Some do benefit from a property crunch...

As I'm sure you're all aware (unless you've been living under a rock somewhere) the world is going through a massive financial crisis. One of the major areas where this is playing out is in the property market. Over the last 12-18 months, there's been a significant drop-off in property values around the globe, and the ramifications have been widespread...

The reasons for the property-price tumble are many. One of the primary drivers has been the global credit crunch, where banks are lending less and less, and it becomes harder to get a mortgage. As fewer people get mortgages, the buyers pool for properties gets shallower. With less demand, prices of properties come down, as sellers have to drop their asking price to attract a buyer. Then there is also the argument that prices were rising at an unsustainable rate, and were due for a reality check (or a 'correction', as the experts say).

The negative repercussions have been thick on the ground: People have realised that property values don't necessarily climb automatically; some have lost their homes as banks have called in sub-prime mortgages; older people, who may have had much of their wealth tied up in their home, have taken a knock to the value of their biggest 'investment'; people who bought at the top of the boom now have a property worth substantialy less than what they owe on it, and are factually bankrupt, etc. etc.

But there is always a positive side to any downturn or bad news. I, for one, have been watching the cost of a home accelerate away from me in the last few years, and have felt sick to my stomach when calculating what it would cost me to get an average starter-home. Apparently, 10-20 years ago, the average person bought their first home at 24/25, whereas the equivalent age today is in the early 30's! Now, I am fortunate in that I am well ahead of the curve in terms of what someone my age (25) earns, and I'll probably be able to purchase a house in the next 2-3 years, but the way that prices were going, I was going to have to settle for 'student' accommodation on an 'executive' income. With prices coming off their highs, I may well now be able to get something something more along the lines of what I had in mind. And I know that many of my peers and friends feel the same way - it at least gives us a look in...

And while estate agents and developers are getting kicked in the nads, there are other businesses that are booming. Going for a run around my neighbourhood the other day (I hadn't done so for a good while), I couldn't help but realise that nearly every second house had done alterations! When you think about it, it makes perfect sense: People haven't been able to buy their dream house (because they couldn't sell their current one, or couldn't get a loan for the one they want), so they've had to do the next-best thing and upgrade what they have. This would mean that the associated industries - such as DIY stores, building supply warehouses, contractors, etc. - would all be noticing a nice uptick in business (or at least keeping the business ticking over while everyone around them is going bust). I noticed in the newspaper the other day that Massmart (the owners of Builder's Warehouse - a local building supply warehouse franchise) came out with relatively strong results, at a time when everyone's competing to report the biggest loss. Maybe companies like these could be a reasonably safe bet for investing, while everything else is tanking?

Oh, and if you have been living under a rock somewhere, don't feel bad - it probably hasn't lost as much value as a real house...