Frizzers

Uk Property: How Low Can It Go

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There are two sources of repayment:

+ Income

+ Sale of the asset (the property)

A well structure loan should be covered both ways. The risk is lower that way.

High LTV with little assurance of income, are very risky indeed. But High TV can be

risky, especially if the borrower loese his job, or suffers from an adverse change

in income.

In Hong Kong, which suffered a 70% fall in property values, it is hard to get a loan

of over 70%, unless you have super stable income, and can easily cover the loan that

which, in which case you might get 85% or even 90%, but you will have to pay extra

for it.

My own most recent purchase in HK cost HK$4.15 million (plus over $100K stamp tax),

and I will be financing about $2.9 million (70%)

Indeed, there may come a time when the UK has a similar policy. But as yet it doesn't and there are still 22 approx lenders offering 95% loan to value. They may not have MIG's in Hong Kong, which are very prevalent over here now in high LTV lending.

Comparing China and the UK is like trying to compare Apples and Pears.

How long do you plan to have property in Hong Kong? Is it not starting to look a bit bubbly out there too?

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I think you will find that if you was a FTB trying to get a 95 / 100% loan you wouldn't get it, even if it was available. Just like the sofa sales on the tv. They show you a sofa with massive discount but when you get there that model has gone. But they have got you in there and will try to rip you off with some other overpriced junk. No one will lend 100% when there is a downturn. Even a financial thicky wouldn't be that stupid.

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I think you will find that if you was a FTB trying to get a 95 / 100% loan you wouldn't get it, even if it was available. Just like the sofa sales on the tv. They show you a sofa with massive discount but when you get there that model has gone. But they have got you in there and will try to rip you off with some other overpriced junk. No one will lend 100% when there is a downturn. Even a financial thicky wouldn't be that stupid.

Yes, you can't get 100% that is true.

But there are around 22 lenders offering 95%, even HBOS at 4.5 times joint income.

I'll keep posting fact.

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Yes, you can't get 100% that is true.

But there are around 22 lenders offering 95%, even HBOS at 4.5 times joint income.

I'll keep posting fact.

Like i said, until you want it and then there will be a reason why you can't have it

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No one will lend 100% when there is a downturn. Even a financial thicky wouldn't be that stupid.

Surely there can be no such thing as a" financial thickie" working in the industry......can there ? ;)

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Thankyou Drbubb, i love all your podcasts and am a big fan of your posts!

Cheers for all the selfless valuable info you provide

Just ordered harrisons book also, should be here any day soon!

Seconded, Peter Schiff's book is essential reading too IMO.

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if Oil hits $400 in 2010-12, as I expect

That kind of price increase will surely create a massive decrease in peoples willingness to pay regardless of their demand.

Fewer rooms will be heated, more clothes will be worn etc etc. Woolen carpets will return to profitability. Woolen clothing generally will be more fashionable. Currently wool is just a sideline of meat production for many farmers whereas it used to be the mainstay.

Demand for products is related to ability to access money to pay for products too.

The current demands of the world are related to a credit bubble.

At that kind of price there are other alternative fuels to consider even if they are messy/hazardous

I cannot grasp how oil go from 40 dollars to $400 in such a small amount of time.

The only way is if the US dollar declines massively further.

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Yes. The dollar would quickly lose a big share of its value in my scenario

Be prepared for a pleasant shock to come, never right off a wounded Wolf or Meercat. ;)

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Be prepared for a pleasant shock to come, never right off a wounded Wolf or Meercat. ;)

Looks like the bottom is getting near in US house prices. Reality in Financials. Not saying its going to be a recovery from here but the dollar is hugely sold off surely? a 20% recovery in the USD from here at 1.56 only takes it back to levels seen around 2 years ago. You have also got to consider that US house price increases are not as high as the UK or France and many other countries *and* the US has had all the dollar depreciation too. If people begin to sense dollar bottoming for now anyway then inwards investment is going to crank up. To consider further dollar falls from here you have to go to social breakdown and a countrywide decay rather than see that many other places have their own problems. Inflation *is* high in europe. Whats more if you fly over the USA it often appears like one big farm so whatever problems it has its not entirely bad!

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Looks like the bottom is getting near in US house prices. Reality in Financials. Not saying its going to be a recovery from here but the dollar is hugely sold off surely? a 20% recovery in the USD from here at 1.56 only takes it back to levels seen around 2 years ago. You have also got to consider that US house price increases are not as high as the UK or France and many other countries *and* the US has had all the dollar depreciation too. If people begin to sense dollar bottoming for now anyway then inwards investment is going to crank up. To consider further dollar falls from here you have to go to social breakdown and a countrywide decay rather than see that many other places have their own problems. Inflation *is* high in europe. Whats more if you fly over the USA it often appears like one big farm so whatever problems it has its not entirely bad!

Really? The impression I got from commentary about the latest Case/Shiller index is that they are about half way there.

Edited by redwing

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Really? The impression I got from commentary about the latest Case/Shiller index is that they are about half way there.

At some point the bottom becomes more visible and it makes little difference if you buy then or you wait till the bottom is reached and there is a bounce. Either way if you intend buying a few properties you can begin buying once you feel a bottom is being neared. If you are buying and renting you get the rent on the way to the bottom and rent on the way back to where you bought. So i am talking about being a trader perhaps. I think we are reaching the point where a well priced offer that is accepted can reach a price that is near the bottom and you will be fine in future years. The current collapse started in earnest about one year ago? so if the collapse continues at the current rate only one more year of massive falls remains. Then its going to be bumping along the bottom and confidance will return and silly offers will not be accepted as perceptions of bottomness increase. Meanwhile there is soon to be a massive bailout of mortgage lending. It is all very bottomy to me! I just see bottoms! There was hysteria on the way up and hysteria on the way down. nobody can time it perfectly.

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At some point the bottom becomes more visible and it makes little difference if you buy then or you wait till the bottom is reached and there is a bounce.

I'm sorry I misintrepeted your earlier post:

Looks like the bottom is getting near in US house prices.

I didn't realise that near meant visible. A bit like the sun, and the moon. Both visible and near.

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I'm sorry I misintrepeted your earlier post:

I didn't realise that near meant visible. A bit like the sun, and the moon. Both visible and near.

We can agree that we are always nearing the bottom unless we are static or moving away from it.

Obviously if a person is in the deflationary camp they are not looking at buying

But if you are in the inflationary camp it could be a way to preserve your wealth as banks fail and everything else generally goes down hill.

Wealth preservation seems important here *also* rather than being clever about predicting the future. I want it both ways just like anybody else but i see inflation rather than longer term deflation. Stagflation or something like it. I can work and renovate and carry on living and do ok meanwhile.

I was also talking about the US dollar and factors that could cause it to bounce back from the current doomsday levels :P

I tried this pessimistic lark for a few years and it has not been good for my health! I want to see a brighter future now :o We had visibility on all of this stuff and now its time to begin looking to the visibility of the recovery

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We can agree that we are always nearing the bottom unless we are static or moving away from it.

Obviously if a person is in the deflationary camp they are not looking at buying

But if you are in the inflationary camp it could be a way to preserve your wealth as banks fail and everything else generally goes down hill.

Wealth preservation seems important here *also* rather than being clever about predicting the future. I want it both ways just like anybody else but i see inflation rather than longer term deflation. Stagflation or something like it. I can work and renovate and carry on living and do ok meanwhile.

I was also talking about the US dollar and factors that could cause it to bounce back from the current doomsday levels :P

I tried this pessimistic lark for a few years and it has not been good for my health! I want to see a brighter future now :o We had visibility on all of this stuff and now its time to begin looking to the visibility of the recovery

I agree that we are closer to the bottom for US house prices, I think 1 year tops left to hit the bottom. What areas do you think are the best for investing in?

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Aliveandkicking

I tried this pessimistic lark for a few years and it has not been good for my health! I want to see a brighter future now We had visibility on all of this stuff and now its time to begin looking to the visibility of the recovery

That's where we differ.

I'm not interested in recovery. In fact, in an ideal world we wouldn't have recovery if that means that housing becomes a speculative market again.

However, I will be buying at some time in the future. I am not at all sure when that is going to be. The time will come when 1. prices are affordable to me and 2. we are enough of a way towards the bottom that I don't regret buying.

Quite frankly, I can't see this point in the future. I don't think it's visible yet. If it was visible then I could stick all my savings into appropriately long savings bonds to maximise interest in the knowledge that they wouldn't mature too early or too late.

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Dispite my hopes and dreams i know i am very worried at the moment.

And while i might intellectually believe that inflation will be what happens i cant rule out some kind of demand distruction that is just horrible to think about

My own situation is very different to most peoples. I am still interested in buying the right kind of property in the right kind of location and more or less i am going to be ok either way. Owning land that you can touch and grow something on feels much safer to me than any other kind of thing that might not be there when you next look for it.

We all have to do what seems best to each one of us. There are no simple solutions now. Dr Bubbs Harrison cycle probably sums it up. Amongst the rubble bargains will emerge that make sense and it seems we are almost at that point.

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