Contents

Introduction....…...............…....................…..1

Interpreting Economic Growth....................2

Understanding the Role Mortgage Interest

Rates Play.....................................................2

Countering Inflation.....................................2

Understanding Property Prices

Unimaginative people forecast property prices

in the same way they do the weather – what

happened yesterday will be approximately the

same tomorrow. The problem with this

approach is that they miss out on planning for

unnexpected things, like balmy days when

profits are available to be hunted down.

2

Understanding the Role Mortgage Interest Rates Play

Speculators need increasing average property prices to make money. In turn, these need eager

buyers. Few of these can afford cash though, and this means that cheap loans are required to

complete the growth cycle. This is a hard nut to crack. Governments lower interest rates in

recessions and tweak them up in boom times to control inflation. Between these two points,

there is a magic moment when interest rates are low and property prices are rising. This is when

property speculators strike gold.

Countering Inflation

As mentioned, interest rates have a strong influence on

property prices, and hence the profit that may be made from

selling on. There is a dwell time here too - sellers are not

always aware of current trends and may sell on at lower prices

than they need to.

Governments and their banks are quick to announce up-ticks in

their economies, because they make good political profit from

them. Average real estate prices are sensitive to these

announcements, especially in early days. When you anticipate

and know this, you can turn profits surprisingly quickly. For

example, a 1% increase in gross national product may translate

to a 4% price increase if other factors hold good.

Interpreting Economic Growth

3

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Real estate investment is an art and not a science. Making

profit with property is as intuitive as any other form of

business. Many ForeclosureDataBank.com customers have

made money by blending intuition with their knowledge of the

effects of economic growth, interest rates and inflation. With

understanding, you could do so to.