Guardian Sat 8.12.07

[drrayjo]

http://www.guardian.co.uk/money/2007/dec/08/buyingproperty

Does property still make sense?

Does it make sense to buy property? Halifax said this week that house prices are falling at the fastest rate since the crash of the early 1990s. Will today's buyers become trapped in negative equity? Patrick Collinson asks the pundits: are you mad to buy a property right now?

"No, you're definitely not mad to buy at the moment. You have to look at it all relatively. The reality is, people talk about a dip in the market but if you are buying a home today you are going to be in it for five, 10 or 15 years.

"Over that sort of time period it is just not going to be a problem. Even if your home does come down a little in value, that just means the next one you buy will be cheaper as well."

She says that potential buyers are in the grip of irrational fears. "Interest rates really aren't at that high a level and it's quite a different economic climate to the early 1990s when rates were at 15%. People aren't in a position where they have to sell because they can't afford the mortgage."

She warns firmly against trying to play the market.

"I think you would be a right idiot if you sell now and try to make a profit by buying back later. I know people - even quite clever guys - who have tried to do this in the past, believing that prices were at a peak. Within six months they couldn't afford to buy back the flat that they had sold."

But the true idiots, she says, are those who are tempted into investing in buy-to-let properties at this stage of the market. "I have thought for some time now that buy-to-letters are bordering on the mental, buying properties on yields of just 3% or 4%."

There's no sign of any downturn in the market for TV property programmes. Beeny has recently been shooting a new series of Property Ladder for broadcast early next year and even if interest in property does dry up, she has an alternative career up her sleeve. She's the founder of the UK's fastest-growing dating website, mysinglefriend.com which now boasts more than 150,000 users.

edit:spp

Edited December 8, 2007 by drrayjo

[BandWagon]

Here's the correct link...

property sense

Edited December 8, 2007 by BandWagon

[Dopamine]

Oh well, I'm proud to be an idiot in that case. Clearly in 6 months I won't be able to buy back the house which is already worth 10 grand less than I sold it for 6 months ago. Hmmm.

[OnlyMe]

Beenyworld is a place far away from imploding banks, CDO's, SIV's, mortgage bondholders who have just had their contracts ripped into shreds by Paulson.

There is a financial bomb under Beenyworld and a billion litres of magnolia is not going to cover it.

[Selling up]

There's a poll beneath the article: "Would you be mad to buy a house now"

Currently Yes 50% No 50%.

Doesn't say how many votes.

Pretty impressive sentiment indicator (unless only I and one other person have voted!)

[thecrashingisles]

Interesting comment from the Wilsons in that article:

"The prices developers who advertise in the newspapers are giving are pure fantasy. The prices of flats are dropping, dropping and dropping. There are some flats in Maidstone which went on the market at £240,000 relatively recently which are now being offered to me at £137,500. I wouldn't buy them even if they were down towards £100,000."

[symo]

Interesting comment from the Wilsons in that article:

"The prices developers who advertise in the newspapers are giving are pure fantasy. The prices of flats are dropping, dropping and dropping. There are some flats in Maidstone which went on the market at £240,000 relatively recently which are now being offered to me at £137,500. I wouldn't buy them even if they were down towards £100,000."

.....................because we can no longer refinance

[margesimpson]

Calling people "right idiots" and "true idiots" hardly makes Beeny look professional.

She quickly realised she could make more money making property porn than she could in property itself. Says a lot.

[Guest The_Oldie]

Re the Wilsons, I have always thought that a business is worth the sum of it's assets minus the sum of it's liabilities. Are property businesses now valued differently, ie ignoring liabilities (mortgages)?

All are in the Maidstone and Ashford area of Kent where the two former maths teachers have built a huge property empire valued today at around £250m.

[bomberbrown]

Jonathan Davis, Housepricecrash.co.uk

Davis was the gloomiest pundit we spoke to. "Don't touch property with a barge pole. Over the next year house prices will go down by 5-10% and over the next four to six years they will fall 30-40%

It's this type of reporting that really gets my goat. Why is it considered gloomy to want to pay less for place to live? We never want cars or food to go up in price, so why is it any different for houses?

[domo]

Clearly she doesn't anticipate prices falling as much as they will do, but then almost no-one does, because they can't think of a single example or reason for prices to fall to crippling levels.

[Nickolarge]

"No, you're definitely not mad to buy at the moment. You have to look at it all relatively. The reality is, people talk about a dip in the market but if you are buying a home today you are going to be in it for five, 10 or 15 years.

"Over that sort of time period it is just not going to be a problem. Even if your home does come down a little in value, that just means the next one you buy will be cheaper as well."

Here is the problem. If you buy now at prices currently being asked (irrespective of whether or not this is the peak) you have to find about one years take home pay to fund the minimum deposit on a 250k home and you are then saddled with a massive monthly payment for years to come. If your home does come down in value the next one you try to buy may be cheaper but you will not have the deposit due to negative equity and you will be unable to remortgage for the new home because the debt you already held would be more than the value of the new home

Are these so called experts really that stupid or is it intentional VI bull.

[ParticleMan]

Re the Wilsons, I have always thought that a business is worth the sum of it's assets minus the sum of it's liabilities. Are property businesses now valued differently, ie ignoring liabilities (mortgages)?

What you're missing, is that in Beenyworld, you mark to model, not to market.

So their assets will probably continue outstrip their liabilities, gaining 10% YoYoYoYoYo.... a bit like a gambler's perception of their own wealth, as they double down one more time.

[margesimpson]

I have always thought that a business is worth the sum of it's assets minus the sum of it's liabilities.

That's not how businesses are valued at all.

[Converted Lurker]

Calling people "right idiots" and "true idiots" hardly makes Beeny look professional.

She quickly realised she could make more money making property porn than she could in property itself. Says a lot.

she's simply v. over-rated due to being cute and cute works on tv., doesn't translate too well to print though eh? Her book/s is /are 5hite too, as is her dating agency nonsense...still...isn't she lovely

[HenryWeston]

There's a poll beneath the article: "Would you be mad to buy a house now"

Currently Yes 50% No 50%.

Doesn't say how many votes.

Pretty impressive sentiment indicator (unless only I and one other person have voted!)

Would you have to be mad to buy a property now?

Yes 61%

No 39%

[Darkman]

she has an alternative career up her sleeve.

And there's the telling line.

What confidence she must have in the housing market.

She's been setting up a different business.

[piece of paper]

Here is the problem. If you buy now at prices currently being asked (irrespective of whether or not this is the peak) you have to find about one years take home pay to fund the minimum deposit on a 250k home and you are then saddled with a massive monthly payment for years to come. If your home does come down in value the next one you try to buy may be cheaper but you will not have the deposit due to negative equity and you will be unable to remortgage for the new home because the debt you already held would be more than the value of the new home

Excellent real world post!

p-o-p

[Guest The_Oldie]

That's not how businesses are valued at all.

Simple ones are surely, how much goodwill and growth potential can there be in a "one man band" BTL "empire", although I should have stated balance sheet value.

[0q0]

I would have thought that it's rather more idiotic to suggest to someone that they should buy now and get bogged down with a huge debt that could seriously challenge their financial future. The mentality to buy a property even if its value seems beyond common sense and fundamentals, must be the most idiotic suggestion going. Well, idiotic or selfish.

As for Beeny bag, she should stick to making useful programmes about additives in cosmetics. And if that contract's dried up and she fears she can only get work in Pwoperty, then she'd best get her sweet cheeks down the Jobcentre and sign on, she won't get those NI credits sitting at home gawping, waiting for more pwoperty shows to do - there's bound to be less of them to do now as economics shift. Just as in the shares boom - you can only work it while it's hot.

Edited December 8, 2007 by The Last Bear

[Fool's Gold]

The purpose of this article was in fact to publicise Sarah Beeny's dating website, as can be observed in the last paragraph of her comments. That's the reason why Financial Planner's comments were relegated to last in the the article, he's not set up a dating website (as far as I know).

Besides, when Sarah Beeny appears on here TV programs and tells people 'You probably can get X-thousand pounds for this' and is then simply proven wrong because some fool comes along and pays over the odds for the property i.e. she's consistently wrong. Either that or she's deliberately cautious, but why should I believe her now that she's more bullish given that she gets it wrong in a bullish market ?

[Guest Bart of Darkness]

Would you have to be mad to buy a property now?

Yes 61%

No 39%

Back to 50/50 now.

[Guest DissipatedYouthIsValuable]

In other news, most of the right thinking, increasingly enlightened public no longer believe a word the mainstream media says, questions the government, and is beginning to wake up to distributed market principles and inequality.

Bob Edwards, an ordinary bloke with an internet connection, said, "I can make up my own mind without deliberate misrepresentation of the truth by a whole tier of vested-interested painted clowns whose raison d'etre is maintaining the ******ed up propaganda systems which continue the slavery of the masses."

Unfortunately, we cannot bring you a video of Bob, because he's not very attractive, had a few days of stubble and was in a slightly torn dressing gown. So he doesn't count.

Edited December 8, 2007 by DissipatedYouthIsValuable

[EmpiricalBear]

How sweet to be an idiot!

http://www.youtube.com/watch?v=jM_QAFJ80GY

also

http://www.youtube.com/watch?v=rWBRZ-duNuk&NR=1

(don't think the 'as harmless as a cloud' works with the image though).

Edited December 8, 2007 by 2MeterBear

[barsark]

Sarah Beeney has a new career, it's called TV.

Fot this career you have to sell your sole, morals and common sense.

(edit) ps 2meterbear - how are things now, many offers for work?!?!? http://news.sky.com/skynews/article/0,,30100-1295327,00.html

Edited December 8, 2007 by barsark