So, I’ve got a flat in Bath, bought decades back. Cool.
Inflation and interest rates.
Higher interest rates are going to at least cool the property market. It’s entirely possible that they’ll crash it in fact. And speaking at the level of the economy, the population, they should too. So, now seems like a good time to sell.
On the other hand, property has traditionally at least been a hedge against inflation. And there’s definitely some of that around. Which should mean the nominal price of housing increases.
Further, if I sell and put the money elsewhere then wherever else that is will also still face that protect from inflation problem.
Which all really boils down to is the likely slump in property prices going to be offset by that – nominal – protection against inflation? Which is the course of action that leaves me, at the end, with the greatest sum?
Not that this is really about personal advice. It’s, rather, an interesting conundrum that many do face.
Interest rates at 3 and 5 and 7% – easily possible in this coming cycle – nominal are going to shaft property prices. And yet inflation is going to shaft anyone not in something that normally bears up well under inflation. Which way does the balance go?