Inflation, interest rates and property development

Inflation is going ballistic across the globe, interest rates are heading upwards and property development is being challenged; or is it?

You’d have to live in a box not to know that inflation has spiked across the globe and that it is set to increase dramatically over the coming years as the repercussions of the money printing that occurred to keep our economies afloat over the past couple of years is coming home to roost.

Recently I was told to look at inflation as having $100 today but only being able to buy $90 worth of goods and services with it during the year due to the lost value of the money. When you think of it simply like this you can see the effects of inflation whereas when government says “inflation was 10% last year” you don’t see its impact upon you, yet it is the same. Your money buys less over time meaning you need more money for the same things.

To fight inflation, governments raise interest rates to soak up excess money from the economy. So whilst there is inflation, interest rates will continue to rise.

I’ve simplified economics substantially with the above and there are far more issues at play than just these, but I think you get the picture for now.

So what do property developers do if costs are increasing and interest rates are too?

In my YouTube video below (click on the image), I share my views on how inflation and interest rates will affect property developers, and how I see property developers benefiting from these changes.

As I said in the video, I see good times ahead for property developers in the low rise, medium density market (apartments and townhouses). As a property developer you will need to make decisions based upon your knowledge and expertise.

Property Development Institute is here to help you with your property development education though any one of our courses but probably best of all, we offer a limited number of 12 month mentoring places each year where you get to spend 12 months with Steve.

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