anto

I don't understand who other than BTL is able to afford the prices of flats in BS1, BS6 & BS8, and in particular the new-builds which are a lot smaller than some of the Victorian conversions. Let's take an extreme example: a 27 year-old Solicitor at a top Bristol law firm earns £55k/year (according to www.rollonfriday.co.uk - 3yrs PQE at Burges Salmon). This has to be among the richest seam of buyers, however narrow it is. Borrowing at 4x salary, and throw in a £20k deposit and you have a maximum budget of £240k. Given that 2 bed flats only start at this price, and they are not suitable for a family, who exactly is paying £300k-£400k for an average-sized flat? anto.

There will be no emergence of a landlord-tenant class divide, at least not under current market conditions. Outside the capital the gap between mortgage payments on a given property and the rent the market will support is so wide that the economics no longer stack up. BTL has shot its bolt, until either rents soar or prices slump to make the numbers balance once more. anto.

Are these real increases, or only notional? You need an annual increase in the notional value at least equivalent to the rate of inflation, or else you're losing money. Apparently my home may increase by 7.34% in the next 5 years - inflation could be twice that over the same period. anto.

Why are buyers always reported to have "snapped up" new builds, as if they're naughty children fighting over the last chocolate biscuit. You'd think they just rushed in through the front door, pen uncapped and ready to sign on the dotted line before there's nothing left to buy. So two Londoners (who may even have been together) looked at but didn't buy the penthouse...they're hardly beating them off with a dirty stick, are they. He says it himself, even if he doesn't mean it: the trend continues, it was mad to pay £1M 10 years ago and it's mad now too. anto.

And obviously my landlord also thinks it's nuts, as yesterday he put the place on the market at £175k. He's right to sell - the only reason you would stand for such a low yield (4% by my reckoning - before voids & maintenance) is if you're confident of capital growth. As soon as future growth is no longer certain, then either rents should rise (but there is too much supply for this to happen) or BTL landlords will start to sell. Anecdotally, it feels like this is already starting to happen. Shame, I rather liked that place. Incidentally (while I'm ranting), there are a lot of BTL flats on the 2 Angel Ridge developments, and I think they are going to take a caning. Rents there are 5-10% lower than in December (due to oversupply?), and even before IR rises the rent wasn't enough to cover the mortgage. And still they are only half finished building there. When the rent deficit starts to bite, they'll be almost giving them away to cut their losses. I don't think older terraces are in the same predicament, but I can see a similar thing happening on a smaller scale. I have also noticed that houses on Goddard Avenue seem to have stopped rising: at Christmas there was nothing for sale below £325k but now there are 3 between £314.5K and £322.5K Houses on this street always sell well, there are few rentals and no FTBs there, so I think it's a bit of a bellweather - a good indicator of market strength. Anto.

I think that properties like this appeal to FTB's who just want to 'get on the ladder'; they're not thinking about the fact that they could rent more cheaply, only that they must buy somewhere while they still can. It baffles me: a lot of people are just not thinking it through. I rent in SN1 and pay £600/month; but the place next door (which is smaller) went for ~£170k in January. It's nuts. anto.

There are lots more examples in Swindon; prices for flats in the town centre are defintely lower than 12-18 months ago (maybe 10-15%), but they still seem expensive compared to houses in the same area. And new builds flats don't seem to have come down at all...who is buying these things? Here's a great example - which would you choose: brand new 3 bed flat on Westlecot Road (heart of Old Town, v fashionable) - £370k. (Aside...who in Swindon with this kind of money is looking for a flat? It's not Notting Hill) or... just around the corner, a tidy 4 bed Victorian house on Goddard Avenue, 2,000 sq ft with period features plus double garage and garden - "guide price" £350k. Why on earth would anybody choose to buy the flat rather than the house? And yet, it is under offer while the house isn't shifting - something is very wrong. anto.

Check out this little beauty in Oxford. Prison Cell, £170k I know the north half of the city is fashionable, but you'd have to be desperate for 200 sq ft! anto.

Here are a few more portfolios for you too: 25 properties in Humberside - £2.2 million 16 flats in Gateshead - £1.2 million 3 flats in Halifax - £5 million (must be a mistake) 19 houses and shops in Crewe - £1.25 million (commercial should not be listed under residential at all...) 4 flats in Glasgow - £1.3 million That's £11m just from a few minutes searching There is also foreign property on Rightmove too, and it isn't always listed under the foreign property section. This one is listed as being in the North East, and clearly isn't: Portugal £3 million. You didn't really think Rightmove was impartial though, did you? They are a VI, just an estate agent but with no offices or agents, and no-one should be surprised that they behave like other agents. anto.

He's way off with the price: this one is identical for £72k less, and this looks like the same house for £108k less. What does someone looking for a sensible family terrace want with an F355? I remember in the early 90s a newspaper article about a flat in London that came with a "free" Porsche (944, I think) - are times becoming so desperate again? anto.

You could slit your wrists, and your partner could collect on the insurance and use that to buy a new house. anto.

So if you want to be poor then you should rent, but if you want to be rich then you should buy. This guy is a genius, why hasn't anyone thought of this before - now I understand where my life went wrong. But hang on a sec - if everybody reads this book and buys property to rent, doesn't that mean there won't be enough people renting to support the market? Seems to me, the easiest way to get rich is to write a book explaining to the man on the street how to get rich. And if you can't find any reputable support for your argument, you can always use dodgy maths, insult those who don't buy into the idea, and quote "most experts" as evidence. Anto.

I think you've gone into more detail in this chain than many small-scale landlords do before they make their investment. If house prices always rise and there's no safer investment than bricks and mortar (as many have had drilled into them), then it doesn't matter if the rent doesn't cover the mortgage, or if you could earn more with your money in the bank: capital appreciation cancels this out and makes it worthwhile. Of course, this is speculation and highly risky - but how many understand that? My landlords are a good example: they bought a new-build flat for £135k 18 months ago with cash from an inheritance, I rent it for £510 pcm. I reckon the market value is now £110-120k, and falling as it loses its shiny new feeling. I wonder if they have even considered how they are going to get their money back. Anto.

When the current retirement age was introduced, average life expectancy was barely 65. Now that it's almost 80 (and still rising), people expect to retire early when actually they need to work longer. Where do they think the money comes from? Anyway, Beveredge's concept of a universal pension was that it would prevent the old from freezing and starving, and given that pensioners enjoy satellite TV and Saga holidays no-one should be planning to rely only on the state for their retirement. Old people talk about young people not appreciating how much better things are for them than the generation before: I accuse them of the same. Anto.

You're so right. You should buy the newest most expensive car you can afford (if you're really smart the dealer might even give you 5-10% off - that's BMV you know), then wait 3 years for it to double in value. Everybody knows cars only go up in value, it's the law of economics. Then assuming your salary has risen, sell the car and borrow as much you can again, and buy an even more expensive car. Don't worry about overstretching your finances, if things don't work out you can just rent it to some idiot not bright enough to get on the car ladder. What a stupid analogy; what's your point? Anto.

I don't know where you got this from but it's not true. Bristol is not cheap, but Bath, Oxford and much of the south east are more expensive. This is no different from the rest of the south (I can't speak for the north), and is why you are better of renting. Unless you are a hermit or agoraphobiac you're likely to outgrow a small 1 bed starter home in just a few years; in a market where prices aren't rising and you can rent a similar property for less than the interest on the mortgage payments, you should rent and wait & see. Anto.

This is a very succinct description, I buy into this model. What I cant understand is why HPI began to top out 18 months ago, yet there hasn't been a crash yet. Maybe it's a transitional period as the market glides over the top of its curve, but I feel like it needs a trigger to get started. Or maybe it just takes time for momentum to build? Anto.

Don't just take the agent's valuation when calculating profit; look at land registry prices and see what similar flats in the area have sold for recently (and not only the price they were advertised for) - that's a better guide. If there are few or no recent sales, then ask yourself if this is an area where flats are in demand; I don't know your street, but it looks like a nice family neighbourhood - perhaps not top of the list for young single renters who often look the buzz and convenience of the town centre. Also bear in mind that the market for flats may be oversupplied at the moment, and there is deflation taking place already in some towns. So even with an accurate valuation, by the time you come to sell it might harder to sell two flats than a 4 bed house. I don't want to put you off, but be sure you understand all the risks before you commit yourself.

I've spent a fair bit of time in Dublin, and was at first very surprised at local attitudes towards house prices (now I just keep my big English mouth shut!). There is definitely a culture of 'you have to borrow as much as you can as soon as possible, or you'll miss the boat'; it feels more frenzied than the UK was at its peak. It's seems very common when you move not to sell your old house, but to hold onto it and rent it out. Those I know don't seem to have much trouble finding tenants, but that can't last; eventually the market will saturate. Although I don't have any data, rental prices already seem lower than mortgage repayments - I suspect many part-time LLs don't mind though as it's capital growth they want. I haven't met one Dubliner who thinks that it won't go on for ever - Crash? Never! IRs are lower than they probably need to be, but there hasn't been a housing crash in recent memory (no UK-style Irish bubble in the eighties) - so I reckon it's a more innocent market. I think it will end in a crash, but wouldn't like to say when....anyone else care to speculate? Anto

Please, don't feed the troll. I enjoy reading data and rational discussion on trends, not bitter arguments that can't be won. Anto.

I watch this market fairly closely and I think you're right. There is an oversupply of new/recent-build flats in SN1, and many are taking a long time and several price cuts to sell. Prices in Plaza 21 in particular, which was so hot when new, seem to be in freefall. Yet there are several big new developments in the pipeline (on Ripley Road, Springfield Road, Princes Street and Farnsby Street), all at prices at least as high as the Bath Building. I don't see how the rents being asked can cover the landlords' monthly outgoings (unless there was a little lie told to the Land Registry, as seems popular with some developers...), yet there seems a glut of 2-bed rentals too so little scope to raise rents: perhaps several more will be on the market fairly soon. When you look at what you can get for similar money not far away... http://www.rightmove.co.uk/viewdetails-103...pa_n=1&tr_t=buy http://www.rightmove.co.uk/viewdetails-825...pa_n=3&tr_t=buy ...you have to wonder if £161k is even what they are worth, once they are no longer shiny and new - which will not be too long if many are BTL.

The problem I always find with these surveys is that they require your job to fit into a nice well-defined box, like Computer Programmer, Doctor, Social Worker, etc. Many 'knowledge economy' workers have abstract jobs that can't easily be pigeon-holed: my previous job was rather niche business change project management, and my current job is managing business travel in a large corp, with extremely fluid responsbilities, and I can't find either. I don't find these tools very useful. Also agree it's not worth geting hung up about salary - not all job benefits are monetary, there will always be someone earning more than you, and you won't always think they're worthy of it. Get used to it, or take the plunge and get a new career! Anto.

Hey DJ...for better or for worse, we live in a market economy and words like 'greed' and 'fairness' cannot be used. The 'right' price is the one that both buyer and seller agree on. The other posters are correct, there is currently a gap between these two positions so give it time and there will be a correction. Read Adam Smith's latest novel The Wealth of Nations - it's sure to be a bestseller - while you wait. Anto

What a poorly-written little piece: the implied conclusion is that 'mortgage-phobics' have no reason to be wary, but the only real reason given is that morgages can be affordable. And what does this have to do with one third of buyers wanting to make money from their house, while one third prefer to rent? Utter rubbish.

Pardon my naivety, but what place do consumer electronics have in a CPI? DVD players and flat screen TVs get cheaper every quarter as more units are sold and manufacturers refine their production processes. Laptops and PCs are specced to fit into fixed pricepoints - you could buy a PC for £999 ten years ago, and you still can now, and you have no way to compare the two. Changes in the prices of these goods have little to do with the underlying value of money, and only serve to skew the data. I reckon the price of a chocolate bar has risen at least 10% in the last 2 years, and a can of Coke seems 50% more than it was a decade ago (can you tell that I snack a lot at work) - these are mature products where price variations have nothing to do with demand surges or efficient new techniques, and so seem more representative of true value. Thoughts, anyone?