What else could affect the cost of living throughout 2022?
One of the stories hitting the headlines at the moment is that of the gas and electricity price hikes – bills are set to rise by £693 a year from April. Regulated rail fares in England will rise by 3.8% in March, as well as TV and broadband prices. In April, companies, workers and the self-employed will start paying 1.25p more in the pound in National Insurance contributions. Rising interest rates will make mortgage payments higher for some homeowners who have chosen a variable rate that follows the Bank of England base rate.**
Is investment in property a good way to combat inflation?
There are three main reasons why property ownership can really help to fight and even help you profit from inflation.
1. Appreciating value
One of the most beneficial aspects of property investment is appreciation. Over the past 12 months, house prices have increased by almost 10%. Putting your money in an asset that will benefit from capital growth is a wise move.
2. Rising rents
For the landlords and budding property investors out there, one of the best aspects of a turnkey buy-to-let is the immediate cash flow generated from tenants. Smart investments in properties will not only cover your monthly expenses, but will also generate a modest (and sometimes not so modest) monthly rental cash flow.
3. Depreciating debt
Just as your property is appreciating in value, the debt owed on the property is actually depreciating in value with the rate of inflation. Your £650 mortgage payment in year one is worth £650. However, in 10 years, with inflation, that debt is going to be worth far less.
Should I sell my house now or wait and see what happens?
It’s difficult to know whether more of a market equilibrium could develop in the coming months. Rather than trying to play the market, it’s a good idea to consider the cards you currently hold. We know now is a good time to sell because buyer demand is at an all-time high and stock levels of property are low. Selling in spring 2022 could mean cashing in when the market is undeniably great for selling.