Friday, Mar 23, 2007
The BBC’s economics editor tells Judith Heywood why property is still a good bet
Times Online: The house master
"Davis... reminds us that property is historially cheap because of low mortgage rates"
Posted by rich @ 10:52 AM (273 views) Add Comment
6 Comments
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1. Ilejustwait said...
yeah right we beleive you, and what income are you on 100k a year, what about people on very low income`s, eg FTB, who are busting there butt trying to get on the ladder we dont have no chance at present but hopefully when a HPC do come i will agree with your statement,
2. Richc said...
From an economics perspective, this commentary makes no sense -- Evans has completely ignored opportunity costs. Buying a house needs to be judged in comparison to renting and investing the difference between rent and a mortgage in another investment (monthly payments are roughly double rents at current prices, so you would have a lot of money to invest). Even if you just put the money in a savings account (currently making about 5.5%, though as a comparison my investment portfolio actually returned 15% last year), you make more money renting given current interest rates, house prices and house price growth rates. To be clear, house price inflation has to go up (up!) from current rates and remain there for any home buyer to make money over the next 10 years.
3. Shipbuilder said...
Historically, property is a good bet for living in. With long term capital appreciation at about 3%, obviously anyone seeing it as a long term investment solely on this basis is an idiot.
The basic rules have always applied - people who have been landlords for years got into it becuase their rent paid for the mortgage and more - capital appreciation was a bonus. If that's not happening, anyone with sense can see that their money is better somewhere else.
4. enuii said...
Every time I see the smug Mr Evan Davis I want to Vomit, he is no more than Neo-Labours resident PR Man, we should monitor all the drivell that oozes from his mouth and hold him to account one day.
5. Confused76 said...
as a matter of fact, Evans corrected his views in the article in his blog
http://www.bbc.co.uk/blogs/thereporters/evandavis/2007/03/the_property_market.html
he was not as optimistic as the times made him sound
6. Davros said...
Not worrying about house prices is a poor reason to buy, if you've stretched yourself to the limit and are facing negative equity. A relative of mine was burned the last time prices crashed and took 8 years before he could move himself and his family out of rented accomodation. Try telling him that by buying he was able to stop worrying about how much his house was worth!