The Property Block - Boom Bust Cycle
Calculating Growth
There are many investors that invest in property solely for the growth. They are not concerned with making a rental profit (sometimes happy to make a rental loss!) but making an above average gain on their initial investment. In simple terms, Capital Growth is the difference between the value of the property now and one year ago.
However, the overwhelming growth that we have seen for the last ten years or so has been quite phenomenal. It would be fair to say that we will not be seeing too much of this around the UK for the immediate future and capital growth will be at best, modest in general and on viewing house prices on a national outlook. This is part of the boom bust cycle and we shall see how it fits.
Understanding +/- Growth
Understanding why prices rise and then fall is very important if we want to make money!
Certain principles need to be explained before we enter the boom bust cycle and these will be addressed e.g. Growing population, Increase in land values, feel good factor and so on.
We start when everything is at a sensible price. There are no rapid increase or decrease in prices, supply equals demand and so prices are stable. And then the cylce begins from here and the following situations are gradually developed:
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