Wednesday, October 25, 2006
The ‘excitement’ of the property market gamble
Millions of pounds of North-East property have changed hands in the biggest sale by a London auction house. Auctioneer Mr Walker said the outlook for interest rates had failed to dent private investors, who were riding high as the stock market hit record levels.He said: "Investors have done well out of property in the last few years. They see cash as boring and are saying, `Why put money in the bank at 4% when I can get 5% or more in property'?". Mr Walker said investors were "eliminating risk" as a consideration in the prices now being paid for commercial property at auction. He said: "People are buying on yields that are factoring in an expectation of further rental or capital growth. Four or five years ago, nobody would buy at yield equal to the borrowing rate, but people seem happy to buy and don't perceive the same risk as there has been in the past. "Whether or not they are right to do that, I wouldn't like to say."