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The time to buy?

28th April 2009 | back to article listings BACK    print this article PRINT

With a world recession spreading misery across the globe and property prices showing a serious drop on the levels of 2007, many will wonder if now is a good time to buy. After all, it may be reasoned, the uncertainty of the global situation could mean those taking a punt now could end up with burnt fingers. But others may see the current time as an ideal opportunity to pick up bargains and stock up on assets that may appreciate substantially when matters improve.

According to Business Week, the latter is a likelier scenario. The news provider suggested: "From European hot spots in Croatia and Montenegro to less exotic investments in Florida and the south-west US, now may be the right time to buy." It reasoned that lower prices are making the difference, quoting head of international residential investment at Savills Charles Weston-Baker. He stated: "Where people can get a good deal, they're grabbing the bargains. Price falls are putting property back within the grasp of investors."

This may indeed be the case for Florida, where, for example, the Orlando Sentinel recently noted that there has been a large increase in sales in the city, with half of these either being foreclosed properties or ones that have been short sold, which means the bank will accept a price less than the mortgage is worth. Local realtor Patrick Higgins told the paper that lenders have become "more responsive" to such possibilities.

Nor is the story of what is happening in the city merely anecdotal. The Orlando Regional Realtor Association figures for housing transactions in February of this year showed a 28.1 per cent rise on the same month in 2008.

Germany is another possible opportunity noted by Business Week. It quoted Falk Schollenberger, head of residential investment in Germany for Jones Lang LaSalle, who commented that real estate could offer good returns and plenty of bargains. He said: "Forced sales are likely to become more common. There will be further negative pressure on house prices, which will present investors with potential bargains." The best investments are likely to be around the cities of Berlin, Munich and Frankfurt, he predicted.

So with the continued downturn in the world economy there may be opportunities in many places, often ones that investors would not have previously thought of but perhaps also in places they may have considered in the past only to be deterred by the price tags. Either way, those who want to expand their portfolios may be wise to undertake some research to see if they really can pick up bargains now that may make for outstanding assets in the future.

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