Investment, by its very nature, usually means absorbing a higher risk for a higher reward. People do not think of GICs (which are risk-free in most cases) when they think of investments, but rather things like stocks, bonds and of course property investment.
Property investment seemed to be a safe investment however, for a number of people that pursued it. Not only did it provide extremely high return on investment in a relatively short period of time, but it also seemed very safe as property values went up month after month for years at a time.
Ironically, it might have been this view of safety in property investment that eventually did the property markets in. With people investing in property on a large scale because of that feeling of safety, the high demand pushed property prices completely out of the control. Homes were being overvalued on a large scale and many people were making purchases of those homes at prices they could not afford.
Now, because of years of compounded mistakes such as the sub-prime mortgage crisis in the United States and the overvaluation of property in the United Kingdom, Australia and New Zealand, it appears as if the era of safe investment in property might just be over in first world nations.
With investment returns in free fall in many developed property markets, the first property funds are starting to not only shut off their investors from getting money out of the funds, but some funds are actually contemplating leaving the markets for good. This effect is most pronounced in the UK at the current moment in time as recent statistics show that the 7.6% drop in return on investment in the last quarter of 2007 was the lowest in recorded history.
While at some point in the future absolutely safe investment in property might return, at the current moment it appears that property investment in many developed nations is going to be fraught with the same danger and risk as investing in any other conventional risk and reward venture.
