Bricks and mortar investing meets the wrecking ball

Ever since the stockmarket crash of 2000/2002, consumer research into attitudes towards investment has come up with only one key finding:  bricks and mortar rule. 

OK, two key findings.  Bricks and mortar rule, and everything else is rubbish.

Personally, I’ve never made an investment forecast in my life, and I don’t intend to start now.  But an awful lot of people do seem to be saying that the 15-year bull market in property is finally coming to an end.  And even though that doesn’t necessarily matter very much for those who think property is for living in (personally, I don’t care if my London mews house falls in value to £1, provided that 7-bedroom Georgian rectories in Berkshire fall to £2), it does matter a great deal to those who think property is for investing in.

Things are already looking very tough for newbie buy-to-let investors whose special mortgage offers run out in the near future and who will soon be faced with the prospect of covering their 7.5% mortgages on properties that are now falling steadily in value from dwindling streams of rental income. 

Gradually, over the next couple of years, the numbers look likely to make less and less sense to more and more people:  and as more and more of them become forced sellers, the rate of decline steepens and the pain becomes more widespread.

And then what’s left?  We’ve never liked bonds all that much.  We hate equities with a passion.  If we start hating property too, well, then there’s not much left except cash.  “Cash is king,” the old saying goes.  It hasn’t really rung true for a while now.  But the old king might be clambering back onto his throne sometime soon. 

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