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economiccycle

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About economiccycle

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  1. http://www.celebritynetworth.com/richest-celebrities/actors/minnie-driver-net-worth/
  2. S1 is clearly the most well balance logical human beeing you could hope to meet on HPC and thanks for helping me undersatbd the differecne between sarcasm one of your specialties andm irony that you seem blind to
  3. The number of homes/flats rented privately rented out has increased dramatically over the last 12 years. As the share of households privately rented has increased from 10% to 14%. Thats a 40% increase. I suspect that is why rents in the area that I look at are only a bit more than 20% greater than they were in 1998. About £330 per week now for an exlocal in a “posh part” of Battersea near battersea bridge. Back in 1998 most of the good folk I rented to were newly qualified accountnants and the like on about “25k per annum. In 2008 I was not renting too newly qualified accountants I was renting to large numbers of eastern Europeans working as waiters, electricians and nurses at the marsden but also on 25 k per annum. The rents for 2008 were very similar to those paid in 1998 , checking out property finder etc there were a large number of fairly posh houses on the market. Newly qualified accounts on a salaries of perhaps 35 k to 45k could afford a better quality of property. It seems to me the folk who rent from me allocate about 25% of their gross income to rent and get the best property they can. The last three years buy to let mortgage rates have risen dramatically and I was convinced that the returns on buy to let did not represent a good return compared to equities. The sharp drop in properties beeing bought for buy to let conincided with a number of “accidental” landlords selling up. In my area rents are about 20% greater than 2008. It is noticeable that the good people coming to view are now on higher salaries as the number of properties available to let has remained static. I still do not think that property yet represents a reasonable return with the hastle involved but another 10% on the rent levels and a fall of 10% in value and I think it would. It is very clear to me that rent levels are determined by the quality and quantity of the available stock and that rent levels srongly effect investment demand. It is also clear to me that in 2008 the vast majority of my tenants were not british born and that without them rent levels would of gone through the floor.
  4. If I believed house prices were going to fall by more than 15% and I disliked BTL landlords surely selling to a buy to landlord would be the goal. As whoever buys would be making a very poor financial decision I think the only reason not to would be if I actually did not believe house prices would fall
  5. I follow prices of 3 bedroom ex local authority flats near Chelsea/ Albert Bridge. SW11. Bought quite a few back in 1999 to 2001 Have paid off over a third of my initial mortgages for these. They used to go for 90k to 100k but at the peak about 270k to £290k . Briefly down to 250k in spring summer 2009. A few sellers on the market at £270k plus just not accepting offers under the 250k stamp duty threshold. Did get a vendor asking £249,950 and they had three investors offer asking price within a week Prices not booming but quite steady An Italian chap bought one a few months ago as "holiday home" could not afford anytihng posh but wanted a three bedroom property walking distance to kings road for less than 300k
  6. I can not see how a reduction in housing benefit will not lead to a reduction in rents . In 1999 Rents in the posher 3 bedroom ex local authorites in Battersea the part near the albert Bridge were about 270 to 290 per week. The people who rented them were young profesionals trainee accounts etc on 20k to 25k per annum. These flats sold for 90k. In 2009 Rents were 300-320 These had been a dip in 2008 and rents were about the same as they had been in 1999. The people who rented them were in less well paid job say waiter restaurant kings road on 20k to 25k per annum. These flats were selling for £270k The extra demand by landlords pushed up prices but alsoad to rents falling significantly in real terms Surety its the economic text book stuff ? Incidently imho capital gains tax beeing higher keeps prices higher. For someone who bought in 1999 in a posh part of Battersea say a three bedroom ex local £90k now £270k Selling would incure a tax bill of £40k+ The way to really crash house prices would be to reduce CGT to 5% for existing property owned if sold within a year but increase it to 50% after that The current level means people who bought ages ago will just not sell
  7. I would guess nobody understands economics at that level except the poster
  8. She came, she saw , she laid waiste, and I suspect has better things to do with her time
  9. I do not think you understand the HPC rules you can only give anecdotal evidence of properties beeing worth at least 25% less than they were in 2007. Surely though you must know the answer more than anyone replying to you. I follow the prices of 3 bedroom exlocal properties in the posher parts of SW11 where prices are now more than the last peak, three bedroom ex locals in sW4 clapham park where less than the peak 10% ish. Four bedroom houses with garden in SW12 where prices are similar to the peak. If properties are advertised at way above the price they are actually selling for and they stick . I have never bothered asking on these properties as if you wait a more realisticly priced property will come along. You mentioned two properties coming onto the market and selling quickly. You now the price that was agreed and I imagine similar properties coming onto the market will sell for a similar amount now. You must know the comparables better than anyone If the prices were less /more the same as 2007 you already have the answer.
  10. Most 20 somethings I know share those on teacher type salaries paying about £500 pcm those on higher typically paying £700pcm with 4 of them in a decent though not particulary posh part of SW London. A friend of mine Indian doctor living with his parents for the last 4 years is now one step up from the lowest level of a consultant . He has just I guess turned 30 and lives like a church mouse checking out the NHS pay scales I assume he is on over £80 k rising to over £100k . I would be amazed if he has not saved about £100k since 25 though its not something I have asked him. He has been put off buying for the last few years as he unsure about house prices I think it is about choices.
  11. I do not have a lot of time to post on a regular basis and I am not going to spent time getting actual figures for a graph of what food etc represents as a percentage of earnings since 1950. ** real growth of 2.5% ove 50 years enables a guestiamte for a basket of expenditure. As I said I do not have the time to get numbers for food, fuel, clothing etc but I would guestimate 3 to 4 times . ** 1.025^50=3.43 So if we had real food inflation ( and all the other necessaties ) of 15% per annum and no income growth for a long time in 8 years necessaties as a percentage of income would be back to the 1950’s Yes if we did I think the house price ratio would fall through the floor. At this time the average family would not own a car or take foreign holidays but we would have a low house price ratio. I think a fall in real incomes of 1% would result in a fall of more than 1% in house price, I think a rise in real incomes of 1% increases price by more than 1%. A country like Nigeria where people spend 73% of income on food is not the same as the UK in 2010. The UK in 2010 is not like the UK in 1960.
  12. I tend to believe prices will stagnate for a few years and then increase slightly more than earnings maybe 1% per annum thereafter due to generations becoming wealthier . I think this effect is gradual increasing the price earnings ratio from 3.5 to 4.5 over tha last 30 years gradual increase with a economic cycle to create peaks and troughs. I think the price earnings ratio is too simplistic ================================ My grandparents spent most of their money on food, clothing, fuel, basic necessities the little that they had left over They had left over was spent on rent and a small amount of savings. Like the majority of people of that generation they never were able to buy. The percentage of their income available for rent/mortgage was less than 15%. The price earnings ratio was 2.5 ish My parents spent a lot less on basic necessities. Like the majority of people they could even afford to buy and save enough money to give their children deposits to buy their first property. Like the majority of people of their generation they owned their own house. The price earnings ratio was 3.5 I was given the equivalent of a years salary to help me by my first property food etc as a percentage of my income is a much less than my parents and a fraction of what is was is 4.5for my grandparents The price earnings ratio is 4.5 If I had 3 children I could pay for half a house for each of them. The price earnins ratio will be ?
  13. Having read the PCW article they expect on average house prices to be 30% higher in cash terms to the 2007 peak by 2020. If prices are about 10% lower than the 2007 peak that means about 40% increase from today or a bit less than 4.0% per annum allowing for compounding over the next 10 years
  14. If the revenue accepts the home as your main residence you will not need to pay CGT with the facts you have given I am not sure that they would so I would live there myself I notice that the coopertive bank will offer a five year deal at 4.19% if you have a 25% deposit. To avoid interest rate risk Over 25 years the initial payment of capital and interest would be £484.55 About £5,814 per annum 484.55=(£90,000*(.0419/12))/ (1-(1+.0419/12)^-300) I would imagine a 90,000 remortgage would pay of your existing mortgage. If you move in you can claim rent a room for the first £4,250 of income tax free . This means if your friends pay £500pcm £6,000 a year you would only pay tax on the ~£1,800 above this amount. About £360 So the annual mortgage payment would be similar to the net rent after tax received. After 5 years the mortgage outstanding would be £78,655.06. 78,655.06'=484.57*(((1-(1+0.0419/12)^-240)/(0.0419/12))) As I was a saver when I started would I would move in use as much of my annual ISA alowance as I could for the next five years and in five years sell and trade up
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