Incito Property clients would appear to be in 'the right place at the right time' and have an apparently rosy future ahead - it’s hard to imagine anything other than strong, sustained price growth over the next decade if you are careful about where you invest and do proper due diligence.

Especially when you appreciate that the property shortage is largely concentrated in the South East and London areas of the country where Incito Property focus. The real capital growth in property long term is made by combining the following four principles:

1.       Maximum gearing – using unique negotiated discounts to achieve 80% loans with only 5-10% of your own funds invested.

2.       Future “hot spot” sourcing – researching the best locations based on long term factors. Incito Property focus on key areas within London and the South East where demand exceeds supply long term.

3.       Compound capital growth – getting growth on the whole value of the property over 10+ years, not just your investment funds.

4.       Risk mitigation – understanding and budgeting for all the legal, financial and future risks.

For further detail on Incito’s “Golden Rules” for achieving capital growth through property investing go to:

http://www.incitopropertyinvestment.com/MarketBeatingCapitalGrowth.aspx

This is what Incito’s landlords are doing and getting return on investments (ROI) of 1,000 percent + over 10 years. Not many other investments can match that without a very high risk of losing your whole fund…something that’s very unlikely in property.

Going back to those pessimistic news headlines you just can’t escape; Property prices don’t grow in a straight line. Anyone who has owned a house or ever tracked the residential property market will know that prices have always fluctuated on a monthly/ annual basis but grown steadily when looked at over the longer term (10 -15 years). “If you invest carefully and stick to the four key principles - YES, Savvy investors see now as a “buyers market”” Say’s Nick Hopkinson. “Incito have seen a number of exclusive investment property schemes sell out in record time to our experienced investors in the last month”.

For further information about this article call Incito Property on 020 7409 1055 or go to www.incitopropertyinvestment.com