Some interesting comments in this vid from Niall Ferguson on property investment and the credit crunch. He’s talking mainly about first home ownership, but what he says is doubly true when it comes to holiday homes in a place like Spain.
At one point he runs through the reasons why property is a flawed investment for most people: “It’s a one-way, unhedged bet on one asset, with a lot of leverage”. Can’t argue with that.
He doesn’t go into it, but the only reason, other than the tax code, why property has been a good investment at times in the past is because it’s the one asset that most people can use to borrow heavily against. Take away the lending, as now, and it’s a seriously problematic investment. Illiquid, high maintenance costs, high transaction costs, et al.