27 April 2022

Owning Real Estate During Times of High Inflation


Analysts suggest that inflation is set to rise even more for the foreseeable future. With inflation already hitting record figures in the Euro zone, this could spell disaster for those with savings in the bank, cash under the mattress, or in a number of other placements. With the Euro continuing to devalue, every cent you have could be worth less in real terms even by next month.


Prudent financial advice has always been to save for a rainy day---but what should savers do if their savings aren't going up, they're actually going down---because the basket of goods they can buy with their money is getting smaller by the minute?


At a time when its making less and less sense keeping your cash in FIAT currencies, there are thankfully other options. Especially real estate. In this article, we're going to look at a few options for you. So you can help your holdings actually grow in a time when many others are struggling.


Why your money isn't working in the bank... Especially during times of high inflation


Let's face it, interest rates have been lower than ever over the last few years. While you might have enjoyed a healthy 5% return simply leaving your money in a current account just a decade or two ago... That simply isn't the case any more. Now you might even struggle to find 1% even by tying your money up for a period of one to five years.


But at least your money's still going up, right? Even if it's only going up a small amount. Not quite. Not if inflation is actually higher than the interest you get. What that means in real terms: your money is gradually becoming worth less and less over time. So when inflation is high, even getting 1% or 2% return on your capital means you'll be LOSING money over time. If inflation is at 5%, your money won't keep up.


How real estate stands strong even in times of high inflation


With banks becoming less and less appealing to regular savers and small-scale investors, many have turned to extremely high risk options like volatile stocks or even cryptocurrencies. But there's one way to get more bang for your buck that's stood the test of time: real estate.


Across Europe, real estate investments have held strong and often offer a return that even beats high inflation rates. And as we'll see shortly, real estate in Luxembourg has out-performed most of the rest of the continent.


And there's one important point to remember... When inflation is high, central banks often act by increasing the base interest rate to help combat it. This could actually help real estate investors who got in before the jump, before mortgage rates become too expensive..


How to get the ownership benefits of real estate... Even if you can't afford a property


There's one big problem with real estate ownership: it's hard to get into for normal people. Barriers to entry are high and you'll generally need a large deposit and verifiable earnings. For those who've already struggled to get on the property ladder themselves, it's not really an option. Until now.


Thanks to companies like BlocHome, you can invest in real estate "slices", where you only invest in a portion of a home. This means you too can enjoy the incredible benefits real estate has to offer (especially in times of high inflation) without the large cash sums needed to buy an entire property.


So if you're a normal person who simply can't afford their own large property investment portfolio but want to make your money work FOR you rather than against you in times of high inflation... Buying slices of investment property is the perfect choice.


How the Luxembourg real estate market offers incredible benefits for owners


One area of the European housing market that has seen incredible growth over the last few years is Luxembourg. And analysts predict this growth is set to continue. The value of single family homes in Luxembourg has increased almost 29% in the last 18 months, and rises have topped 10% in almost every quarter dating back at least 3 years.


While regular house prices rises of around 5% might be great in normal times, they aren't necessarily in those of high inflation if rates of inflation are greater than that 5%. So as you can see, Luxembourg's real estate market offers a unique opportunity for people who want to see their savings grow even in this inflationary times.


But it does present one problem: property is becoming more and more expensive for normal people and therefore pricing out many smaller investors. And that's where the unique opportunity to purchase slices of real estate investments, an idea that's been pioneered in Luxembourg itself, really makes sense. All sorts of investors now have the opportunity to not only see their savings keep up with inflation rates, but even beat them considerably.


So if you want to see your savings grow even in times of inflation, buying a slice of a property in Luxembourg could be the perfect choice.