2012 Real Estate
I’ve been reading what other real estate writers have been saying about what will happen in the world of real estate for the next year. For once it is a sorry state of prediction. No-one is happy. No-one sees anything much happening either one way or the other. Prices wont fall much because there is so much demand. Prices cant rise much because people will be poorer and feel poorer.
It’s more a matter of what wont happen rather than what will. I think most people are phased by the situation with the euro, and dont know what to make of the current economic chaos.
As I usually say in these circumstances, if you are just looking to sell one place and buy another it doesn’t really make much difference what happens. You are just swapping counters. But if you are investing you have big problems. Interest rates are low, but will have to rise sometime, so you need to build in a safety zone for that eventuality. You need to cost your project on the basis of rental returns rather than assume any capital gain in the near future.
I am staying on the sidelines because I dont like risk, and the risk element is high. I do still have rental properties but they were bought so long ago that they are in for peanuts.
As I stated in my previous post I think the tourist ghettoes are in for a hard time. Now is certainly not the time for buying holiday homes. The prices are still coming down, and the whole operation of buying a second home abroad is simply not cost effective, certainly not in Europe.
There are always exceptions to the general rule. The objective for the next year or so is to find those exceptions. They are out there. I still think the southern areas of Andalucia away from the Costa del Sol are good value, and so is the deep south of Italy. The eastern Mediterranean area, and Eastern Europe are still no-go areas.
john
