Wednesday, Aug 15, 2007
Wow! a discovery
MSN: Why the property market is heading for a nasty fall
The importance of this MSN article is that it says the same thing as this website has said for the past 18 months. Imitaion is flattery!
Posted by alan @ 12:25 PM (194 views) Add Comment
2 Comments
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1. Symo said...
Sing along now
"It's the end of the world as we know it and I feel fine"
2. voiceofreason said...
"But, according to Landlord Mortgages, the average rental yield on a buy-to-let property is 5.42%. That compares to the more than 6% interest rate that you can get on some savings accounts."
This is a really stupid comparison. And it really annoys me when journos keep making it.
A BTL-er has say £5000 deposit. He could put this into a bank account and get 6% pa on it.
Or he borrows £195,000 and adds his £5000 then buys a flat for £200,000 at 5.42% yield.
5.42% yield on 200K is a damn site more than 6% yeild on 5K whichever way you look at it.
You are comparing apples and pears.
So forget about returns and comparisons with bank accounts. A BTL or other property purchase is just a massive bet on interest rate movements, because -20% of £200K is a shed load of potential losses.