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Guardian Sat 8.12.07


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#1 drrayjo

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Posted 08 December 2007 - 09:20 AM

http://www.guardian..../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 by drrayjo, 08 December 2007 - 09:22 AM.

"‘Historically, societies that seek high levels of instant gratification and are willing to borrow against future incomes to achieve it have more often than not suffered inflation and stagnation. The economies of such societies tend to run larger government deficits financed with fiat money from a printing press.

Eventually, the ensuing inflation leads to a recession or worse, often because central banks are forced to clamp down...I regret that the US may not be wholly immune to it."

Alan Greenspan in "The Age of Turbulence: Adventures in a New World", 2007.

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it"

Upton Sinclair

#2 BandWagon

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Posted 08 December 2007 - 09:31 AM

Here's the correct link...

property sense

Edited by BandWagon, 08 December 2007 - 09:32 AM.

"Most stop-go problems that Britain has suffered in the last 50 years have been led or influenced by the more highly cyclical and often more volatile nature of our housing market" - Gordon Brown, June 2003

"The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts." - Bertrand Russell


#3 Dopamine

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Posted 08 December 2007 - 09:44 AM

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.

#4 OnlyMe

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Posted 08 December 2007 - 09:49 AM

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.
"Asians make things and sell them to Americans, who borrow money from their suppliers (on the inflated value of their houses) in order to continue living beyond their means. Asians take their profits and either relend them to Americans...or use them to buy more productive capacity, in America and elsewhere.

For those who wonder where this trend will lead, we offer a guess: The average American will be left with a shoeshine kit and instructions on how to say 'please' and 'thank you' in Chinese...."

Bill Bonner.

Socialists want socialism for everyone else, but capitalism for themselves, while capitalists want capitalism for everyone else, but socialism for themselves.
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#5 Selling up

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Posted 08 December 2007 - 09:57 AM

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!)
For every complex problem, there is a solution that is clear, simple and wrong.


#6 thecrashingisles

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Posted 08 December 2007 - 10:01 AM

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."

#7 symo

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Posted 08 December 2007 - 10:12 AM

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 :lol:
Need to understand how it has come to this? Read this Click here!

Money saving tips from the ever brilliant lifehacker.

End the BBC license fee

#8 margesimpson

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Posted 08 December 2007 - 10:15 AM

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.
http://www.propertysnake.co.uk - the opposite of property ladder.

#9 Guest_The_Oldie_*

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Posted 08 December 2007 - 10:19 AM

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.



#10 bomberbrown

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Posted 08 December 2007 - 10:39 AM

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?
In the 1950s Local Authorities built over 200,000 homes per year. In 2004 they built just 133.
Housing - Trends in tenure and cross tenure topics (general)

#11 domo

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Posted 08 December 2007 - 10:44 AM

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.
Voting = Violence

#12 Nickolarge

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Posted 08 December 2007 - 10:49 AM

"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.
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#13 ParticleMan

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Posted 08 December 2007 - 10:49 AM

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.

#14 margesimpson

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Posted 08 December 2007 - 10:58 AM

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.
http://www.propertysnake.co.uk - the opposite of property ladder.

#15 Converted Lurker

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Posted 08 December 2007 - 10:59 AM

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 :D
Propaganda is to a democracy what violence is to a dictatorship




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