[drrayjo]

http://www.guardian..../buyingproperty

Quote

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

This post has been edited by drrayjo: 08 December 2007 - 09:22 AM

[BandWagon]

Here's the correct link...

property sense

This post has been edited by BandWagon: 08 December 2007 - 09:32 AM

[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!)

[Zanu Bob]

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

ain't that the truth.She knows too.read what she says about BTL

[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]

thecrashingisles, on Dec 8 2007, 10:01 AM, said:

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.

[bomberbrown]

Quote

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]

drrayjo, on Dec 8 2007, 09:20 AM, said:

"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]

The_Oldie, on Dec 8 2007, 10:19 AM, said:

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]

The_Oldie, on Dec 8 2007, 11:19 AM, said:

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.