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London-loser

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Everything posted by London-loser

  1. I think this happens quite a bit. The guy wanted £210k... almost got it... put it back on the market with the EA knowing the discount has widened and they are going to get lower offers (was £220k looking for £210k, now it is £227k looking for £210k). Still in denial I'd say.
  2. You keep on taking from the rich and giving to the poor mate.
  3. London rose the most and fell the most in the last boom/bust. Using Nationwide QUARTERLY data (so this is not necessarily exactly peak to trough), the average London property peaked at £97,667 by end Q2 1989. It fell to £66,573 by end Q4 1992 (down £31,094 or 32%). It broke back through the original level sometime during Q1 1998 (£98,387 by end Q1 1998). In nominal terms the average price took nearly nine years to recover. However, in REAL terms (measuring the "purchasing power" of the average property - say how many pints of lager you could have bought with the property's value) the position was worse. With the same numbers adjusted for (RPI) inflation the average London property peaked in Q3 1988 and bottomed out in Q1 1996 (down over 45% in REAL terms). The average London property finally regained its end Q3 1988 value in Q2 2001 (nearly 13 years later!). It was VERY messy for Londoners last time around!
  4. I'm losing the will to live a little with all these different Sipps-related threads. I agree with your headline. You are right that someone who already has £180k in his Sipp can use this to buy property... but he has already had the tax break, he doesn't get another tax break for selling equities and buying property. So he would only do this if he believes he will get a better return from property than from equities (or wherever the £180k is currently invested). I would also question how many people actually earn £200k - sure, people do but we are talking about a few people who will have minimal impact on the market as a whole. I would suggest that £90k is actually uncommon, even in London... we are STILL talking about a small number of people (and even smaller once you strip out those who could afford to do it but won't). I'm not sure I fully understand what you mean about borrowing the money and getting the tax back on it. As for the £90k guy buying the property etc, he can do the same thing and invest in equities - and get a better return than on property. The country seems to be focused on property at present at the expense of every other asset class possible. It is a strange world... but it is not reality (imagine if you could have done this last September - and got 1.8% plus rental yield on property or 20%+ on a FTSE 100 tracker... which is the better result, even if you are 50% geared on the property?). Peopel who do buy residential property get the rental yield (5% you say) but they get this on money market funds without risk. Intelligent people want a good risk premium... so perhaps unintelligent people with wads of cash might go for it? They are not protected from 40% falls. They have £180k in their pension, if prices fall 40% they have lost £72k in their pension. They ARE £72k poorer while they could have been richer had they bought a good investment. This would be a VERY expensive mistake and they would have to be pretty dim to tell themselves it was a good result. I pretty much agree with the rest of your post (see today's other threads on Sipps).
  5. I agree. Thankfully those people waiting on the sidelines are getting a gentle kick in the teeth while dishing out an almight kick in the nuts to BTLs.
  6. Simon, The average Joe is indeed a numpty... but the average Joe has £30k in his pension. He might think it is a great idea but he isn't going to do a thing about it. Arguments about how much will flow into Sipps (and how much of this into residential property) are really about guestimation but I've seen numbers of £6bn, £10bn floated around. Let's suppose there is an extra £10bn that flows into Sipps next year and all of it goes into residential property (I'd say this is an optimistic view, mainly put about by people who will benefit from such big inflows). The average property price is about £160k so say 6,000 properties per £1bn so 60,000 extra properties purchased. I think we have around 24 million dwellings in the UK with an average turnover every seven years - so roughly 3.5 million properties sold each year. The 60,000 represents about 1.75% of the average number of properties sold per year. Now, you might argue the BTLs will be buying cheaper than average properties and you might want to allow for a "multiplier effect" (one BTL purchase at the bottom of a chain might kick off six sales) so let's guess at a 10% boost to the market. Now, the NAEA says property for sale is about 40% higher than last year. This £10bn will help account for one quarter of that increase in supply. What about the other 30%? And then what is the trick for next year? ANOTHER £10bn extra? Is there going to be an endless massive increase in BTL Sipps pensions? From people who don't mind that they are not getting good returns from their investments just as long as it helps prop up house prices? I don't doubt Sipps will have a positive impact on house prices but the strength of this impact really is being massively overdone.
  7. And the worst part is at least one of the links in that chain was probably lying... so it's more like "we know someone who pretends he knows a mate of Donald Trump". The article was distinctly light on facts. It implied they have fat yields on their properties - they make £1000 plus cashflow on EVERY property... but also implies they are geared to the tits (seems likely since they only started a year ago and focus on London/the South East).
  8. Isn't the first comment somewhat academic? If my flat is priced at £220k and then drops to £160k (or whatever) does it really matter whether the £60k is a result of a "genuine" price collapse or the vendor realising his current price is Mickey Mouse? As far as a potential buyer like myself is concerned all that matters is that the price has fallen significantly - back to a sensible level. As for the second point, how do these guys buy the three/four bed place without selling their two bed etc for a good figure? And if the price of the two bed is collapsing (as in your first statement above) how do they afford to maintain the jump up the chain?
  9. I believe last month was the second time this year that people repaid net credit card debt (there were more repayments than borrowings on credit cards). I believe April 2005 was the first time this had happened for 11 years. This would indeed provide some evidence to suggest UK consumers are concerned about their debt levels and look like they are retrenching and starting to repay debt rather than run up new debt. On the plus side this does point to people starting to get to grips with the issue of a large amount of debt. The rest of your conclusions from this seem a little odd though - consumers concerned about debt and saving/repaying debt rather than spending, to me, is a worrying thing for the UK's massively overpriced housing market. I think it is the right thing for people to do and it is good for our economy long term (we cannot fund an economy on debt long term and the earlier the reckoning the less the problem) but it does not bode well short-term and is potentially very bad news for sellers with overpriced properties. Indeed. The long bull run came on the back of an extended period of economic growth (Gordon Brown's boasts it is the longest since records began). People seem to have extrapolated this out to "strong economic growth forever" and priced houses accordingly. They have become so brainwashed that they seem to believe house prices march on regardless of what the economy does. I still believe UK property to be a "supercyclical" - a VERY good investment in periods of strong economic growth but VERY bad in periods of recession/economic weakness (especially if started from overblown prices too).
  10. The last time around is a little complicated by the high inflation levels. At the start of 1990 base rates were 15% and remained there until about September time... with nominal house prices pretty much constant (falling in real terms) for this nine month period, based on HBOS monthly numbers. Then the base rate started to fall (it hit 7% by July 1992). Over this period house prices fell by about 7-8% in nominal terms. In real terms (after RPI adjustment) they fell by 20%. So, in short, average house prices fell despite hefty IR cuts in the last crash (and fell quite heavily in real terms). And this is in a period of almost two years of generally falling interest rates. It is entirely possible that house prices can fall as interest rates are cut - especially if they start from massive overvaluations and it is against a backdrop of worsening economic conditions (arguably where we are today). With no inflation to hide real losses this time around it COULD be that nominal falls in the face of IR cuts could be greater. I believe this is still Capital Economics' central theory - house prices will fall against a weakening economic backdrop with IRs cut to compensate. I would agree this is entirely possible perhaps even likely.
  11. Could you run us through this argument? You sell the property to your Sipp and incur stamp duty, solicitors fees etc and crystallise a capital gains tax liability on the £130k (40% less taper relief etc). And obviously you need to have a Sipp already established that is able to buy a £180k property (so minimum £120k already in the Sipp). Now, the property is in the Sipp (which is £180k poorer - having sold off £180k of equities or whatever) and the BTL has £180k (less mortgage) in his hands. Why is this now a massive boost to the UK property market? Presumably because this BTL is allowed to put even more of his money into property... which he will rent out to people whose rents are set by their income levels (even if house prices are not currently fixed to incomes because of BTL stupidity). Now, if these BTLs have ENDLESS pots of money in their Sipps it could have a big impact... but do these people actually exist in any great number?
  12. Volvo, The tax breaks apply to equities, bonds and pretty much any other investment you care to mention (although the rules are not finalised and it seems some things will be left out of the final rules). The argument that you either buy overvalued property or pay 40% tax just does not hold. As a simple example, you could buy Money Market funds that won't offer a great return but immediately overcome the tax issue while you decide where better investment opportunities lie. I also find the "equities are overvalued so the only alternative is to buy massively overvalued property" somewhat strange.
  13. Whenever someone tells me this I simply reply "that's lucky" and leave it at. As you change the subject you can see the doubt on their face... it's priceless!
  14. What a weird world we are living in now: Outer SE: -0.2% YoY Outer Met: 0.4% YoY South West: 0.4% YoY Right the way through to... Scotland: 7.1% YoY Northern Ireland: 11.4% YoY
  15. Well, they're obviously willing to sleep together but they're not willing to all bath together. I wonder what rogerthelodger makes of all this?
  16. Perhaps I'm being a bit dim but do you pay £390pcm to sleep on the couch or is this a back-handed way to advertise that these guys like threesomes?
  17. Othello, Nobody anywhere in the world spends much time arguing about/debating things they agree with (OK, maybe a few stoodents). For example, if you were to post that the sun rises in the east and sets down in the west you will probably not kick off an almighty debate. As for the above, how would you tally this with the graph from Hometrack that shows "supply", nationally (across England & Wales), has risen by 75% over the last year (in terms of properties for sale) while "demand" has fallen by 75%. I realise you don't really like backing up your opinions with facts but you might like to see page 5 here to see what I am talking about: Hometrack's last report You might say I'm just seeing what I want to see but that looks like evidence of a pretty serious supply/demand imbalance. From my elementary economics lessons too much supply, too little demand leads to price falls until some kind of equilibrium is restored (that old fashioned position where there are enough buyers to take the houses people want to sell rather than the current position where "selling" actually means leaving your house in the estate agent's window with a pretty price tag on it). The only "trigger" that is required for prices to fall significantly is for sellers (as a group) to decide they actually WANT to sell. I suppose it becomes a bit academic after a while as to what actually constitutes "a flood".
  18. Othello, Aren't these two comments somewhat contradictory?
  19. Othello, My frustration is about the lack of substance behind your opinion. I hope this doesn't sound rude but if your opinion is no more valuable than the average man on the street then I'd rather you didn't share it with me (for example if you want to tell me there hasn't been a significant increase in the supply of property for sale while every piece of useful information on the subject suggests there has). There are millions of knee-jerk, uneducated opinions around already - they aggregate to a position that says an average house price in the UK of £160k-plus makes sense. I'm reliably informed that there is "one born every minute"... and I'm no more interested in the opinons of the one born a minute ago than I am in one born 30 years ago. That's not to say I don't want to hear from people whose opinion differs from mine, it's more I'd like to hear only from those who have a thought-out opinion. As for the Halifax/Nationwide, now those indices are discussed at great length on this site - feel free to "join the debate". They are taken to pieces... in terms of being about mortgage applications at an early stage of the buying process, having geographical biases, only reflecting places that have mortgages applied for on them (so places that sit on the market month after month after month are not reflected) etc, etc. Interesting stuff... and it can help you build a picture of the market position. Obviously both are telling you about what HAS happened so looking at them will only tell you about any crash AFTER it has happened. An argument that "they haven't fallen so they will not fall" has no great value in it I'd say.
  20. Othello, Could I politely suggest you "join the debate" rather than merely posting your opinion supported by no facts. As one example, the NAEA recently put out a report (debated on this forum) that the average number of properties on estate agents' books had risen by 40% or so. This seems to somewhat fly in the face of your view that "the market is not flooded with sellers". I may have missed your contribution to this thread, where you demonstrated the NAEA was talking out of its Aris and in fact the supply of property was not up at all.
  21. Translation: Things aren't as bad as last time... yet!
  22. And they are the most violent people in Europe (well, except those vicious Norwegians, apparently) I was reading last night. I came to study and stayed. I know what you mean about whinging gits (although the public transport system really is embarrassingly bad isn't it...). As much as I love the multi-cultural/cosmopolitan feel of London, can we add a special category for all the foreigners who come to live in London and then seem to spend every waking moment telling you "it's much better in Milano", "the quality of life is Barcelona is so much better"... stop telling me about it and FUG OFF HOME.
  23. Perhaps the Scots all move to London and rent once Scotland is full of ex-Londoners?
  24. Yeah, either that or house price falls. TITS. An average 14 WEEKS taken to let a property? That CAN'T be right, surely? On average, three months of voids on empty property for rent? OUCH! Sales up 10% and stock up 40%? A recipe for "stabilisation" for sure. - that's a made up estate agent's name planted by someone on HPC, it can't be real.They seem to have stopped listing that part at the bottom that told us how many BTL properties were bought/sold on average per estate agent. This wouldn't be because the numbers went decidely negative would it?
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