Long term growth in property prices are strongly linked to wage inflation. If wage growth is strong and people are earning more, then they will be driven to pay more for property.
(PRWEB UK) 25 July 2012
Having a little extra cash in the wallet takes the pressure off household finances and this is what many Americans must be thinking after getting their 3% pay rise this past 12 months according to property investment company, Colordarcy.com.
They will also starting to look at their properties as assets again rather than the liabilities they have been in recent years. Some will be thinking the same thing about their jobs too.
The Median weekly earnings of the country’s 102.8 million full-time wage and salary workers was $771 in the second quarter of 2012 according to the U.S. Bureau of Labor Statistics released this month. This was 2.4 percent higher than a year earlier and above the rate of inflation.
In the UK meanwhile we see wages failing to keep pace with inflation (Source: FT) and there is one other thing about US wages that investors should take note of…
Average weekly earnings have risen 0.5 percent in the past month. Top-performing employees meanwhile will get an average pay rise of 4.4 percent this year, according to a survey by US consulting firm Mercer released last month.
So how will this extra cash in American pockets investors in USA property?
According to Loxley McKenzie, Managing Director of Colordarcy.com, “It is really quite simple. Long term growth in property prices are strongly linked to wage inflation. If wage growth is strong and people are earning more, then they will be driven to pay more for property.
As analysts would say, the one good thing about economies is that wage growth continuously outstrips consumer inflation, or at least it will do in advanced economies like the United States.
So if USA wage growth continues to be strong, investors can expect to see the value of their investment rise as well as the rents people are prepared to pay.”
Notes to the editor:
Colordarcy is a leading property investment company that specialises in finding positive cash flow investment properties worldwide. Colordarcy investment property portfolio includes some of the best properties for sale in Brazil, Florida, Turkey and the United Kingdom.
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