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August 2009 |
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Global Interest Rates Exchange rates £1 buys:
 Market Update With growing optimism that the global recession is now starting to lose its grip, stock markets around the world are continuing to bounce back. In fact, the rate of growth has increased dramatically since the early part of July with the FTSE 100 index now trading at a very respectable 4695 after reaching a low of 3500 at the beginning of March. History has shown that it is often the stock markets which have led the way out of recession. If this is again the case then people are quite right to be optimistic that the worst of this recession is now behind us. Around the world, historically low interest rate levels have been maintained as the main central banks have opted to leave rates unchanged. This is undoubtedly having a positive impact on the world economy, especially in the UK where many people are choosing to repay debt at record levels with the extra money. The important Stirling 3 month LIBOR rate has continued its rapid downward trend and is now well below the 1% mark. This is excellent news and looks likely to continue heading in the same direction for the near term. The UK housing market is showing continuing healthy signs as all of the main market surveys have reported either static or increasing prices for July, particularly in the south of the country. Both the Halifax and Nationwide house price surveys have revealed increases of 1.1% and 1.3% respectively and Rightmove’s survey of asking prices has revealed an increase of 0.6% for the last month. Miles Shipside, commercial director at Rightmove comments: “There is now clear evidence that there were some fire-sale prices last winter, when a few brave buyers correctly called the bottom of the market. In most parts of the country prices have consistently improved during spring. With growing confidence that we’ve passed the bottom, buyers are more active, although they may discover that many of the best buys have gone.” At 0% The Hometrack house price survey was the only one not to report a July increase. However, even static prices should be viewed as a positive sign in a recession. Of course no one can predict the future but with mortgage lending picking up, house prices rising and increasing transaction levels, it looks very much as though the housing market has bandaged its wounds and is now starting on the road to recovery. In the news House price crash is over!!! A report by a leading group of economists, the Centre for Economic and Business Research (CEBR) claims that the house price crash is as good as over as the property market bottoms out at around 24% below the 2007 peak. The report claims that prices will maintain positive territory rising by 2% next year and 3.5% in 2011. Although the CEBR has not ruled out a further minor decline in the region of 3% -to 5% through the latter part of this year, it says that the ‘chronic undersupply’ of housing and a predicted pick-up in mortgage lending in 2010 will prevent prices falling much further. Commenting, report author Benjamin Williamson said: “In the UK the concentration of people on this tiny island and shortage of supply of houses has created a house price floor which house prices won’t go below.” He went on to say: “We have always maintained that a shortage of housing supply in the UK will maintain a floor for prices.” The report joins the growing number of market commentators who believe that house prices are now very near the bottom and will soon start the process of regaining lost ground. Major property price indexes have recently been reporting increasing prices and even the Royal Institution of Chartered Surveyors predicted last week that prices may show a small increase this year. Come and meet us Over the coming weeks we will be travelling to a number of locations around the country to present our unbelievable Caribbean investment opportunity. Quite literally, for an investment of just £1000 of your own money this incredible investment will provide you with an income of £20,000 or more, every year for life. Without doubt, this has to be the best property investment opportunity in the world today and we would urge anyone with an interest in investing in property to take full advantage of this. Interestingly, this unbelievable opportunity has now been extended to Brazil. With a growing middle class, rapidly expanding tourist sector and an economy widely expected to become one of the 5 largest by 2050, Brazil offers mouth watering investment potential. If you would like to come along to one of these evening presentations call us today on 01235 553569 to book your place. Locations and dates are: Wednesday 19th August – London Alternatively, if you cannot make one of these events call us on 01235 553569 to talk through the opportunity in detail. You’ll be glad you did. What is it? Return on investment Quite simply, return on investment (ROI) is the amount of profit (or loss) returned relevant to the amount of capital invested in an asset. ROI is a very popular performance measure in evaluating the effectiveness of an investment, and can be particularly useful when comparing a number of investments as the potential return of each can easily be identified and investment efficiency compared. To calculate ROI, the gross profit gain from the investment minus costs should be divided by the cost of investment and multiplied by 100. The result is expressed as a percentage of the capital invested. The calculation looks like this: Gross profit gain – Investment costs For example, if a property is purchased in cash for £100,000, has costs (maintenance, tax etc) of £2,000 per year and a rental income of £7,000 per year, the calculation would look like this: 7,000 – 2000 In this example the ROI is 5% per year. Of course, this is based on very simple figures whereas a real life calculation would most probably take into account additional factors such as mortgage interest and insurance. In order to get an accurate ROI and therefore establish the true investment potential, it is essential to make sure that all costs have been included. The downside of ROI analysis is that if initial figures are incorrect or have been missed, the overall return could be shown to be higher that it would actually be, giving a misleading indication of the investments potential. With this in mind it is imperative to fully understand all the inputs that are being used. ROI analysis is an essential part of the investor’s toolkit and should be adopted whenever considering an investment, no matter how good the opportunity looks initially. Individual circumstances will often result in a different ROI figure as not everyone will fund the investment in the same way. On a lighter note “I refuse to join any club that would have me as a member” – Groucho Marx |
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| The Worldwide Property Group Ltd. Suite A & B, The Courtyard, Abingdon, Oxford. OX14 5SE Tel: 01235 553569 email: enquiries@w-wideproperty.com Web: www.w-wideproperty.com Copyright – The Worldwide Property Group Ltd 2009 The Worldwide Property Group is a marketing agent for developers and whilst we endeavour to ensure the accuracy of information contained in this site, including figures and forecasts at the time of publication, the Worldwide Property Group does not guarantee or take responsibility for their accuracy
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Global Investor August 2009
