Wednesday, Jan 16, 2008
Landlords see falling prices as an investment opportunity
Citywire: Landlords see falling house prices as investment opportunity
Buy-to-let loans rose dramatically at the end of last year, accounting for a surprising 39.55% of all mortgages arranged through property consultants Hamptons in December 2007, compared with just 17.9% in December 2006. Meanwhile, borrowers taking out loans for house purchase declined sharply from 35.94% in December 2006 to just 13.18% in December of 2007.
Posted by jack c @ 08:11 PM (1262 views) Add Comment
17 Comments
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1. hpwatcher said...
''Landlords see falling prices as an investment opportunity''
Well they would, wouldn't they?
2. Jackas said...
And where are they going to get the funds from exactly?
This is all fascinating to watch. The property market is full of commentators that simply don't understand what happens when a bubble bursts. The next year is going to be fun.
3. Physicist Turned Economist said...
I have been working in the field of science and economy all my life and I have not seen such a bad use of "percentage"!!
Percentage is just a ratio! WIthout any hard numbers, you are not seeing the full picutre.
What about the total number of mortgage? (NOT MENTIONED!!!!!)...
In fact, this article is telling us that non-BTL mortgage is heading south fast!
The author is twisting the truth!!
Think carefully before drawing any conclusion from this article.
4. Acidrob said...
Like all failing investments - amateurs see it as an investment opportunity - how many thought the same in the tech bubble burst? how many bought into Northern Rock on the way down? Many peoples pensions will be wiped out - again!
5. converted lurker said...
Must be piling a lot of cash in 'cos most BTLs have required 15-25% deposits up to 35% on newbuild.
6. jack c said...
Converted L - good point, plus the rental assessment must also stack up
7. lvmreader said...
They need to NEVER be bailed out.
8. geed said...
You want to cross the road but a 12 ton bus is hurtling down it at great speed. You notice that it is starting to slow, would you step out in front of it or be sure to make sure it will stop in time before you take the plunge and step off the kerb?
The signs are there but be patient, be sure.
Fools.
9. lvmreader said...
Evil Pension Fund Manager (EPMF): [Brooklyn Accent] Mr Schmo, about your pension I have some bad news and some good news.
Joe Schmo (JS): Well what's the good news?
EPMF: Well it's like this. We had a little bit of a problem. We lost all your pension money. It's gone. That's it. And there's nothing anyone can do.
JS: Eh! WTF! And you say that's they good news. How the f**k is that good news?
EPMF: Well we still got our 10% cut.
JS: [Ashen faced] Well what's the bad news?
EPMF: We need your house. Well actually it now belongs to (rustling papers) The Government of Kyrgyzstan
JS: [Now angry] But I paid off that house with 40 years of lowly paid productive labour. I have never even HEARD of Kyrgyzstan?
EPMF: Well it's like this we invested in Synthetic CDOs and it turns out that MBIA and AMBAC got downgraded and now we have no insurance. So the buyers of the slices of the CDO are now on the hook for 7 times the amount they invested. So that means you and your house. Hey Mr Schmo, what you doing AARGH
JS:[Sound of chainsaw starting] I'll show you some slicing..........................
10. confused76 said...
BTLers will soon represent 100% of mortgages taken out, as the are the "last fool"
11. Jammo said...
Rising prices are a boon! Falling prices are a boon! It's a win-win scenario. You'd have to be stupid to not give up your day job NOW and become an investor. Same principle applies to stocks and shares presumably. Stocks rising: opportunity! Falling? Another opportunity! The money will soon be flooding in quicker than I can throw handfuls of it into the air whilst laughing maniacally.
12. Mariothegreat said...
I am not sure how people react to these news, in fact I consider myself a BTL investor, when I bought my flats the rent return was around 12/15 per cent, when the price raised the return on the value decreased to an unbelivable 5 per cent, so I sold every flat and I put the money in the bank at 5 per cent. what does it means? that every wise BTL will invest in UK market when the return will be again on at least 10 per cent, (btw it is a gross figure, in real terms you should think on about 60% of the total). Another interesting point is that after 300/400 incres in the last 10 years it was very improbable to achieve other increments of the properties so better wait a couple of years...
13. crash bandicoot said...
''Landlords see falling prices as an investment opportunity''
Is that instead of seeing it as a loss of revenue? I'm sure that 20% YOY gains were never even part of most BTL landlords plans!
Talk about looking on the bright side. My property empire is crumbling, I will soon be over my head in debt, but look on the bright side. I can now buy even more overpriced, depreciating tat and subsiduse someone else to live in it!
14. uncle tom said...
Never underestimate the stupidity of those with more money than good sense!
No doubt there will be arguments that house prices follow a 'stall and surge' routine, and as this is a heavy stall, a mega surge will follow..
Will it? - of course not - but lose no sleep over idiots blowing their pensions.
As others have noted, the use of percentages without hard numbers is very telling - what this really says is that only the fools were active in the market last month...
15. inbreda said...
Do you think there is a sufficient volume of BTL idiots to force the government to bail them out?
The government seem very good at using tax payers money to bail out idiots. It could happen.
16. theboltonfury said...
i'm sorry, no matter how hard I try to understand the comment that buying into a potentially massive depreciating asset is a good thing, I just can't do it. How could anyone else think 'Oh, I'll spend all my money' when even Blunkett can see the market is at best correcting downwards, at worst losing it's ar5e
Obviously they think it's the bottom of the market - lovely stuff BTL brigade - keep buying. Your just making my eventual house purchase much more pleasant
I can't thank you enough
17. Landedgentry said...
Let em buy in.
More nice done up properties to choose from when they are repossesed.