Sunday, Nov 16, 2008
Phil Spencer (of 'Krusty and Phil' fame) still ramping
Times: Winners in the housing downturn
This is, after all, the cheapest time to buy property for years – and it could prove one of the best. If you have the cash to get into the market today and are able to drive down the price further, you’re set to become even wealthier in the future.
If you think I’m being overoptimistic, just look at those who bought during the dark days of the early 1990s – and what happened to the value of their homes in the decade that followed. This time around, as then, confidence will eventually return – it’s all just a question of time.
In a Credit Crunch Special edition of Location, Location, Location, my television co-host, Kirstie Allsopp, and I look at the property troubles of three sets of people affected by the current market [AND PRESSURE THEM INTO BUYING UNSUITABLE OVERPRICED HOMES]
22 Comments
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1. Dave said...
Hi
I bought my in the dark times of 1990 for 60k and it was last valued at 250k.
No bad, not bad indeed!!!
Dave
2. mario said...
I agree in part... in fact if you can get a 50/60 per cent of the top price why not! quite difficult make a mistake but instead where I disagree is that the prices have reached the low level, check the percentage rent/price and you get a 5/6 per cent per year, when I bought my flats in 1997 the percentage was 12/15 per cent ( don't laugh... I sold them BEFORE the crash, I was telling anyone to stay away from the imminent crash). So when the percentage will came back to 10/15 (in the south regions) will be the time to get in until there.. stay away! (if is not your first house of course!)
Last thing to remember is the financial crises has not hit the real economy , that will be next year...
3. phdinbubbles said...
It isn't the cheapest time to buy pwoperties for years because it will be cheaper tomorrow and the day after and for some considerable time to come.
4. Fjcruiser said...
so far these two property "entrepreneurs" have bought at the peak so I dont understand what make them so great! Another two fools.
5. bellwether said...
Its the difference between interest rates and rents that matters. An 8/10% return where interest rates are 4% would be a good investement providing tenant demand is strong - admittedly a real variable right now.
6. harold said...
Lets hope the guy is hoisted on his own petard before too long. Surely he must have a BTL portofilo that has turned nasty?
7. harold said...
Oh, and where's Krusty's edible hat?
8. quiet guy said...
"An 8/10% return where interest rates are 4% would be a good investement providing tenant demand is strong"
Bellwether, aren't you leaving yourself badly exposed to IR rises with such numbers? If we have a bad currency devaluation or have to go to the IMF, IR rates way shoot up.
9. bellwether said...
QG, stong tenant demand (if such a thing exists at present) would ensure that rents rise with inflation. Property can do well in an inflationary enviroment.
10. paul said...
Hang on, this article has nothing to do with conspiracies!
11. tick tock said...
Bellwether
But if you lose 50 - 60% of your initial investment (presumably borrowed money too) over say a 5yr. period, what compensation would a rental yield of 4% over bank rates be to anybody during that time? You would still make more (or rather not lose as much), and with considerably less risk, simply by holding any real funds in cash, and not borrowing any more. Sure, prices might recover in 5, 10, 20 yrs. (who knows) but investing in an asset set to half in value is a poor decision, whatever rates, or yields, may be.
12. Brightonrentfodder said...
strong tenant demand there may well be but only at prices that people can afford, and lets face it, things aren't going to improve. As Mario
says, the crises hasn't hit the real economy yet. If it had, folks wouldn't still be withdrawing their houses for sale, because they don't deem
what's offered for them as sufficient. that's a laugh, if I had a property i would drop it as far as I could afford, to get rid of it, because let's face it, there won't be much profit in the market for years to come.
13. Steve said...
There is no guarantee that the future is going to be the same as the past. For years now we've heard from 'experts' that house prices will only go up and its different this time because there is a shortage of housing. This argument implicitly argues that things WONT be the same as the past. Now this argument has turned out to be wrong, the new argument is that things WILL turn out the be the same as the past and therefore prices will go up again.
Like I said, there is no guarantee that houses will EVER go up again; they could, in theory, become worthless. There are lots of possiblilites and no one knows for sure what will happen.
I think they will drop by about 60% and remain priced like this for the next 100 years, increasing only in line with inflation.
14. phdinbubbles said...
I wonder how many hat comments they haven't let through at the bottom of the page. I've tried my best.
15. matt_the_hat said...
Mr mario 1. - Did you use the word flats - that sounds like more than one to me. I don't care if you sold them at the peak this is not a BTL gloating forum - or at least I didn't think so or else I will stop visiting this site. I don't care if you sold them at the top to many unsuspecting first time buyers or other BTL parisites. The problem is speculation on peoples homes and I don't like that full stop.
Just to put this clap trap into context - the government has full ownership rights on all your income - after the next spending splurge (David Cameron's own words) or tidal wave of government debt that is secured on yur future earnings would you want to be shackled in debt to thuis country for the next quarter of a decade. Rent then you have the ultimate vote in all future general elections - your feet!
Ps. Mr mario I'm sure you are a nice guy who wants to do well by his family.
16. bellwether said...
Tick tock a property consistently yeilding 10% in a climate of low interest rates would not drop much in capital value, as it is a return you are unlikely to better with many other investments. The fact that you can use borrowed £ to secure the yeild only makes it more attractive.
17. bellwether said...
Matt you are being a bit extreme. In so long as capitalism exists there is always going to be a tension between landlords and owner occupation. Gloat that now is the time for landlords to get screwed. And they will.
18. matt_the_hat said...
You see bellwether thats where you and I differ. I don't want to see anyone get screwed I just want a tax (say 95%) on profits gained by speculation on peoples homes. If you don't feel the same way then I conclude that you are in one of two groups - a) a BTL investor or homeowner who has 'made' a profit, or b) someone who would have been delighted to have been an a) but missed the boat and now feels a perverse sense of enjoyment that other people are losing out. To me a) = b).
19. Daniel said...
I do hope that the programme will not show Kirsty and Phil, Irresponsibly advising, or interviewing people, who have a vested interest in selling property in the present climate.
However, after browsing the location, location, location website, I do not believe it will be an impartial programme at all.
On their website, they have interview quotes from so called 'experts' who are in fact business people with vested interests in suckering impressionable young people into purchasing their first property.
'Yolande Barnes of Savills, who is credited with identifying the last bust and boom years, supports Beale’s assertion that prices will fall by 15 per cent in 2009. But she says that from 2010 the housing market will recover and will increase 20 per cent by 2012, with London leading the way.
'David Bexon, managing director of independent new homes property portal SmartNewHomes.com, says, ‘The lack of supply (of new properties) will hit home in certain areas in 2009, and while I expect a continued decline over much of next year, I do not expect new house prices to fall further than 15 per cent from their July 2007 peak. I believe we will have reached the bottom of the market by the end of 2009.’
For those of you who do watch the programme, and believe it to be totally and wholly innapropriate, biased, and describes an unfair, innacurate, and irresponsible description of the housing market.
You can and should complain here:
Complaints
Channel 4
PO Box 1058
Belfast
BT1 9DU
WEB: http://help.channel4.com/SRVS/CGI-BIN/WEBCGI.EXE?New,Kb=C4_Author,Company={2EA1BB9C-510E-44A5-A481-01EB1DDA1669},T=CONTACT_VE,VARSET_TITLE=TV
And to Ofcom here:
http://www.ofcom.org.uk/complain/progs/specific/?itemid=286480
20. mario said...
Dear Matt, What I paid in tax for my investment probably is more than what you'll pay in your whole life so I am not feeling any social remorse for that, and I was happy to pay 40% tax because tax money needs to improve the society, if everyone is on benefit we'll turn to be a very poor country, said that when I came in Uk I took with me all the profit I earned in my former businesses, the BLT was just an another business, quite interesting because you could achieve 10/12 per cent instead of 6% from the bank and basically you were protect from inflation, if most of English people were masochistic to push the prices above 400% in 10 years is not my fault, in fact I warned all the people to stay out from this crazy market, anyway, every agent, friend or relative laughed at me...
This is what happens when a market grows to much and too fast, I think is not immoral making money honestly, maybe exploiting the resources of the government is not, because we all are the government.
I am sure you are a very nice guy as well perhaps a little bit frustrated by the house market but just wait another year and you could buy an house that is a full right of every people living in a civil and decent society.
Post Scriptum
And don't re-mortgage it twenty times because you want spend some time in Spain... I never did.
21. planning4acrash said...
Matt, if you tax 95% on home speculation, you can bet your bottom dollar that government encourage it, on, yer, they do already, via stamp duty incentives, ah, so that's why government is VI then.
So, if you don't like the speculation, ask why the speculation, otherwise you are dealing with symptoms and evoke the law of unintended consequences. (Government will be aware of the consequence and stay quiet!) The fact is that banks are able to print money so long as they are in accordance with their fractional reserve requirements. So, you get a situation where banks now are given licenses to counterfeit, and when they have more capital than the free market would provide via sound finance based wholly on savings, they must lower their standards to lend the cash, hence sub-prime.
"I am afraid that the ordinary citizen
will not like to be told that banks
can and do create money
...And they who control
the credit of the nation
direct the policy of Governments
and hold in the hollow of their hands
the destiny of the people"
Reginald McKenna,
past Chairman of the Board, Midlands Bank of England
22. planning4acrash said...
Matt, another point, government know that too much tax reduces speculation and their revenue, so they simply won't put the tax up that high. Rosevelt, I think it was, during WWII proposed 100% tax on wages above 30k I think, and Congress said no, because they said it would dissuade people from working for the war effort. So, if you put your faith in tax to solve any problem, it won't ever. It will only wed a government to sustain and carry out husbundry operations for the crime, i.e. nurture it, fatten it up and take the speculators to slaughter every now and then, as we saw during the hpc boom, and then plump up the next generation for milking, as we see now in the bailout. This farming analogy is why we are called sheople, but via excellent PR and and amazing show via fake democracy, just as the hen is made complacent by a warm bed of hay, so to are we.