Inflation is the increase in the price of goods and services over time. The value of your home can provide protection against inflation, which is the reason why many people invest in property. If you’re looking to protect your investment, then you might want to consider the benefits of increasing the value of your property. This is because home values tend to increase more than inflation rates.
Development of inflation and the highest variable savings rates
Inflation is when prices for goods and services go up. When inflation goes up, the value of your money goes down. The highest variable savings rates are interest rates that change based on market conditions. This type of rate could be a good choice if you are looking for a short-term investment with higher potential returns than traditional, fixed-rate accounts offer.
A high value of your home protects not only against inflation, but also against other uncertainties such as economic or political policy decisions. Although the average increase in home prices is leveling off this year, the year-over-year increase in average home prices is still above the level of inflation. In other words, average home prices are rising faster than inflation.
Long-term protection against inflation
Whether the long-term value of your home will also exceed inflation remains to be seen. The problem with real estate, however, is that capital value is not readily available for other purchases. Only if the excess value from a home is liquidated then the purchasing power of this excess value is relevant. This is because in this case the money is released immediately, but whether the surplus value will still exceed inflation rates in the future is not yet clear.
Besides this, inflation does play a role for landlords of housing. Apart from the increase in the value of homes, the level of rents is usually partly linked to inflation. This can be a way for investors in the housing market to ensure that rental income from homes stays in line with average price increases.
Increasing the value of a property with renovations
When it comes to property, the value of a property is determined by the market. The market determines the value of a property primarily on how much it earns. If a property has high earnings, then its price will also be high. If a property has low earnings, then its price will also be low.
The main idea behind increasing the value of your home with renovations is to increase the earning potential. This can be done by making sure that you have all your expenses in check, so that you don’t spend more than what you are earning. You can also improve your home’s curb appeal and make it more appealing to potential buyers by changing up some things like paint colors or landscaping or adding some new features like an outdoor kitchen or patio area. Renovations can help to increase the value of your property and make it more attractive to potential buyers and do not have to be expensive either.
At Red Sand Group, we are happy to advise on developing, buying or selling real estate. Want to learn how to increase the value of your property? Contact us now for more information.