For sale sign
Experts are questioning whether or not property/real estate investments hold the same value they once did Reuters

For as long as I can remember, property (or real estate for my American colleagues) has been an excellent investment. Even now, when I gather with family and friends, you can garner some rather strange looks if you dare to suggest that going forwards, the end of Real Estate as a 'cash cow' could be nigh.

Who can argue with decades of price rises that never seem to end, lulling the unwary young into believing that unless they buy a house now, they are destined to be poor and homeless for the rest of their sad little lives? The older ones who already own a house get richer, while the young who have yet to set foot on the property ladder and need to overstretch themselves to do so get poorer.

It is just one more example of the numerous "Ponzi" schemes that currently surround us.

This a rather depressing sentiment, but history tells us that when the "state of play" becomes out of balance like this, a painful reckoning is on the horizon.

When speaking to a financial adviser in the mid-2000s we were reviewing the investment vehicles for my pension. The pension company's commercial property portfolio was far outperforming any others. When I questioned why I hadn't had part of my pension added to that portfolio, my financial adviser blithely shrugged and said – it was over-subscribed. I was younger back then – I suspect he thought I didn't know enough to understand the implications or challenge his oversight. He was right; I didn't.

In the year 2000, I bought my first and only house so far. It was an incredibly charming 200-year-old cottage, and despite my diligence in acquiring a survey before purchase, within six months, the roof had collapsed. I was in my twenties then and had plenty of time to make up for the additional expense, and I loved the house, so I wasn't too troubled. By 2003 I had spent as much money renovating the house as I had initially paid for it and I was very proud of the final result. However, the surveyor who came to value the house when I applied for a remortgage to cover the renovations was not so similarly impressed.

By the end of 2007, expecting my first child and about to open my first business, the house needed to be sold at a specific price point to cover the outstanding mortgage and expenses. Long story short, the house eventually sold seven years later in 2015 for the price, finally, that I wanted. So I eventually recovered the money I had spent on it. But after that, I was in no hurry to buy a new one.

So, I will admit, my perspective on properties, as an investment, in addition to running a dental business (if you have read my book), is somewhat jaded.

As someone brought up to do the traditional thing and choose higher quality, those values have not always served me when it comes to my financial well-being. It was only towards the middle of my life that it became apparent to me; the importance of understanding how money and finance work. It is not a simple matter of saving conscientiously and spending wisely; there is much more to it than that. I now believe that comprehending how money works is a primary key to understanding how to get ahead in life.

From the outside and without the relevant education, finance can seem overwhelming. The over-abundance of complexity, tied in with the need for accountants, financial advisers, governments and central banks, are all requirements for how our current economic system works. Yet, it turns out to suit the interests of the top 1 per cent to keep it confusing. It keeps those that know wealthy and those that don't poor.

Property can be an excellent investment if you know what you are doing with money and finance. A disaster if you don't.

In my book Truth Decay – How Bitcoin Fixes This, I go into more detail about how the monetary system works and why this leaves the average person at a disadvantage. Property is the perfect example of this.

Every human being needs somewhere to live; it is a basic human necessity. With a growing population and land in desirable locations a scarce asset, properties will inevitably increase in price. When you add to this the problems of inflation and entities around the world requiring safe places to store their wealth as the value of cash melts away. It is hardly surprising that property prices are exploding.

Property prices can lead to the ultimate FOMO (Fear Of Missing Out). The biggest culprit (in addition to scarcity) is the availability of leverage – the ability to borrow money to buy an asset. As the conditions around lending have been eased surreptitiously over the decades, so property prices have increased. The poor management of such lending is what ultimately led to the financial crisis of 2008. This crisis has not been fixed. Quantitative easing disguised the pitfalls hidden in the financial system's backrooms, but these anomalies are now much more significant.

So far, the music is still playing, and the musical chairs continue, but what happens when the music stops this time? Banks can be capricious, and they are well known for only giving you an umbrella when the sun is shining. What happens when their banks – the central banks have no umbrella to give them? Banks calling in loans is not unheard of and can be one of the most catastrophic things to happen to an individual or a business, especially if their whole life is built on them.

Debt is relatively new as a form of money. Without it, much of our economy would not have grown as fast as it has over the last forty years. However, this growth has been borrowed from the future, in a way never before seen in history and those that are meant to pay it back have had very little say in its accumulation.

Debt became viable as a form of money once the banks convinced us that we should trust them to keep track of the value of money relative to the gold in their vaults. The argument for loosening the rules first occurred around World War I as the expenses for that adventure needed to be covered. So began the fudging of numbers, but hardly anyone still alive today remembers that discussion.
The paper debt, relative to gold, is now astronomical, but that means the paper assets are too – held in pension funds and promises to cover future welfare payments. The entire situation is incredibly finely balanced; it has to break at some point, it is mathematically inevitable – but what happens then?

If you listen to the financial pundits, they couch this debate around the subject of inflation or deflation – i.e. which will happen first. The strict definition of inflation is an increase in the money supply – so we already have that – no question. So the honest debate is when will the problems in the financial system become apparent in the real world due to trouble with the banks leading them to withdraw credit. This is what the financial pundits really mean by deflation.

If the banks have over-extended themselves concerning the actual amount of gold held in their bank vaults – what will hold them accountable?

Some argue that the price of gold will need to explode to re-balance the system. Some say that the banks will get away with continuing to fudge the numbers. Others say that the banks will need their own central bank digital currencies, keeping them somewhat more accountable. But with this method, they can maintain their own back door into their custom-built programmes.

Bitcoiners buy into the argument that the economy needs to return to the idea of gold. The economy can't fully trust real gold, however, because storage and transport are problems. The need for banks to verify gold's ownership and value is part of the corruption.

Bitcoin solves this problem because, as a digitally scarce asset, it simulates gold's monetary properties. Bitcoin is also much easier to store and transport. Verification of its ownership is programmed into the software. On this basis, the world has the potential to operate on sound money again.

If you understand the benefits to society of sound money, this is a beautiful vision. But what about the assets that currently rely on debt? Most notably, our welfare systems, the industries that depend on the management of debt, i.e. the banks and the politicians, and finally, what about the value of the real estate? Not only is property a massively over-leveraged asset, with a large proportion of the population and businesses committed to a mortgage, but what about those who only own it as an asset in their pension fund? Many of these properties remain empty for long periods, while the streets of some countries are filled with people who cannot live in a house at all.

If Bitcoin reaches its dream as a world reserve currency, this means the use of debt as a currency, as it is now, is ultimately obsolete. Yes, individuals and businesses will need some borrowing to help start a business or buy a home. Still, the obsolescence of debt, as a form of currency, means that its availability will be much more constrained than it was in the past, indicating a significant limitation to the growth of property prices going forward in the future.

At the moment, there are decentralised finance projects that are attempting to recreate a new financial system around cryptocurrency, including using debt-based models. Many of the organisers are still uncertain about how our economic future is likely to play out and hedge their bets as to which cryptocurrency to hitch their sail. This is hardly surprising given how currency has been managed for the duration of their lives. Who can blame them for believing that it is simply a popularity contest, and all they need to do is take an educated guess as to who the winner will be? After all, who knew that the American dollar was likely to emerge as the new financial powerhouse following the second world war?

The reality is that history and an understanding of how money works most effectively can indicate which currency is likely to win. As the problems with debt and dilution of money came to a head in the past, for example, the fall of the Roman empire, pre-revolutionary France and Weimar Germany – the ultimate solution has usually been gold. As the pendulum swings from lies, misdirection, and corruption, truth and honesty in the form of sound money become the next destination.

So be wary of over-leveraged assets and don't be deceived into believing that because Real Estate has exponentially increased in value over the last forty years, it is likely to continue. It is crucial to understand how the foundations of the financial system are actually built and if Bitcoin is the next currency, debt as a form of money will be obsolete.

We are at a unique point in history; we have been here before, but with different players. It is a melting pot of ideas and a simmering stew of possibilities for our money going forward. The actual direction, however, is apparent if you think about the issues deeply enough.

You can do well with property, but don't let the easy availability of debt right now seduce you, and equally, be wary of doing the same with Bitcoin. If the market for debt collapses – it will affect you too.

By Profile Picture Victoria Collette Jones Victoria Collette Jones https:www.linkedin.comcompanysatoshis-page-ltd

Victoria Collette Jones is a qualified dentist who worked in the dental industry for over twenty years. 

As part of this she has had a range of involvement in different public- and private-sector markets, from small family-owned practices to large corporate chains, from local co-operatives to international institutions. She also spent ten years starting up and building her own dental establishment into a profitable enterprise in the private sector, and successfully sold it in 2017. As a result she has extensive experience in varied business environments. 

Victoria has also earned an MBA from the University of Nottingham, and is interested in the world of commerce and economics, including new payment methods and the ways in which these will influence and profoundly affect our future. 

Her familiarization with Bitcoin came in 2016 when she introduced Bitcoin as a payment method into her own business. Victoria now works as a Bitcoin advocate, supporting individuals and businesses that are similarly interested in adopting Bitcoin as a payment method. You can learn more about her and her work at