Property Investment – A personal perspective (with a half century of hindsight)
On the wall of my home is a framed letter, dated 17th June 1924. It is from a solicitor in Northampton to my maternal grandfather and concerns the purchase of the house in which I was born nearly twenty-four years later. The price of this Victorian inner-terraced house was £180, and it required a loan from the building society of £130. The house is still standing today, and I would estimate that at current prices it would fetch something in the region of £182,500.
“..a profit of about 100,000%”
My parents became the owners of this house, and if they had stayed there, and if I had stayed there, I would now, by virtue of the law of succession, be the owner of a property which would return a profit of about 100,000% on the original purchase price.
I struggled to find reliable figures for income inflation over the same period, but a rough estimate is 15,300%. It is therefore safe to say that property prices in Northampton have gone up by more than salaries, and by eye-watering amounts if we are talking about London.
When I first stepped on to the property ladder, I was about twenty-two years old. That property sold for a figure that was much higher than the purchase price, as did the following three properties I lived in.
Then my wife and I moved to France to enjoy our retirement. We sold our three-bed bungalow and bought a large, detached house with a lot of ground. When we finally decided to move back to the UK, we put our French house on the market for a price that was about 15,000 euros less than the amount we would need to recoup our initial outlay and the large sum spent on improvements.
We had some encouraging viewings from people who liked the house and its rural location, but no offers. We eventually sold our house in France for about 150,000 euros less than our initial outlay! I used to think I couldn’t afford an Aston Martin and then discovered the amount we lost on this property would have paid for my dream car with a bit to spare. But today we live in a house we like in a town we like and have some money for a rainy day.
So, to anyone wondering whether property is a good investment, I would say that in my experience, and over a period of some decades, the answer is yes. Not least because when we took the big financial hit in France, we were ultimately rescued by inherited savings which, in themselves, originated from house price inflation.
“..go for a house in which you can imagine being happy and which you can afford.”
I used to think you should try to stretch yourself to buy the best house you can afford. That way you have somewhere nice to live and the value of your house increases more with inflation than a less expensive property. Now though, I would simply say go for a house in which you can imagine being happy and which you can afford. If you are lucky it will prove to be a good investment, and if it doesn’t, you are happy with where you live and you haven’t over-stretched your finances.
Jeff Osborn
Copy Editor at David Cosby
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