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Inflation is an extended period of rising consumer prices that decreases consumer’s purchasing power and has a direct impact on the real estate market. If you’re wondering why you should invest in property during heightened inflation, this blog is for you.
In recent years, inflation and demand have caused the average property value to increase significantly; The average house price in Scotland rose by 1.57 per cent between June 2022 and May 2023.
The rate at which prices are rising and the cost-of-living crisis are the cause ofthe current inflation rate. In May 2023, inflation reached 6.5 per cent- the highest it has ever been since November 1991.
However, inflation is expected to fall to around five per cent by the end of the year and reach two per cent by 2025.
So, for anyone looking to leverage the unique opportunities associated with investing in property in Scotland during a period of heightened inflation, from first-time buyers and second-steppers to families, now is the best time to act.
Inflation can have an upward or downward effect on home prices, depending on the economy’s health. As inflation rises, real estate prices tend to rise along with it, making it difficult to decide whether to invest.
In order to make an informed decision, there are a few things to consider, for example, whether you’re looking for a long-term investment to gain from a passive income or you’re searching for the stability of having your own home. If you’re currently renting, you won’t see rent money again, but instead, mortgage payments let you build equity over time.
Investing in real estate during inflation also requires careful consideration of your personal financial situation. If you have a stable income and low debt levels, you should consider investing. However, if your financial situation is precarious, you may want to consider postponing buying property until inflation has levelled off.
A real estate investment is more resilient to economic downturns than stocks, bonds, or commodities. As a physical asset that satisfies a fundamental human need, property is less susceptible to market fluctuations.
Also, a recession increases rental prices, so if you can buy your own property, you may be less severely impacted by a downturn. Finally, property has the potential to increase in value over time.
To take advantage of inflation as a property buyer, you should look to secure favourable mortgage terms to benefit from rising house prices. You should also consider investing in a newly built home to benefit from zero maintenance costs and high energy efficiency.
To capitalise on the opportunity of investing in property during periods of heightened inflation, speak to a real estate professional. A real estate agent can provide insight into the local market and explain the best strategy to ensure you take advantage of inflation and make a good investment when buying a new house.
At Muir Homes, we are a family-run business that has been building luxury homes in Scotland since 1973. With over 50 years of experience in building happy communities and new homes in Scotland, we are committed to delivering a customer experience like no other.
Our focus is on innovation and development so you can find your dream home in the ideal location at the best price. Get in touch today to find your new home-We look forward to helping you achieve your home-owning dreams.