Bloo Loo Posted February 15, 2012 Share Posted February 15, 2012 I agree but how long can you wait for. I've waited 4.5 years and still no crash here in Essex. I dont have the luxury of time on my side therefore at some point I need to get on with life. The trouble with owning a home is that no matter where you sit, you're looking at something you should be doing. Quote Link to comment Share on other sites More sharing options...
Giordano Bruno Posted February 15, 2012 Share Posted February 15, 2012 Please try and answer in a more mature manner, otherwise dont bother. Negative equity is only if you owe more than the property is worth so maybe I wont be in that position. Maybe I'm in the process of buying. Maybe I have more balls than you will ever have. I would prefer if you think before posting. I thought the forum was for expressing opinions and you are only one person, not the whole forum, and you are not even Si1 to whom the post might have been addressed. Quote Link to comment Share on other sites More sharing options...
marcusthe Posted February 15, 2012 Share Posted February 15, 2012 Surprised no one has mentioned BTL and the impact on home ownership. I cannot see a crash because as soon as prices slide enough to offer a potential good yield then they will be snapped up by cash buyers who are frustrated with low savings rates. Quote Link to comment Share on other sites More sharing options...
cashinmattress Posted February 15, 2012 Share Posted February 15, 2012 Certain people on this forum are prone to posting that they will not buy until prices return to where they were at (in terms of income multiples) in the mid nineties. I think that this is deluded. Houses in the mid nineties were undervalued, in the same way that they are overvalued today. I do not, in my lifetime, expect to see houseprice/income ratios return to where they were 15 to 20 years ago. The same people also often quote the ‘long term’ trend of average house prices averaging 3.5 times average income. Again, I think this model is flawed. The long term average spans many years where it was the norm for the husband to work and the wife to stay at home as a housewife. That model is now long gone. Both husbands and wives now routinely work so the new norm is the double income family. Finally, interest rates were historically a lot higher than they are now. This meant historically the cost of servicing a small loan was similar to the current cost of servicing a large loan. People argue that IRs will rise, and indeed I believe they will. But not by much and not very fast. I think that it is quite conceivable that someone taking out a new Mortgage today could see IRs stay below 2.5% for the entire duration of their mortgage. Look at Japan. So, although I would LIKE house prices to revert back to nineties levels in terms of price/income ratios, I do not think they will. Glad you think so. I'm sure plenty of Japanese folk said exactly the same thing over 20 years ago. Seems you, like so many folk, do not equate the last 30 years of Britain's economic growth with the presence of the UKCS oil and gas sector; but perhaps you can acknowledge that the housing inflation was by design to sequester a whole generation out of productive independence and into wholesale debt servitude to banks? If perhaps your scenario plays out and prices hover at current levels, or even go high again, how on earth are you going to pay to heat the home when we're importing 80% of our energy needs from Russia et al? Will you have a job and pension to support yourself as well? Or how about who will be propping up elevated property prices when the last of the boomers are put into homes or buried? Are the current generation, who are swamped in debt and have a dim future as far as job stability and wage inflation going to be able to survive in a system with 1950's era British socialism being supported by 21st century globalist monopolistic corporate culture; ie no money to support all the people out of work and the ever increasing army of pensioners seeking increasingly expensive medical care? What happens to Britain when the BOE is forced to push up rates, which will happen at some point? There's a big demographic discrepancy that's never considered, -10%++ YoY indigenous energy production, wage deflation and obvious loss of industrial output that's not going to change. I don't think you've looked outside of your box very often. Quote Link to comment Share on other sites More sharing options...
Si1 Posted February 15, 2012 Share Posted February 15, 2012 Please try and answer in a more mature manner, otherwise dont bother. Negative equity is only if you owe more than the property is worth so maybe I wont be in that position. Maybe I'm in the process of buying. Maybe I have more balls than you will ever have. I would prefer if you think before posting. the compound costs of paying double what a property is worth a few years later are enormous do you understand what compound costs are? opportunity cost? investment return? I have thought oh so much more than you have about this having balls is about challenging your own simple minded preconceptions, which is something you have failed to do Quote Link to comment Share on other sites More sharing options...
Dorkins Posted February 15, 2012 Share Posted February 15, 2012 Surprised no one has mentioned BTL and the impact on home ownership. I cannot see a crash because as soon as prices slide enough to offer a potential good yield then they will be snapped up by cash buyers who are frustrated with low savings rates. I very much doubt there is enough BTL-wannabe cash lying around to outbid an entire generation of would-be-homeowners. Quote Link to comment Share on other sites More sharing options...
Si1 Posted February 15, 2012 Share Posted February 15, 2012 Ulitmatly most people on this site would like to own there home, youself included? I dont understand what you trying to established if by one day you yourself will own a house you to will "no matter where you sit, you're looking at something you should be doing." ? a home is only an asset, I wish to have assets in my life as they pay an income (imputed virtual rent if you own your own home), however a home is only one possible such asset the long term real income of property is exactly the same as for other real investable assets owing to market arbitrage over the long term - do you know what the word 'arbitrage' means? I suggest you look it up. So no, the smart don't necessarily want to own a home for its own sake, however they may well end up doing so if, as an asset with a yield, it makes sense in numerate thinking man's terms it does not add up right now; however there other less quantifiable terms under which you may wish to be a homeowner, of course; an argument towards capital losses not being an issue if you have a big enough deposit does not wash, if you think about it, which you haven't Quote Link to comment Share on other sites More sharing options...
Si1 Posted February 15, 2012 Share Posted February 15, 2012 Whats compound costs got to do with your original reply to my post? fair play compound costs ball-crunching too Quote Link to comment Share on other sites More sharing options...
marcusthe Posted February 15, 2012 Share Posted February 15, 2012 But they are being outbid by landlords, particularly at the FTB end of the market, I have seen it happening at auctions and its all I hear from Estate Agents. One decent area of Bristol has a landlord who basically hoovers up everything. According to a couple of estate agents he gets in there even before they are uploaded to Rightmove. How the f*** can the average FTB compete with that! Quote Link to comment Share on other sites More sharing options...
Si1 Posted February 15, 2012 Share Posted February 15, 2012 (edited) But they are being outbid by landlords, particularly at the FTB end of the market, I have seen it happening at auctions and its all I hear from Estate Agents. One decent area of Bristol has a landlord who basically hoovers up everything. According to a couple of estate agents he gets in there even before they are uploaded to Rightmove. How the f*** can the average FTB compete with that! why would you want to? he's going to lose his shirt, as are Accord/YBS mortgages who seem to be doing all the BTL lending these days, having poached the ex-BTL business team off Bradford and Bingley after they went bust... (there's also the question of whether the agents are acting legally - if he is buying at discount prices and FTBs would pay more but never get near the sale then the agents, or the repossessing bank, are acting illegally - could this be happening? Edited February 15, 2012 by Si1 Quote Link to comment Share on other sites More sharing options...
Si1 Posted February 15, 2012 Share Posted February 15, 2012 Surprised no one has mentioned BTL and the impact on home ownership. I cannot see a crash because as soon as prices slide enough to offer a potential good yield then they will be snapped up by cash buyers who are frustrated with low savings rates. it is deeply uninformed to directly compare savings rates with asset yields - obviously asset yields carry a heavier risk than cash income people who have (foolishly) entered BTL on this basis will run for the hills when they hit their first serious loss (which happens in any real asset market) if they have a cash-investor's risk profile, this will compound the crash Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 15, 2012 Share Posted February 15, 2012 Ulitmatly most people on this site would like to own there home, youself included? I dont understand what you trying to established if by one day you yourself will own a house you to will "no matter where you sit, you're looking at something you should be doing." ? sounds like you need to get a life, let alone getting on with one. Quote Link to comment Share on other sites More sharing options...
Mildura Posted February 15, 2012 Share Posted February 15, 2012 (edited) But they are being outbid by landlords, particularly at the FTB end of the market, I have seen it happening at auctions and its all I hear from Estate Agents. One decent area of Bristol has a landlord who basically hoovers up everything. According to a couple of estate agents he gets in there even before they are uploaded to Rightmove. How the f*** can the average FTB compete with that! I have heard similar reports. Someone I know is in the process of buying two properties in the North East which she intends to rent out. Purchase price for each is around £60k, with an expected monthly rent of £450. This is a far better return than this person currently receives on her savings in the bank. (Before everyone starts, I know it's not quite as straightforward as that, with void periods, maintenance, tax etc, but it's her decision not mine.) Edited February 15, 2012 by Mildura Quote Link to comment Share on other sites More sharing options...
Si1 Posted February 15, 2012 Share Posted February 15, 2012 I have heard similar reports. Someone I know is in the process of buying two properties in the North East which she intends to rent out. Purchase price for each is around £60k, with an expected monthly rent of £450. This is a far better return than this person currently receives on her savings in the bank. (Before everyone starts, I know it's not quite as straightforward as that, with void periods, maintenance, tax etc, but it's her decision not mine.) so you agree it is a deflating speculative bubble that will continue to deflate as specualtors realise that assets and cash returns are not strictly comparable? Quote Link to comment Share on other sites More sharing options...
Hat Posted February 15, 2012 Share Posted February 15, 2012 I agree but how long can you wait for. I've waited 4.5 years and still no crash here in Essex. I dont have the luxury of time on my side therefore at some point I need to get on with life. In the previous housing crash starting in 1989, houses prices didn't bottom out until 1998- a full 9 years later. This bubble was far larger, but even if the timeline was as last time, you'd be looking to expect to wait until at least 2016 before reaching the trough. The truth is, we may yet be 10 years or more from the bottom. If you don't mind me asking, why is it that you do not have the luxury of time? Quote Link to comment Share on other sites More sharing options...
Mildura Posted February 15, 2012 Share Posted February 15, 2012 so you agree it is a deflating speculative bubble that will continue to deflate as specualtors realise that assets and cash returns are not strictly comparable? I would agree that illiquid assets and cash deposits are not strictly comparable, and the likelihood for many parts of the country is that property values are likely to stagnate, at best, for a number of years to come. However I can understand how someone who is retired say, with cash sat in the bank earning them 1-2%pa would be tempted by purchasing a property to let out which may give them a better return. Whether that is a wise decision for them to take will need to be judged in years to come. In a way are those that do not wish to buy speculating just as much as those they are currently buying? When it comes to trying to predict exactly where prices are heading there are those that don't know and those that don't know they don't know. Quote Link to comment Share on other sites More sharing options...
Goat Posted February 15, 2012 Share Posted February 15, 2012 VI trolling bulls*** meme #1: I agree but how long can you wait for. I've waited 4.5 years and still no crash here in Essex. When the alternative is financial suicide I suggest you wait as long as it takes. VI trolling bulls*** meme #2: I need to get on with life. Quote Link to comment Share on other sites More sharing options...
Hat Posted February 15, 2012 Share Posted February 15, 2012 Houses in the mid nineties were undervalued Why do you think that? Long term historical data suggests that house prices were highly overvalued in the mid-90s. For example see "Safe as Houses" by Neil Monnery. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 15, 2012 Share Posted February 15, 2012 I have heard similar reports. Someone I know is in the process of buying two properties in the North East which she intends to rent out. Purchase price for each is around £60k, with an expected monthly rent of £450. This is a far better return than this person currently receives on her savings in the bank. (Before everyone starts, I know it's not quite as straightforward as that, with void periods, maintenance, tax etc, but it's her decision not mine.) yeah, buying unseen no doubt...has she been on a course? Quote Link to comment Share on other sites More sharing options...
Si1 Posted February 15, 2012 Share Posted February 15, 2012 In a way are those that do not wish to buy speculating just as much as those they are currently buying? no speculating is not the same as asset allocation Quote Link to comment Share on other sites More sharing options...
Si1 Posted February 15, 2012 Share Posted February 15, 2012 VI trolling bulls*** meme #1: When the alternative is financial suicide I suggest you wait as long as it takes. VI trolling bulls*** meme #2: Quote Link to comment Share on other sites More sharing options...
Mildura Posted February 15, 2012 Share Posted February 15, 2012 yeah, buying unseen no doubt...has she been on a course? Incorrect on both counts I'm afraid. Quote Link to comment Share on other sites More sharing options...
winkie Posted February 15, 2012 Share Posted February 15, 2012 I agree but how long can you wait for. I've waited 4.5 years and still no crash here in Essex. I dont have the luxury of time on my side therefore at some point I need to get on with life. I have come to the conclusion there will be no crash, just a slow orderly deflation....house prices crash the economy crashes, that can't be allowed to happen, apart from that a crash would have happened big time if it had not been for the implementation of zero interest rates.......property falling with zero interest rates is telling you they were massively overpriced, so there is still plenty of space to achieve equilibrium.....went up too far and to fast, coming down surely and steadily. Quote Link to comment Share on other sites More sharing options...
Mildura Posted February 15, 2012 Share Posted February 15, 2012 no speculating is not the same as asset allocation That may be so, but those that have the means to buy but choose not to are surely speculating that the future purchase price will be lower. Whether that proves to be the correct decision will vary from person to person, and area to area, I'm sure there will be many winners and losers. Exactly who falls in to each category we will have to wait and see. Personally I've long since given up doing predictions, as I've no idea which way we're heading or how long it will take to get there. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 15, 2012 Share Posted February 15, 2012 (edited) Incorrect on both counts I'm afraid. can we all join in? Oh, I see that we can. http://www.thetelegraphandargus.co.uk/homes/homes_for_sale/in/Bradford,%20West%20Yorkshire/from/50000/to/70000/low-to-high/All/with/0/bedrooms/list/ Edited February 15, 2012 by Bloo Loo Quote Link to comment Share on other sites More sharing options...
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