Downvaluing......

[laurejon]

True but if you only paid 55K for the house that today is worth 225K and your tenants have paid off the bulk of your loan then its a good deal and remains so.

If someone stopped you in the street and said you could own 100 houses with mortgages that will be paid by someone else over the next 25 years would you refuse the offer?.

[RJG18]

Housing has ups and downs and if you guage them correctly you can hop in and out of the market place. However to do that you have to know the high and the low and given that over the past five years even the sum total of the UK's analysts have not been able to guage that, nor the treasury, nor the BOE then I am dammed sure that Joe Blogs logged on to Nothingventured.com is going to have any information that is more valueable than theirs.

<{POST_SNAPBACK}>

The ability to accurately call the top of the market does not in any way affect ones ability to correctly identify it as an asset bubble, however good an analyst you are.

[RJG18]

200k invested in a BTL will return around 900PCM.

You can argue that 200k invested in a particular share over the past six months has returned more than that, however many neglect to point out the shares that were losers either slightly or completely.

That 200k is unlikely to see more than 450 pcm in a term deposit after tax. And with property in the long term there will be significant capital gain at the least or a property to hand on to your children saving them the hassle of saving up a deposit and walking the treadmill to get onto the ladder.

<{POST_SNAPBACK}>

Nice to see you didn't bother to apply any taxes to your 900pcm in your comparrison.... nor any other maintenance or ownership overhead costs...

[RJG18]

It certainly does which is why all those FTB'ers pushed up the prices over the past few years.

Panicking they were missing out they put in inflated prices to secure the property.

Thank god their money supply has now dried up and only those with real collateral can now play the market keeping it both stable and affordable.

<{POST_SNAPBACK}>

So you think that pricing levels in a market which is either inflated or inflating can be sustained by a dramatic drop in new money entering the market at the bottom. An overpriced market such as this requires new money to enter at the bottom at ever increasing values just to remain stable, let alone rise.

Also you post is a little contradictory, as in the same sentence you are celebrating the fact that FTBs can no longer afford to enter the market and using this to justify prices as "affordable". You are rather strange.

[laurejon]

I am celebrating the FTB'er who have pushed up prices not being in a position to enter the market.

It is a fact that those with a reasonable deposit are more calculated with their offers. Those with no deposit and asking for 100% loans are the ones who are happy to throw caution to the wind as they have nothing to lose.

I do not celebrate FTB'ers having a hard time however I would also not promote the idea to them that the UK economy is so flawed that there is going be some kind of economic meltown in the near future.

Life is full of dissapointments as it is, FTB'ers should be given a helping hand not told that they may as well give up.

As to the current market I dont believe that new money has to come from FTB'ers it is quite feasable for everyone to cash in their pensions and hop onto the property bandwagon. For every BTL purchased that is one less FTB property. If all the private households were puchased by BTL'ers then we would all become a nation of renters.

To kill the market you will need to lose affordability and although many young people starting out with big debts and student loans are finding it tough. There are many many more people who dont have those overheads and are in a position to finance a house purchase and as we are seeing daily some are financing several having second and third homes and many overseas.

[RJG18]

True but if you only paid 55K for the house that today is worth 225K and your tenants have paid off the bulk of your loan then its a good deal and remains so.

<{POST_SNAPBACK}>

Yes, BUT, for this to continue and be sustainable you now have to pay £225k for the same house (not £55k), which means going forward from today the market would only continue to stack up if the same property became valued at £920k a few year later. If the price merely now stayed at £225k (let alone fell) the BTL justification would no-longer work.

The bTL market requires more money to be poured in at the bottom at an ever increasing rate, creating a sufficient % of capital increases in house prices merely for the BTL model to remain stable and viable.

Not a great anaology, but picture this. If your car did 50 miles per gallon you would think it to be a reasonably efficient mode of transport. However, not assume for the first mile it did 50 miles per gallon, then the second mile it's fuel consumption increased so it was doing 49 miles per gallon, then a mile later it's fuel consumption increased so it was no only doing 48 miles per gallon, and so on. You were having to add more fuel at an ever increasing rate just to keep the same milleage going. This is not sustainable (obviously), so why do you think the same thing can be sustainable in BTL investment?

If someone stopped you in the street and said you could own 100 houses with mortgages that will be paid by someone else over the next 25 years would you refuse the offer?.

<{POST_SNAPBACK}>

I'd probably explain the completely flawed financial logic of the aforementioned person in the street to them, until they had a good enough understanding of economics to see the the error of their ways, or they got bored and knifed me, whichever came first.

[red]

True but if you only paid 55K for the house that today is worth 225K and your tenants have paid off the bulk of your loan then its a good deal and remains so.

If someone stopped you in the street and said you could own 100 houses with mortgages that will be paid by someone else over the next 25 years would you refuse the offer?.

<{POST_SNAPBACK}>

Damn right I'd refuse. I'd take the cash, though. In a falling market, you'd be mad to take the properties and watch those paper profits dwindle...

Cash is king right now.

[laurejon]

Cash is King.

However just because you dont have any cash should that deter you from making money?.

Its a whole lot easier to risk someone elses money especially the banks.

So if you can get a few BTL's under a limited company with little outlay from yourself you would be mad not to take the risk.

I think the point is everyone is in a different position.

Take the city guys this years sitting on a six million pound bonus would they really STR to save a few quid. Or the middle aged manager with no kids and no mortgage who opens his annual pension statement to see its worth less than last years and he has made another 12 contributions.

These people are now becoming common (maybe not the 6M bonus ) and as such property to them is an ideal investment.

Let us not forget that many including myself thought that in 2000 we had seen the peak of the market and there were many fancy graphs to support a massive fall. My own agent when selling one of my two bed semis for 120K that I paid 52K for and let told me. "There are going to be tears soon, the market is so overpriced".

That same agent sold that property on for 225K two years later and the only tears where mine.

My point is that we have come on five years and the rates are lower and the wages are higher. Its even stevens in my book and a crash to me is not on the cards just yet. If prices this summer did rise 10% then I think that for sure we would be looking at a bubble burst scenario. Today we are at the pinnacle however I think without a shove in the form of higher rates we will be just perched on the edge.

[RJG18]

Its a whole lot easier to risk someone elses money especially the banks.

So if you can get a few BTL's under a limited company with little outlay from yourself you would be mad not to take the risk.

<{POST_SNAPBACK}>

That's not really how it works. You can't use the Limited Liability status of a company to simply borrow money to speculate with at zero risk to yourself. While it's true that as a Director of a Ltd company your liability for the companies debts can not exceed the value of your own share capital, this cannot be used as an excuse to take on huge loans at no risk.

Try it. Set yourself up as a Director of a small Limited company, then walk in off the street to a bank and try to borrow large sums of money, or even just set up an overdraft facility of any reasonable size on your Busines Account. They won't let you do this at no risk to yourself. They will require you to put in a very sizable amount of your own capital, and if you can't provide reasonable collateral then forget it. I even know of recent cases where Directors have been required to secure the overdraft facility on their Business Account against their own house.

Generally banks are very risk averse and cannot simply be used to divert the risks from you to them, and certainly not for free.

[war]

It certainly does which is why all those FTB'ers pushed up the prices over the past few years.

Panicking they were missing out they put in inflated prices to secure the property.

Thank god their money supply has now dried up and only those with real collateral can now play the market keeping it both stable and affordable.

<{POST_SNAPBACK}>

Can you quote a reference about FTB pushing up the house prices, laurejon?

I thought it was those greedy BTL and the desperate people saving as their pension. The money supply of the prospective FTB is not drying up, but the cautious ones are waiting for house prices to fall to sensible levels before entering the market.

[Guest consa]

DESPERATE SELLER downvaluing!!

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?Vie...4347167908&rd=1

[war]

DESPERATE SELLER downvaluing!!

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?Vie...4347167908&rd=1

<{POST_SNAPBACK}>

This is a typical example of things to come. Thanks for posting it.

[laurejon]

Can you quote a reference about FTB pushing up the house prices, laurejon

I will have a look around however I thought it would be obvious as the FTB'ers pay more to get on the ladder. If they had not then the prices would not have been pushed up as none would have been prepared to pay the increases.

In the last two years the FTB'ers have pulled back however the slack has been taken up with BTL'ers buying to house STR'ers and the like. The more STR'ers there are the more BTL'ers will come in to take up the slack. The problem for the STR'ers is that they have gambled on a drop, if the BTL'ers take the slack then the STR'ers will be up sht creek without a paddle.

[Guest wrongmove]

In the last two years the FTB'ers have pulled back however the slack has been taken up with BTL'ers buying to house STR'ers and the like. The more STR'ers there are the more BTL'ers will come in to take up the slack. The problem for the STR'ers is that they have gambled on a drop, if the BTL'ers take the slack then the STR'ers will be up sht creek without a paddle.

<{POST_SNAPBACK}>

And of course BTLers have gambled on a rise and will be up that very same creek if that doesn't happen.

BTLing is sooooooo 2004. All the glamour has gone now. Instead of gloating up the pub about paper profits, everyone is taking the p1ss

The one thing that can be said about a fashion is that in a very short time it will be deeply unfashionable. That time has come for BTLing IMHO.

[RJG18]

DESPERATE SELLER downvaluing!!

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?Vie...4347167908&rd=1

<{POST_SNAPBACK}>

He he. He says that he is selling it for the discounted price of £84,500, but it has a market value of £115,000. However, our new best friend NetHousePrices.com shows similar houses in Swinton (Manchester) that have sold most recently have gone for between £75k - £87k.

Oh dear. Someone offer him £40k for it, and show him reality hurts.

[Uriah Heap]

To pick up on one of Laure's earlier points: "That covered then we all know that Property in 10 years will be more than it is today." - I bought a house in 1990. 10 years later it was worth less than I paid for it. I had also paid out about 10 percent of its value in r epairs. A truly lousy investment in the short and the medium term. .There is nothing special about property as an assett. You can win and you can lose.

[Guest wrongmove]

To pick up on one of Laure's earlier points:  "That covered then we all know that Property in 10 years will be more than it is today."  - I bought a house in 1990.  10 years later it was worth less than I paid for it.  I had also paid out about 10 percent  of its  value in r epairs. A truly lousy investment in the short and the medium term. .There is nothing special about property as an assett.  You can win and you can lose.

<{POST_SNAPBACK}>

And that was with relatively high inflation. With low inflation/deflation it could take much longer than 10 years.

But be careful what you say UH. People have been burned at the stake for heresy such as this !!

[laurejon]

To pick up on one of Laure's earlier points: "That covered then we all know that Property in 10 years will be more than it is today." - I bought a house in 1990. 10 years later it was worth less than I paid for it. I had also paid out about 10 percent of its value in r epairs. A truly lousy investment in the short and the medium term. .There is nothing special about property as an assett. You can win and you can lose

That must of been some hellish kind of basket case.

Was it on the seafront on the isle of wight on the cliff edge or something.

I cannot imagine any property priced in 1990 being worth less in 2000.

I purchased a property in 1995 for rental purposes and made 100% when sold in 1998 today if I had kept it I would have made 250% today.

How much did you pay in 1990 and how much did you sell if for in 2000?.

[oracle]

It all stacks up for BTL then does it????

when house prices fall,consumer confidence drops.

When consumer confidence drops,they wont shop

When they wont shop,stores lose profit

When stores lose profit,they make redundancies.

when people get laid-off,they can't afford mortgages/rents and default

Any landlord want to endure the legal costs incurred by a defaulting tenant!

let alone a fall in capital growth?

NOT ME!!!!

[zzg113]

He says that he is selling it for the discounted price of £84,500, but it has a market value of £115,000. However, our new best friend NetHousePrices.com shows similar houses in Swinton (Manchester) that have sold most recently have gone for between £75k - £87k.

I'm starting to think that www.nethouseprices.com will be the most revolutionary thing to hit the UK property market since owner-occupation. No more wondering about the mark-up that the vendors are screwing you for, it's all there in black and white. No more kite-flying asking prices, no more buying a shitheap and flipping it for a profit that would choke a horse. This could be a tool to bring sanity back to the UK housing market.

Long live www.nethouseprices.com!

[bricksmortar]

No I would not.

You have sixty million people who require a roof over their heads.

Unless people are prepared to double up or live in corrugated tin sheets with polythene groundsheets by the roadside it is irrelevant the tenure of the property.

Rented, or Owner Occupier it will always be a resource with a use.

Every Property is owned by someone, they dont just spring up out of the ground.

They are either sold or let and one things for sure there are not enough of them and never will be.

<{POST_SNAPBACK}>

To some degree they already are, rather than living in some of the rental dives available they are putting up at the parental home longer they are building inventive extensions,convering lofts reorganising larger houses into up down family flats,I have seen many instances of all these,I know several couple living in caravans in the yard be it unnofficial,necessity is the mother of invention and people will do all sorts to save towards a house by saving on rent.

[FreekBear]

I'm starting to think that www.nethouseprices.com will be the most revolutionary thing to hit the UK property market since owner-occupation. No more wondering about the mark-up that the vendors are screwing you for, it's all there in black and white. No more kite-flying asking prices, no more buying a shitheap and flipping it for a profit that would choke a horse. This could be a tool to bring sanity back to the UK housing market.

Long live www.nethouseprices.com!

<{POST_SNAPBACK}>

It's only free till 18 jan of this year. After that, it's cheaper to go to the land registry to get your info, if you want data on a specific house.

In my London suburb street, it turns out that profits aren't that pretty.

238500 -> 249000 over the course of a year. That's 10K 'profit', excluding all costs and taxes. Even without costs that works out to just about 4.2%. Even if they were buying cash only to minimize costs that's still a crap return.

Couldn't find out what my landlord paid for the place, but some rough numbers at current market rate mean that unless interest rates + maintenance costs are at 2.4% of property price, it's cheaper to rent for me....

For those who say rents don't go down.... they do: in my place from 300/week with previous tenants to 260/week.

Happy to rent now

[TellinStories]

I purchased a property in 1995 for rental purposes and made 100% when sold in 1998 today if I had kept it I would have made 250% today.

<{POST_SNAPBACK}>

That's the point - you purchased at the bottom of the cycle, and sold higher up it. In other words you bought low and sold high. Which is why we're all waiting until the bottom of the cycle again so we can do the same!

[Marina]

Life is full of dissapointments as it is, FTB'ers should be given a helping hand not told that they may as well give up.

<{POST_SNAPBACK}>

The biggest disappointment most young people face these days is the realisation that property is so overpriced they have take on huge levels of debt - just for a rabbit hutch to live in.

No-one as far as I can see is advising FTBers to give up - on the contrary - the advice is to wait for the crash to bring property down to historically affordable levels.

[Van]

laurejon has the dubious honour of being the first poster ever to make it onto my filter list. A troll who doesn't realise he's trolling.. having a discussion with him is like banging your head against a brick wall.