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|Does property crowdfunding have an impact on first-time buyers?|
|Friday, 23 October 2015|
Over the last couple of months this question has come up, on numerous occasions, with crowdfunding being cast as the villain of the peace. Let’s look at the situation objectively.
In the first place, 'crowdfunding' may well affect prices, but it is highly unlikely to ever actually 'drive' market prices, which rise and fall - as we all know - on an almost cyclical basis, and are interdependent on a wide range of influences such as the economy, wages, interest rates, etc. These influences will also affect the prices that a crowdfunding purchase may achieve.
Propnology’s platform provides access, for interested parties, to invest in both commercial and residential property that may not be accessible to investors; for example, we may offer a portfolio consisting of a block of tenanted apartments, on the basis of providing investors with an immediate return upon purchase. This strategy does not always equate to fuelling demand and pushing up prices. In fact, it creates the opposite effect, as the platform can, potentially, can fund deals more quickly; furthermore, leverage is created when it comes to negotiating on a price reduction. Additionally, it removes the hassle of vendors having to deal with sitting tenants, who may be under no legal obligation to leave.
We believe the actual impact of crowdfunding, on housing prices, will probably be peripheral rather than direct. We live in an imperfect world and while, ideally, it would be great for first time buyers to have 'first bite' at the housing market, this is unlikely to happen, irrespective of the presence of crowdfunding businesses in the market place.
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