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Ben Madigan

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Everything posted by Ben Madigan

  1. No, it can't. The UK economy does not exist in a bubble, for starters. Mrs. Thatcher thought she could control inflation like a tap, and that by returning to the doctrine of sound money, she could save the British economy. It was in the process of destroying her when General Galtieri marched into Port Stanley and saved her bacon. No, we can't. As someone who is a hard-core cornucopian (the opposite of a peak-oil doomer!), I wouldn't dare suggest that dwindling North Sea oil reserves are a sensible long-term energy strategy for Britain. Most fields are showing sharply declining production and the few remaining hopes for new, long-term, exploitation, are prohibitvely expensive at current oil prices. Housing wasn't the only asset class to witness a spike in value, fuelled by cheap credit, and a collapse in yield. Remember that, in an efficient market, yield directly reflects risk. In the late 1990s and early 2000s, investors in field after field seemed to forget that risk existed in a frenzied pursuit of credit-fuelled capital gains. Everyone has suddenly realised that the world is not free of risk - "an end to boom and bust" indeed! - and therefore yields will rise across a broad range of investments, and they will rise in the way they always do in a declining economy; by a collapse in their capital value. Sorry, but if there was an easy way to make money, everyone would figure it out and it would cease to be a means of making money. That's basic economics. Deny it at your peril. BTW - Vedanta Trader - GREAT post!!!
  2. Conacre artifically inflates the price of agricultural land on either side of the border well beyond the level it should be at. But the stupendous rises of the past 2-3 years are, I'm afraid, another speculative bubble. The global rise in food prices makes farming more profitable, even in rich countries - but that could well be a transient phenomenon, and in any case, the current spike in agricultural land values predates that.
  3. If you're really keen and see something you like, make an offer well, well below the asking price. You've seen something you like and think it should be valued at £50k below the asking price? Well, then make an offer £50k below the asking price. I've heard numerous stories of people getting £20-40k off asking prices in the £150-200k bracket. You never know.
  4. At what price for land with planning permission? At what average wage for construction workers? At what cost of financing?
  5. Acceptable as defined by whom? In historic terms, they remain high. There is a limit to how far the British government can cut interest rates, given the weakness of Sterling and the UK's high dependence on imports. And if they do cut rates further, then we would be rapidly heading into a frightening scenario of serious global depression. The UK cutting interest rates to 1% or lower would be a desperate attempt to keep UK exporters afloat by deliberately crashing the value of Sterling. Other countries might well do likewise; the Eurozone is also heavily export dependent, especially Germany. And so is China. The Japanese experience is that slashing interest rates will do little anyway - remember, given current levels of inflation, real interest rates are strongly negative anyway; effectively the government is paying you to borrow money. Banks still aren't lending and people still aren't borrowing. The little UK-Iceland spat was frighteningly close to a scenario of Western European countries practising Beggar-Thy-Neighbour against one another for the first time in 70 years. If that is the way the world is heading, God help us all. The nice house I want to buy and your BTL portfolio pales in importance in comparison.
  6. Why would the government voluntarily spend a lot of money bailing out BTL landlords when the UK is about to add £100 bn in debt and the cost of rescuing owner occupiers is making a few eyeballs swivel? I mean seriously, what is the rationale for this in either economic terms or in terms of political advantage? While the gap between renting and buying in England isn't the same yawning chasm it was in NI at the peak of the boom, it was still significant. I was effectively evicted from a house in London 18 months ago when the landlady sold it for £430k; I was renting it along with a friend from £1175 pcm. Before that I was renting a flat in Central London at £925 pcm; the identical flat next door sold for £260k. You seem to be a bit like Fox Mulder - you want to believe. I don't see why the government is going to rescue you when it has millions of harder, more deserving and politically more advantageous cases ahead of you in the queue...
  7. I take it this is a wind up? The 'peace benefit' was when prices rose from extremely low values to a level similar to areas in GB with similar income profiles in the mid-late 1990s. Actually, that process had already begun by the late 1980s - one of the reasons we avoided the early 1990s crash.
  8. Sorry, posted this to the wrong thread earlier: Asking price £200k http://www.propertynews.com/brochure.php?r...=1&sort=h2l Rateable value £205k http://vlistdcv.lpsni.gov.uk/propertydetai...202669&rn=7
  9. I found propertynews was fine when securing my current home - it is frustrating when landlords leave listings on after they've already let them out, but that is (ahem) less of a problem than it was a year ago. BTW, I'm paying 600 pcm inc. rates for a 3 bedroom semi with front and back gardens near Belfast Castle. I don't think I've got a particularly good deal. Although I'm single, a smaller flat would cost just as much in rent. South Belfast is a bit more expensive though, but a work colleague pays the same rent as me for a similar house (smaller garden) in Ballynafeigh, so the difference might not be that stark.
  10. http://www.propertynews.com/brochure.php?r...=1&sort=h2l Asking price slashed from £345k to £200k. Rateable value is £205k. It's a nice street. If it's on the side of the street I think it is, it has lovely views to Squire's Hill and Wolf Hill over Cliftonville Golf Course. Wonder how much work it needs. Houses half the size on my street are still on the market for more than this, and twice their rateable value... This is only the start, friends.
  11. I agree entirely. I was involved through being a voluntary sector trustee - sadly not my money - in the sale of a large detatched property in a leafy lane off the Malone Road. After a bidding war, we finally accepted a bid in early Autumn 2007 of £1.275M, beyond our wildest expectations. We completed in early Summer 2008 for £875k. BT9 saw some of the worst fantasising of the 2006-7 period and is seeing some of the sharpest drops. OTOH, in the leafier parts of North Belfast we are not seeing drops quite that drastic yet. Unfortunately.
  12. Don't need to go to Dublin for that - have a look at the exterior work on the apartment block on the corner of Union Street and Kent Street next time you're in the area. And that one actually has quite a few people living in it.
  13. http://www.nipropertyauctions.com/pro_details.php?pID=14 "Appartment [sic] Close to the City Centre" Address: 17 B Oranmore Drive Blacks Road Oranmore Drive is in the Suffolk area, close to the junction of Black's Road and the Stewartstown Road. It certainly wouldn't meet most people's definition of an 'apartment close to the City Centre'. It is a good 3-4 miles from the City Centre. It's not in a great area, but then again it's the only area in Belfast where a substantial peaceline has been largely dismanted, which is a sign of great community spirit. It's an ex-NIHE flat. Nothing wrong with that, but if you're going to puff it up as an 'apartment', you could at least try and spell the word correctly. "This attractive recently refurbished property is perfect for those who need to live close to the city centre, reasonably priced, and within easy reach of bus routes to Lisburn, Belfast, and Newry Dublin the house is classy and sophisticated with a fully fitted kitchen, all brand new furniture. Should not be missed." It has a very good bus service to Belfast City Centre, if you're happy to get the bus down the Falls, which I would hope more and more people are, but frankly some potential renters wouldn't be, otherwise it has a mediocre bus service via the Black's Road and Lisburn Road. It has a mediocre bus service to Lisburn if you are happy to get the bus through Twinbrook and Poleglass. Otherwise it has an excellent bus service to Lisburn from the Lisburn Road but you have to walk 20-25 minutes to get there. With Newry, the same 20-25 minutes takes you to where you can get the SLOOOOOOOW bus. The express buses to Newry, genuinely an excellent service, stop no closer than the Europa. The buses to Dublin stop no closer than the Europa. I know such detailed bus information is of little relevance to many potential renters - so why mention it? From the pictures, there's absolutely nothing wrong with this place BUUUUUT the constant exaggerations and downright lies are what poison many people against landlords and estate agents. Just tell the truth - even a slightly optimistic reading of the truth - instead of telling us fibs we don't believe anyway.
  14. Oh, dear, my Ballymena comments have caused a bit of a stir - not only offending Ballymena Boy, but bringing the working-class warrior out in others as well. Please be assured, BB, that I wish you nothing but the best of luck in your investment plans even though I may disagree on them and bear you no ill will. Please be assured also that I too grew up on a housing estate with a bit of a reputation and still have family living there. I yield to no-one in my capacity for working-class chest-beating. But let's be realistic. People living up the Galgorm Road are not downsizing to ex-NIHE terraces in Dunclug and living of the returns off their fat cash profits, and there is a reason for that... you can choose to be offended if you like, but you are renting out in areas with high proportions of social tenants and where rents have a floor effectively fixed by the current DSDNI Housing Benefit limit for the area. These are areas where people with the financial wherewithal tend to leave, not because the majority of their neighbours aren't decent people, but usually because of a small minority of anti-social, unpleasant and feckless scum who poison the area for everyone. I note you don't live on one of those estates any more, and I'd guess you don't for the same reasons I don't, and the majority of the people I grew up with don't. I also don't see anything whatsoever wrong with buying to let social housing - if you are providing people with a decent home, good for you, and if they would struggle to find a decent home without Housing Benefit, even better for you. I rent, I rent from a landlord, and I like my home. I don't see anything wrong with making a decent buck for providing a good service, in housing or anywhere else. You are assuming that rents will remain constant as prices fall; I think it is highly possible that they will BUT remember the huge oversupply of apartments in towns and cities across Northern Ireland, including Ballymena, that are essentially unlettable at their current rents, a situation that was tolerated by owners as long as they were assured capital gains; indeed was often preferred by owners seeking less hassle and none of the depreciation of fixtures and fittings caused by someone actually living in a flat. If there is a lot of vacant capacity in the market, and government finances are constrained - which they will be, severely - as most HAs let at significantly lower rents than private landlords, there must be a temptation for Margaret Ritchie, possibly led on by DSD in London, to radically restructure they way Housing Benefit works. Or to simply fund HAs to buy up blocks wholesale as prices crash and investers stampede out of what will become a poisonous asset. None of this is certain, but you seem unwilling to consider any downside. That is unnecessarily risky. For what it's worth, I think you are investing in the only sane part of the market to invest it for BTL, but I also think you would be well advised to hold off to see where the bottom of the market lies - because it certainly isn't here - and guarantee yourself higher yields for the lifetime of your investment. Japan is a valid comparator because it is one of the few cases of a property bubble even more puffed up than that in Northern Ireland post-2000. The fact that house prices remain substantially - very substantially - lower there than they were 20 years ago in a country with an limited amount of building space (too many mountains) ought to cause anyone pause for thought, rather than cause for bluster. But, hey, you can do a reasonably amount of research on it in a few hours if you were interested. I certainly would if I were about to take on a significant number of new, highly leveraged, investments. Bringing Mogadishu up is, with the greatest of respect, just silly, unless you expect Northern Ireland to descend into anarchy, balkanisation and civil war. Oh yes, we tried that; let's hope for all our sakes we don't repeat that mistake. As for your overseas investments: Dubai - calamity! Bulgaria - whoops! Morocco - don't know enough about the local property market. Germany - certainly a good short-term investment for yields, but you correctly note the structural issues in Eastern Germany and surplus of housing in Berlin. I wouldn't underestimate these. The reason why property prices, and indeed rents, are so much higher in Düsseldorf and Munich than Berlin is that Berlin is not a capital in the sense that London and Paris are capitals. It has the parliament. It has a fair wack of the central civil service, and it nowadays has most of the foreign diplomats. But it is a chronically poor city (travel outside the central corridor, and look at the standard of road and pavement maintenance, even in the West), with massive unemployment, and Outer East Berlin is still losing population rapidly. Despite targeted bulldozing of the most unlettable parts of districts like Hellersdorf and Marzahn, it still has a lot of vacant property. And unemployment is stupendous and not going down. Frankfurt has finance. Hamburg and Munich have the media. Cologne has gays, academics and eco-luvvies, Düsseldorf has Japanese and the companies they own, and Stuttgart has the world's finest precision engineering nestling uneasily beside yet more eco-luvvies. Berlin has a lot of civil servants and a vastly bigger contingent of people who haven't worked since the wall came down (East) or who haven't worked since they first toked a joint in '68 (West), and not a lot of industry or private service sector stuff, especially at the high-value end. Still and all, I LOOOOOVE Berlin and would happily live there if the chance came up. I'd guess the best bets would be areas in Central East Berlin that are still gentrifying (Mitte, Prenzlauer Berg), and maybe even some neighbouring traditionally Turkish/white working-class areas of West Berlin that are more slowly doing likewise (lower Wedding, the northern end of Kreuzberg). Rents ought to be solid and voids are very low in solid lower-middle to middle-class areas of West Berlin - outer Charlottenburg, everything from there out to the Wannsee and all the nicer bits of Reinickendorf. The rest of East Germany has chronic demographics. For example, Saxony-Anhalt had 2.9 million people at reunification, has 2.4 million today, and is projected to have 2.0 million by 2020. And East Germany was a country with the world's lowest birth rate and one of the highest divorce rates to begin with, so don't expect too much alleviation from the trends due to smaller household size leading to more households. Görlitz is a nice place (learned any Sorbish yet?) but just look at what has happened to its population over the past 20 years! You seem to be doing all the right things - buy whole Wohnhäuser, keep them in good nick and bear down mercilessly on voids. On current demographics, people in It certainly seems to be a market where people can make good money, but beware the potential long-term pitfalls. You seem well aware of them.
  15. It's the bidé that really sells a house.
  16. Ask a Japanese friend where we are heading...
  17. The NI Assembly has met every Monday and Tuesday that it has been supposed to meet. You are thinking of the NI Executive (the Assembly is the PARLIAMENT whereas the Executive is the GOVERNMENT) met yesterday and the compromise is probably closer to the pro-developer side of things than anti-. But it will take a few dozen test cases to sort out exactly what it means. On balance, it will almost certainly weaken one of the major supports to property prices in rural parts of NI, but not destroy it entirely.
  18. The model of the late Thatcher property crash in SE England is misleading in terms of Northern Ireland. Unlike Northern Ireland, whose economy consists of legal aid fees, civil servants and ********, South Eastern England is one of the most productive economies in the world. The South East of England also happens to be the catchement area of one the world's two centres of the financial services industry, which went into rapid overheat in both the 1980s, and then more spectacularly in the 1995-2007 period. Having lived for many years in Central London, I was driven out of the area by rich Arabs, Americans, Russians and Chinese who were spectacularly rich. I went shopping with these people in Tesco. I fail to see such spectacularly rich people while stuck in the Abbey Centre traffic jam on Saturday afternoons. In terms of ratio to incomes, Northern Ireland property by 2007 was spectacularly overvalued with property price:income ratios well over 10 by the valuation of most observers. 12-13:1 by most estimates. Even at its climax, the late Thatcher property boom 'only' saw valuations of on the low side of 8:1 or so in Central London; most of SE England was less overvalued. In the current boom, Central London managed a Northern Ireland style 12:1 but then again, rich Arabs buy houses in Hyde Park and Kensington as a safe haven from summer heat and potential political heat at home. I have yet to see many sheikhs renting pied a terres off the Galgorm Road. You state that you are currently enjoying yields of between 6% and 7.5%. I can only assume this is gross yield, and I can further only assume that you are benefiting from housing benefit limits providing a supporting thresholds in areas like Dunclug, Harryville, Ballee, Fisherwick or the many other rather horrendous Ballymena estates in which no sane person would actually indebt themselves to live in. As a renter in a solidly middle-class area of Belfast that has the added bonus of easy commuting and easy parking, I know that someone buying my house from my landlord now would benefit from a gross yield of around 3.5% from me. Yes, that has improved due to a ~30% fall in purchase prices in this area in the past year; but rents are not going up - holding solid, yes, but a landlord trying to jack up my rent would find I could walk away to dozens of virtually identical properties in the immediate vicinity at an identical rent. You also 'hope' for 7.5-9% from next year's purchases. Given that Ballymena Town has a low birth rate (see NINIS for details) and also has a manufacturing-based economy, which ain't the best economic launchpad just at the moment, I wonder which factors are supporting your hope? Property values do not always rise in the 'long term' - at least not in the sort of timescales to be of relevance to most people. If you had bought a buy-to-let flat in Tokyo in 1989, your property would now be worth only 40% of its value 19 years ago. And you would have no reasonable expectation of recouping the value of your original purchase within your lifetime. If you wan't my advice, take profits (assuming you have some), put the proceeds into blue chip government bonds - sod the UK and Ireland; try properly managed countries like Canada, the Netherlands or Sweden - and if you want to build a property empire, re-enter the market when there is some clarity as to what the bottom in NI property prices will be.
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