Discover the world of real estate investing and why more and more people are choosing to invest in real estate. Real estate offers numerous benefits, including capital growth, passive income and diversification of investment portfolios. But what actually makes real estate inflation-proof?
Below we dive deeper into the reasons why real estate is considered a solid investment in times of inflation. Because it is often written that real estate is inflation spending. But is it?
Learn why real estate values have historically risen along with inflation, how rent increases and refinancing can work in your favor, and why real estate as a tangible asset can protect against inflationary pressures.
Discover the potential benefits and considerations of real estate investing and familiarize yourself with this exciting investment opportunity that can offer many opportunities in a dynamic market.
4 Reasons why real estate is inflation-proof:
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1. Increase in value
In a high-inflation economy, many goods and services tend to become more expensive, and real estate is no exception. Real estate prices have historically tended to increase in value in line with inflation. So over time, real estate investments can show an increase in market value, allowing investors to maintain their purchasing power, making it true that real estate is inflation-proof. But there is more.
2. Rent increase
Inflation can also lead to rising rents. As the cost of living increases, renters will typically pay more to stay in a property. This can result in higher rental income for property owners, making them more resilient to the effects of inflation.
3. Refinancing
Inflation can benefit property owners with mortgages. As inflation rises, property values and rental income can increase. This creates an opportunity to refinance the property at a higher value, freeing up additional capital.
4. Hard assets
Real estate is a tangible asset that represents value in the form of land and buildings. Inflation can cause currency to depreciate, but real estate remains a tangible asset that retains its intrinsic value. This makes real estate attractive to investors as a protection against inflationary pressures.
While real estate is generally considered inflation-proof, it is important to note that this is not an absolute guarantee. There are other factors that can affect the value of real estate, such as market conditions, location, supply and demand. It is always wise to do thorough research and seek professional advice before deciding to invest in real estate.
Find out more in the article "How does inflation affect real estate?"
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