Property Investment: The Essential Rules

Intro: Property Investing

Property investing is one of the oldest and most popular forms of investing worldwide. It is often portrayed as a reliable investment with extremely stable returns and an ever-growing demand. Across the globe, its desirability and price vary significantly from market to market. What might be able to buy you acres of land in the middle of nowhere may not even be sufficient enough to buy an apartment on Billionaire’s Row in New York City. Its rapid increase in price over relatively short periods paired with quite a successful and reputable investor base has allowed it to cement its status as the pinnacle of investments. Just as house prices can shake the market as they rapidly grow, they can crush it as they rapidly fall.

Indeed this is the main reason that discourages potential investors from investing in it. As well as needing a significant initial investment, a severe market crash could be detrimental to anyone’s financial position. The 2008 market crash and China’s housing crisis are a testament to this. The catalysts for the 2008 global financial crisis were falling US house prices and a rising number of borrowers unable to repay their loans. Similarly, the Chinese housing crisis was due to the economy slowing down, leading to developers finding it harder to raise funds to finish building units that had already been bought. This led to Evergrande, their second biggest property developer, filing for bankruptcy in mid-2023 after owing more than $300 billion to its investors. Furthermore, an estimated 230 more developers also filed for bankruptcy shortly afterwards.