Podcast Summary
Focus on location fundamentals: Strong fundamentals and rental demand make Crewe a worthwhile investment, despite lower purchase prices.
The fundamentals of a particular location, such as Crewe, should be the primary consideration when investing in property, regardless of potential future developments like HS 2. Harsh, a listener, expressed concern that his investment in Crewe might not appreciate in value due to its lower purchase price of 75,000. However, Rob reassured him that the town's strong fundamentals and rental demand make it a worthwhile investment, even if it doesn't experience significant capital appreciation. This discussion emphasizes the importance of focusing on the long-term potential of a property investment, including rental income and the underlying economic factors of the location.
Investors attracted to high-yield areas during market heat up, but may demand lower yields over time.: Investors should consider a long-term perspective when investing in real estate, as high-yield areas can lead to capital growth, but may also face harder hits during market downturns.
While areas with high capital growth potential may attract more investors and eventually see price increases, areas with attractive yields can still benefit from capital growth in the long term. However, investors may need to consider exiting towards the end of the market cycle if they fear a potential capital growth hit. The process typically involves investors being drawn to high-yield areas as the market heats up, but they may demand lower yields as time goes on. Capital growth eventually occurs, but areas that are less desirable may experience harder hits during market corrections or crashes and take longer to recover. Overall, patience and a long-term perspective are essential for investors in real estate.
Remote work trend during coronavirus uncertain for long-term: The coronavirus outbreak led to an increase in remote work, but it's unclear if this trend will continue long-term as businesses may reconsider cost savings in a few years and the impact on property remains uncertain.
While the coronavirus outbreak has led to a significant increase in remote work and the availability of jobs that allow for working from home, it's unlikely that this trend will fundamentally change the way people work in the UK or worldwide. Although more people are working remotely now than before, it's still uncertain whether this trend will continue long-term. Businesses are currently keen on reducing overheads by allowing remote work, but it remains to be seen if they will still feel the same way in a few years. As for the impact on property, it's too early to tell if the fundamentals will shift towards recreational activities or being closer to home rather than cities with a lot of jobs. For more context on this topic, listeners are encouraged to go back and listen to episode 385 on property megatrends.
Pandemic may bring shifts in property market but core fundamentals remain: The coronavirus pandemic may lead to some changes in the property market, but the fundamental drivers of property investment, such as connectivity to big cities and good transport links, are expected to remain the same.
While the coronavirus pandemic may lead to some changes in the property market at the margins, such as increased demand for rural areas and commuter towns due to remote work, the fundamental drivers of property investment, like connectivity to big cities and good transport links, are unlikely to change significantly. These trends have been shaping the property market for decades and are likely to continue doing so, despite the shift towards remote work. However, it remains to be seen how large these changes will be in the coming years. So, while the pandemic may bring some shifts in the property market, the core fundamentals of property investment are expected to remain the same.
