We are all well aware, in the business world, that property prices have taken a severe downturn in the last 3 years thanks to the housing bubble crash of 2006 and the recession that it precipitated. On average property prices have fallen by around 27% and the rate of home loans is still decreasing; despite the recent upturn in the market and the incredibly low mortgage rates on offer. Whilst this is odd for buyers we are starting to see the opposite trend in the purchasing of business properties – warehouses, offices etc. In this article we’re going to examine the business property market and analyze whether it is now a good time to buy.
The Business Property Market
The business property market has, according to Moodys, fallen just as significantly during the recession as the personal property market. The recession started a wave of cut backs across all sectors with numerous divisions, factories and offices being closed or relocated in an effort to minimize costs. This has meant that prices have fallen drastically. Whilst usually companies would expand into new areas business growth is at an all-time low thanks to a collective effort to reduce expenses. This means that tens of thousands of commercial properties are sitting dormant across the US with few companies buying despite falling prices. The reasons for this are that companies domestically are still worried about the pace and extent of economic recovery – the economic crisis in Europe and the fear of a double dip recession are holding a tight rein on corporate bank accounts. However, the market is showing signs of recovery and in many sectors the prices are picking up. This means that prices are likely to begin to rise gain as more confidence is gained in the markets.
So is it a Good Time to Buy?
This question may seem slightly ambivalent given our less than certain economic outlook outlined above. At the bottom line we can take a conservative stance and say that the economy may not recover or there may be a second recession. However, currently this doesn’t seem likely and this means buying property now might be a good idea. If prices continue to rise then our current position means that now is the perfect time to buy. Mortgage prices are at an all-time low with business mortgages available from as little as 2% interest. This in many ways makes now the perfect time to buy as your company can secure a truly fantastic mortgage deal.
If you’re company is in a stable financial position and you are looking to expand then now is clearly he perfect time to buy. Property prices are expected to increase and are already doing so. The low interest rates on business mortgages in turn mean that you can purchase property without compromising your long term financial security. Even in the event of a double dip recession business property prices are unlikely fall further as the property market overall has fallen as far as it really can. So if you can invest in property it is unlikely you will have a better opportunity.