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Answer To 'should I Buy Now Or Rent' Questions


Scott

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HOLA441

You don't need to know when the bubble bursts, simply that you are in one, even then you are not safe. House prices always regress to the mean, which seems to be about 3/3.5 times the average income. So unless you do not require a mortgage, or at least a very small one, and the property you are interested in has no problems (and I have yet to find one), and the price is right, then I would rent and save.

We are all currently part of the biggest pyramid scheme in history, and one thing about history is that no-one ever learns from it. Property, or at least land speculation, is part of an 18 year cycle, so those that claimed 2004 would be the bust were slightly premature. I might not know the exact details of the crash, as there are too many variables, but the downturn would seem to be gathering pace.

Each generation thinks that it has invented sex, drugs, and rock'n'roll. But really, it has all been seen, and done before. I have been through two crashes myself and the funny thing is they were pretty much identical. The last one in the late 80's/early 90's seems to be getting replayed before my very eyes.

Not all questions are dumb, people in groups however are. Fear and greed are all you need to know about investment. Please also note that just because people have money, it does not necessarily follow that they are in any way knowledgeable or intelligent.

An excellent explanation of the current situation can be found in the book, "A Short History of Financial Euphoria" by the economist J K Galbraith. That will explain how people in groups behave when it comes to money, investment, and asset bubbles.

Ask as many questions as possible, that way you may not lose your shirt at the casino that is capitalism.

To buy, or not to buy, that is the question? I would suggest the answer is, do not buy unless you are prepared for the inevitable loss to come.

Edited by SMAC67
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HOLA442

I have been a bear for a very long time, but I now have serious doubts that house prices will drop by anything significant. I know house prices have come down a little recently, but I have a bad feeling. Even with a slight drop, there has been a lot of renewed interest. The only thing that is preventing a lot of people from actually buying at the moment, is the uncertainty.

I know there are a lot of properties on the market too, but I suspect this is because a lot of people put their houses on the market before 'HIPs' and with all this talk about a 'house price crash' it has lead to sheer panic!

Consider these points:

1. Huge backlog of FTBs still unable to get on the ladder.

2. Many people now want a second home.

3. Immigration is still out of control.

Yes the economy is struggling and bills are soaring BUT those points I mentioned are not going to change any time soon. There are still plenty of people who CAN afford to buy.

The UK has changed dramatically over the past 10 years. No-one can predict the future. Maybe the UK WILL be the first country where house prices only go up (with a few little blips here and there)...

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HOLA443
I have been a bear for a very long time, but I now have serious doubts that house prices will drop by anything significant. I know house prices have come down a little recently, but I have a bad feeling. Even with a slight drop, there has been a lot of renewed interest. The only thing that is preventing a lot of people from actually buying at the moment, is the uncertainty.

Nope - most people arent buying because they're priced out and can not get a mortgage they can afford (note how many have been pulled)

I know there are a lot of properties on the market too, but I suspect this is because a lot of people put their houses on the market before 'HIPs' and with all this talk about a 'house price crash' it has lead to sheer panic!

Do you really believe this? It's £600 for God's sake! That's about 0.3% of the average price of a house!

Consider these points:

1. Huge backlog of FTBs still unable to get on the ladder. - so not just uncertain then :rolleyes:

2. Many people now want a second home. - please explain how a significant number of the population could afford this at the moment.

3. Immigration is still out of control. - Indeed. Now they can't get away quick enough.

Yes the economy is struggling and bills are soaring BUT those points I mentioned are not going to change any time soon. - they are already: more prople can't afford to buy; and our immigrants are leaving faster than they're arriving

There are still plenty of people who CAN afford to buy. - could you substantiate this with evidence?

The UK has changed dramatically over the past 10 years. - and now it's going to go into reverse.

No-one can predict the future. - but we can make educated guesses.

Maybe the UK WILL be the first country where house prices only go up (with a few little blips here and there)... - :lol::lol::lol::rolleyes:

Edit to add - are you sure you've been a bear for ages...

Edited by Disillusioned
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HOLA444
... No-one can predict the future. Maybe the UK WILL be the first country where house prices only go up (with a few little blips here and there)...

Yes predictions are difficult, but the past is the key to the future. Asset booms are cyclical - always have been, always will be.

A bust is precipitated by a trigger (or series of unfavourable events), so putting this together, we’ve had an unprecedented property boom that is eye wateringly unsustainable coming against the beginnings of a worldwide “shock and awe” financial crisis.

You don’t have to be mystic meg to work out that a crash is almost inevitable and that a substantial correction to the norm is underway.

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HOLA445
I know some will not agree but being in your thirties and not owning property does not impress anyone. You can tell people all you like about how you are watching out for the forthcoming HPC but there is not going to be a rush of women wanting to marry you. That's the way it is. Some of the anorak wearing single guys that have never had a girlfriend will disagree no doubt.

There is plenty of information on this board. I have already posted a reply on this thread that the biggest falls happen within the first couple of years. Do a bit of research and you will find that these issues have been discussed. What you have posted above demonstrates why the topic was pinned. You are not the listening type, I am now convinced you are on here for other reasons. <_<

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HOLA446
There is no tax relief now – look at the graph again, affordability is as bad as the last peak.

It's also does not reflect this years hike in SVR's which have just made it worse.

Just a word on the affordability graph - it doesn't tell the whole story. Affordability (payments as a percentage of disposable income) does not take inflation into account. If affordability now is roughly the same as affordability in 1990, this means the situation is very much worse now than in 1990, given the relative interest rates.

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HOLA447
The UK has changed dramatically over the past 10 years. No-one can predict the future. Maybe the UK WILL be the first country where house prices only go up (with a few little blips here and there)...

A credit crunch, five months of continual drops in some indexes, starting prior to the crunch, not enough of an indicator of future direction for you?

Your right, the UK has changed dramatically in ten years – we have taken on large amounts of debt.

If you think these are blips, then yes, price only ever go up – FFS. <_<

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HOLA448
Just a word on the affordability graph - it doesn't tell the whole story. Affordability (payments as a percentage of disposable income) does not take inflation into account. If affordability now is roughly the same as affordability in 1990, this means the situation is very much worse now than in 1990, given the relative interest rates.

Fair point, but I was highlighting that Telometer was reading the graph wrong when he said affordability had a way to go before it reached 1990's levels as he wasn't looking at the effect that mortgage relief had. Your point is definitely worth highlighting though as we seem to be swamped with idiots recently who think everything is fine and dandy.

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HOLA449

Yes I think if someone had planned to market their property in the next six months, it would prompt them to put it on sooner to avoid having to pay for the HIPs. It doesn't make sense, I know! But it is surprising how many people thought paying out for a HIPs as a big thing.

- please explain how a significant number of the population could afford this at the moment.

Coming from London yourself I am surprised by this comment. There are a significant number of people in London :lol: and it's bonus/pay rise time now isn't it? If you have the money, property is still considered the best asset.

- they are already: more prople can't afford to buy; and our immigrants are leaving faster than they're arriving

Now who cares about those who can't afford to buy? No-one. There are plenty who still can.

Persimmon reported a 'wait and see' approach earlier in the week:

http://www.guardian.co.uk/business/2008/fe...n.housingmarket

As for the poles, who cares about them going home when the majority of immigrants come from Africa and they're certainly not going home! Read the news if you want to know why...

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HOLA4410
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HOLA4411
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HOLA4412
There is plenty of information on this board. I have already posted a reply on this thread that the biggest falls happen within the first couple of years. Do a bit of research and you will find that these issues have been discussed. What you have posted above demonstrates why the topic was pinned. You are not the listening type, I am now convinced you are on here for other reasons. <_<

I'm listening. It's an ongoing discussion. Does it stop as soon as you state that the biggest falls happen in the first 2 years? End of story, no need to discuss it any further? Evidently not. If I were not the listening type, I wouldn't have dared asked such a question. I would have put my fingers back in my ears and refused to listen to anyone else. Crash 1990 took 5 years from peak to trough. A house purchased in 1992 was problably worth less in 1995 yeah?. I'm no economist, but I fear neither are you. You have a view based on your understanding and I'm grateful you shared it. I, on the other hand, am confused, which is why I asked the question of fellow citizens as myself.

A guy standing near the train station told me the other day that I am going to hell. He said that if I am born again with the spirit of Christ, I will be saved. Otherwise, I'm screwed. He KNOWS this. He is convinced of this. Can I be sure that what he says is correct? DUH! Of course not. No more sure than anyone claiming to know that everything is going to drop drastically over the next 2 years. I hope it does.

It's a public internet forum. I have just as much right to be here as anyone else. If I have a question, I'll ask it. I'm sorry if that upsets you, but since you don't own the forum, it's too bad for you. I could "do research" as you suggest. I chose instead to ask some kind people a question. That's my business yeah? Thus, I was rewarded with some excellent information, including your observation that the biggest falls happen in the first 2 years.

Thank you for your view on the matter.

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HOLA4413
It's a public internet forum. I have just as much right to be here as anyone else. If I have a question, I'll ask it. I'm sorry if that upsets you, but since you don't own the forum, it's too bad for you. I could "do research" as you suggest. I chose instead to ask some kind people a question. That's my business yeah? Thus, I was rewarded with some excellent information, including your observation that the biggest falls happen in the first 2 years.

Thank you for your view on the matter.

Toilet, Let this thread slip away now, as you said you gained some useful info. Responding in a personal way will only attract negative views and this will only continue to wind you up. (and them)

Another point, this forum is made up from some weird and wonderful specimens from society and some blunt emails can be seen as rude when in fact some people are just well!! Blunt. Others are frustrated because they have waited for ever and a day for a crash ( Which is coming )

If you went into an EA forum and asked them a simmilar question, some would try and bring you round to there way of thinking and some will tell you to f;';k off and stop wasting there time.

Remember this, You asked a question that is accesable to the entire worlds population ( Who are online )

G`luck ;)

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HOLA4414
Does it stop as soon as you state that the biggest falls happen in the first 2 years? End of story, no need to discuss it any further?

In my experience, in life the people who are experts, the people who really know, the people who are experienced, are the ones that answer "I'm not sure, its tricky, I can't be certain, no-one really knows, maybe, maybe not". These are the people whose advice I seek on internet forums. The one's who shout "This is the answer! These are the facts!", are sometimes right, and often wrong, I always take their views with a pinch of salt.

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HOLA4415
I'm listening. It's an ongoing discussion. Does it stop as soon as you state that the biggest falls happen in the first 2 years? End of story, no need to discuss it any further? Evidently not. If I were not the listening type, I wouldn't have dared asked such a question. I would have put my fingers back in my ears and refused to listen to anyone else. Crash 1990 took 5 years from peak to trough. A house purchased in 1992 was problably worth less in 1995 yeah?. I'm no economist, but I fear neither are you. You have a view based on your understanding and I'm grateful you shared it. I, on the other hand, am confused, which is why I asked the question of fellow citizens as myself.

A guy standing near the train station told me the other day that I am going to hell. He said that if I am born again with the spirit of Christ, I will be saved. Otherwise, I'm screwed. He KNOWS this. He is convinced of this. Can I be sure that what he says is correct? DUH! Of course not. No more sure than anyone claiming to know that everything is going to drop drastically over the next 2 years. I hope it does.

It's a public internet forum. I have just as much right to be here as anyone else. If I have a question, I'll ask it. I'm sorry if that upsets you, but since you don't own the forum, it's too bad for you. I could "do research" as you suggest. I chose instead to ask some kind people a question. That's my business yeah? Thus, I was rewarded with some excellent information, including your observation that the biggest falls happen in the first 2 years.

Thank you for your view on the matter.

Hi Toilet

No doubt you are going to be answering my question soon that I asked last night.

Cheers

Scott

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HOLA4416
Yes I think if someone had planned to market their property in the next six months, it would prompt them to put it on sooner to avoid having to pay for the HIPs. It doesn't make sense, I know! But it is surprising how many people thought paying out for a HIPs as a big thing.

You do seem to be well connected to these people...

Coming from London yourself I am surprised by this comment. There are a significant number of people in London :lol: and it's bonus/pay rise time now isn't it? If you have the money, property is still considered the best asset.

I said 'population', not London. Also, property ISN'T considered the best asset. Read the papers if you want to know why.

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HOLA4417

In 1998 I was a bull. I was living in London. IR's were around 6% and appeared to be falling, the economy appeared very stable, and sentiment was good, the population was growing rapidly due to immigration, things were being re-generated, and I was paying slightly more in rent than the cost of a mortgage. So I bought, I felt this was a way in which I could become economically stable.

In 2008 I am a bear. I am living in London. IR's are around 5% but have been on the whole, rising, the economy appears unstable, sentiment is bad, the population seems to have hit breaking point, things have been re-generated, and I am paying less in rent than the cost of a mortgage. I would not buy because I feel it would economically destabilise me.

It is almost the exact opposite than my original situation, although having underestimated how much things would go up, I'm fairly open to any kind of drop.

I have no idea though, what I am certain of, is that if things remain this way, I will be moving to an economically productive environment rather than joining in with the madness.

EDIT: That said, I don't think it is ever a bad thing to keep questioning whether you should buy or not, but assuming a bull position to weigh the consequences in your favour is a bad thing to do.

Edited by jez123
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HOLA4418

@ Disillusioned

I know you said population, but let's face it, London is where all the money is and not many Londoners give a sh*te about the possibility of a housing crash.*

*Based on my own personal opinion of course, and determined by the number of people around me looking to buy their first BTL property or update it, with their bonus :lol:

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HOLA4419
@ Disillusioned

I know you said population, but let's face it, London is where all the money is and not many Londoners give a sh*te about the possibility of a housing crash.*

*Based on my own personal opinion of course, and determined by the number of people around me looking to buy their first BTL property or update it, with their bonus :lol:

I'm sure they'll give a shee-ite when house prices start dropping, especially the BTL brigade!

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HOLA4420
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HOLA4421
I'm no economist, but I fear neither are you. You have a view based on your understanding.

Most falls do happen in the first couple of years. Like I was saying, do some research and you will see it has already been discussed.

You are the one saying that it will take five years, that's why I replied to reiterate that this is not the case for the majority of the declines. If you had listened first time, instead of continuing with your floored mantra it would have helped.

Edited by OurDayWillCome
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HOLA4422
Property, or at least land speculation, is part of an 18 year cycle, so those that claimed 2004 would be the bust were slightly premature.

I might not know the exact details of the crash, as there are too many variables, but the downturn would seem to be gathering pace.

If you are certain of the absolute detail of statement 1 then statement 2 is wrong.

If you are certain of statement 2, then the detail in statement 1 is the biggest load of twaddle out.

NOBODY knows when the crash is/was/will be.

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HOLA4423

I am a bear, and don't doubt that renting right now is plain common sense. You want to buy? Welcome to negative equity.

But lets not downplay the effect of inflation on an STR fund. And the period of "free" home ownership after a mortgage is paid off needs to looked at also. Say you enjoy a further 25 years in the home after paying it off. That is surely worth a great deal, no?

buy a T-Mobile USB broadband dongle for £15 per month over 24 months and you have unlimited internet access

Just for the sake of balance, those usb dongles are heavily capped on usage. The term "unlimited" actually means "unlimited until you go over a low threshold". After that expect to pay a fortune for every Gb ;)

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HOLA4424
NOBODY knows when the crash was.

I think you need to sit in a dark corner and think this one through. Of course we know what happened in the past.

Bit like saying we're not sure what date Xmas Day falls on for the last 100 years!

Edited by Scott
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HOLA4425
@ Disillusioned

I know you said population, but let's face it, London is where all the money is and not many Londoners give a sh*te about the possibility of a housing crash.*

*Based on my own personal opinion of course, and determined by the number of people around me looking to buy their first BTL property or update it, with their bonus :lol:

How narrow-minded...

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