New Homes For Sale – What Credit Crunch?

photo credit: Chrispitality

I read this article today in the Telegraph about how the top end of the new homes for sale property market is alive and kicking. Apparently its revival is only paralleled by the top end ‘Super House’ buying that last occurred in the 60’s.

So why is this? When the man in the street is feeling the pinch, the super wealthy are out spending money like it’s going out of fashion. I suppose the keyword is credit. Most of us use credit in some form or other for everything from buying the groceries to holidays.

This means that the moment interest rates change, 99% of us are affected, and if the interest rate moves north – we all have to tighten our belts. This doesn’t apply to the super wealthy – because they don’t live on credit – which is probably a lesson to us all.

It’s a lesson that it’s taken me a long while to learn, but I think I’ve got it now. The ease with which we obtain credit makes us by things that we would never buy if we had to pay with cash that we saved.

As property investors we need to be much more thrifty and careful with our money. It’s a valuable lesson that we can learn from the Asian Community who don’t generally waste money the way the rest of us do.

When I look back at the money I’ve wasted over the years on credit and credit cards, I could retire. My advice – a) stop wasting money on things you can’t afford, b) use the credit crunch as a massive lesson that will make us all change our behavior and c) save your money – then buy a big house for cash. Then you’ll be credit crunch proof.

Quite how that all fits in with OPM – Other Peoples Money – I’m not sure as when it comes to a credit crunch it appears that it’s best to use your own.

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