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Cherubium

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About Cherubium

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  1. Cherubium

    All Over For Hmv?

    Spend it before the 17th. That's doomsday according to a friend who works as a retail analyst.
  2. Cherubium

    Bear Buys A House

    I must admit I'm confused by your logic. I thought the biggest threat was presently government and personal debt levels.If deflation sets in, all sterling debt begins to inflate in real terms, the government can't pay its loans and people can't pay their mortgages with shrinking incomes. So the government defaults, the banks go bust. The only example I can think of where long term deflation has been sustainable is Japan over the last 20 years. But they started off with vast overseas assets, a huge trade surplus and despite a property bubble most people had enormous personal savings. I doubt Britain could sustain any kind of meaningful long term deflation with some of the highest debt levels in the developed world.
  3. If you've seen my thread in anecdotals you'll know I've bought now, but I turned down my 'personal' invite to view these! I've seen these so called 'super premium' developments at £1000+ per square foot in places like Chelsea, but you have to wonder about the wisdom of trying this on a main road in Totteridge... There was a very hi-spec development called Cheines Place going about a mile from here a year back. Big 5 bed houses with trimmings like underflloor heating, air-con, music streaming, Miele appliances etc were on the market at 1.5-1.8m and sold for 1.2-1.5. And there are similar developments in much posher places like Kenwood (overlooking Hampstead Heath) going for similar prices.
  4. Cherubium

    Bear Buys A House

    I'm 39 Like most new builds they've maximised the plot and the house is only a semi. The garden is about 25x25ft, as a single bloke that's enough to slide open the glass doors and have a few friends out there, or read the Sunday paper outdoors. Maybe not so good if you've got three kids who want a trampoline and football matches! The house is about 3250sqft, so the internal rooms are big and there are huge glass areas. Spec is high, with things like CAT5 networking, music streaming, programmable lighting, underfloor heating. We're a long way from a mass market box here and I wouldn't mind betting that they'd have chanced their arm at £2m if this had gone on the market in 2007. The house has a garage, which is nearly unheard of in this area. My 'ideal home' would have been detatched, large in Central London (Zone 2/3ish). However, this would have cost me about £4m. I probably could have got that if I'd mortgaged myself up to the eyeballs, but in this market I'd be scared of doing that! At 1.5m my choices were to go for the big detatched house (double garage, garden etc) somewhere a bit further out like Wimbledon or Barnet or go for a similar sized house but attached and on a smaller plot nearer to the centre. Most people in family situations would have gone further out, but as a single bloke I prioritise being able to get into central London within 30 mins, or getting a taxi home after a night out with friends over having a big garage and garden and being some sad git living on his own at the far end of the Picadilly line!
  5. Cherubium

    Bear Buys A House

    Inflation is primarily driven by commodity prices and interest rates, not the UK economy. So I reckon: 1. Commodity prices (food, concrete, metal, oil etc) will have their prices driven by 2 billion people in fast growing India and China. 2. The government and the population have vast amounts of debt. If the government keeps interest rates low and inflation high, the debt gradually vanishes. If the government lets interest rates rise and keeps inflation under control, you might see some big short term falls in property prices when millions of people go broke, but then the government won't be able to pay it's debts, the £ will collapse and inflation will rocket. Also, in this scenario, the banks go broke too so instead of losing 50% on my property, I'd lose 100% on my cash.
  6. Cherubium

    Bear Buys A House

    I think the key here is that I targeted new builds. I can only vouch for London, but while new builds usually sell for 10-15% above average, they currently list at average prices and then seem to sell at whatever is on the table when the development loans expire. You'll not get big reductions dealing with Mr & Mrs 'I know what my house is worth,' as long as mortgage rates remain low enough for them to be comfortable, but many developers have short term finance deals which mean they have to sell. I think a 50% drop is possible, BUT 50% in inflation adjusted terms not in actual prices. With inflation nearing 4% and rising steeply, I wouldn't be surprised if the greatest proportion of the price drops is taken care of by inflation rather than in actual price falls. Also, if prices drop by 50% I can pick up a nice place for my parents to live in for about 200k! And the person who said, 'That's go abroad and retire money,' yes I could if I wanted to. But I'm single, all my friends are here and my parents are elderly and need a bit of help. And as my accountant (who does quite a few pop stars and celebs) said when I asked about going into tax exile, 'I know an awful lot of people who've moved out of the country for financial reasons and made themselves extremely unhappy.' Cos no matter how much I hate London when the weather's horrible, the traffic's snarled and the tax bills land on the doormat, it's my home and I've no desire to live anywhere else!
  7. Cherubium

    Bear Buys A House

    I'm not looking for reassurance, I was making my mark in the snow! I don't like the culture on this forum where unsophisticated people call everyone who wants to buy a house a 'Muppet' or a 'Sucker'. Their arguments only apply if you view a property as an investment. Buying a house to live in is much more complex and to me the idea that you shouldn't buy a house becuase the price will go down, is part of the same culture of idiocy where people maxed out on houses because they thought that the prices could only go up. Almost everything we buy depreciates in price. Nobody would bat an eyelid if I went out and spent 30k on a BMW and sold it for 10k 5 years later!
  8. Cherubium

    Bear Buys A House

    I like my job!
  9. Cherubium

    Bear Buys A House

    Thought I'd share my story because although I'm a bear on house prices I've also spent the last two years looking for my perfect house. My first reason for buying was personal, I've earned a lot of money over the last few years, but still live in a 1 bed rented flat. My second (much more recently) is an increasing feeling that with inflation taking off, I'd be happier to hedge my bets and have a chunk of money in property rather than having it all sitting in banks getting eroded by inflation. I decided to go for new build, budget up to £2m, more or less anywhere in London. At this level you tend to have much better quality new builds than the boxes put together by big builders, or even the 'executive homes' they put out. Also, when I looked at the market I noticed that the best value seemed to be in new build, primarily because normal sellers can withdraw their properties but new builders are under pressure to sell and don't have that option. I first saw my dream house in Jan. Still with builders inside and the developer asking £1.75. The price seemed too high and I bid 1.35m, which the developer rejected. Over the following months I saw a few other houses, but none that really pushed my buttons. Most were 30-40% above what I'd pay. The agent on my dream house kept ringing, telling me that the property was about to be sold, but I kept my nerve, even when smaller houses in the development sold for more than I was bidding. Anyway, 3 weeks back, the agent rings. The houses have been on the market for just under a year, only 2 of 4 have sold and developer's finance has run out. Given current market conditions I reduced my offer to £1.3m, buying cash. After a bit of stalling and me ignoring six 'The developer just wants a little bit more' calls, we had a deal. Contracts now exchanged. I'm happy with the price, because two smaller houses on the development have gone for 170k more. In the same area there are smaller run down houses on the market for 1.2-1.5m (to be fair, they're on bigger plots, but they dont' have parking and they need about 250k of work done to bring them anywhere near the spec of the house I'm buying). I'm also comfortable with this financially. Taking a 10 year view I reckon house prices will drop by about 30%, reverting to long term norms. I think I've got a good deal, so I might have a cushion, but let's ignore my cushion and assume that my house drops by 30% in real terms. So on paper my 30% drop means I'm throwing away £390k. However, with inflation of say 3% per year (lets face it possibly much higher) I reckon I'll be able to get my 1.3m back in 2020. If my 1.3m sits in the bank for 10 years growing at about 1% after tax (I pay at 50%) I'll end up with a compounded £1.45m. So basically over 10 years, I'm paying £150,000 to live in a stunning house, which at £1250pm is less than I'm paying in rent for a cramped 1 bed flat. And of course, if we do enter some hyperinflation global mayhem scenario I won't be totally wiped out. And even if house prices drop by 50% to historic lows I'll still be paying less than if I rented a bigger flat. (Plus, provided I keep earning good money I can sell up at a loss, add another million in cash and buy what would currently be a £4.5m mansion overlooking Hampstead Heath WOOT!) I know my circumstances are exceptional because my income is in the top 1% and I'm buying with cash. But my argument is just as valid for someone looking to buy a house for 200k as 2m. I just wanted to show that provided you don't over leverage yourself, provided you bargain hard and are looking to stay in the house for 10 years or so you don't have to be a 'fool' or a 'muppet' to go out and buy yourself a home that you really love. And given the realistic chance of very high inflation or even another big banking collapse, it might even turn out to be the most sensible decision I ever made!
  10. Cherubium

    Just Applied For A Mortgage

    Well you'll have fun getting a mortgage now because there'll be a declined mortgage application on your credit file and you'll have to tick 'yes' in all the 'have you ever been declined finance' boxes every time you want a loan/new credit card etc.
  11. It's usually the young and fresh faced bankers who go for property right after bonus day, and the banks haven't been recruiting for the past couple of years.
  12. Cherubium

    Trust Me, I'm An Estate Agent:

    "Photoshop, a program fitted to many computers,' makes me imagine the article is being written by some old dude with a monacle who doesn't know who the Beatles are yet.
  13. Cherubium

    Will There Be A Crack-Up Boom?

    During very high inflation nothing really has a value because cash is worthless and there's no medium of exchange. But after the crisis, things calm down, there's a new currency in place and you own a house, instead of a bank account full of debased currency. Of course, you could fail to keep up repayments on the mortgage if you lost your job. But for a government to raise interest rates so high that they kept pace with or even outpaced high inflation would be a global first. I can't think of a single example of an economy where the value of cash held on deposit or debts hasn't eroded during high inflation. Another poster also argued that, 'by the time inflation takes off you won't be able to buy anything.' Of course, they're right. The point is if you think this crack-up-boom is coming, you need to buy assets like property and gold now.
  14. Cherubium

    Will There Be A Crack-Up Boom?

    Ironically for a house price crash forum, the best thing to do in this increasingly likely scenario is go cash light, asset rich. For the more confident, borrow as much as you can and buy assets with it. For most people, the only asset you can buy with borrowed money is property. Gold is all very well, but in this kind of crisis there's likely to be a huge bubble in the price, so you won't get very much of it and if the crisis doesn't happen you end up at a long queue of people desperate to sell it as the price collapses. Also, unlike a house you can't live in a pile of gold bars and might find yourself having to sell it to pay rent when you lose your job. So for someone with a bit of money here are the options: 1. Be in cash, get totally wiped out if banks collapse or inflation takes off, if there's no crises see the real worth of your money eroded by 1-5% per year by inflation. 2. Be in gold (or a similar asset), you'll do OK if the crisis happens but if it doesn't expect to lose 30-80% of your money depending on how early you bought in before the price boomed. 3. Be in property or land, if the crisis doesn't happen the chances are property prices will drop by 25-40% relative to incomes, but even with inflation at current levels real prices won't fall by anything like that amount and you'll be no worse off than with cash in the bank over 5-10 years. If there is massive inflation (or even sustained inflation in the 6-12% range) your property is likely to soar in value by 100%+ as people clamour for assets, and if you've got a mortgage it's value will be wiped out by inflation. If you think things will get really bad (Like Argentina 90s/Brazil 80s/Germany 30s/Zimbarbwe now bad), make sure you buy a property with a decent garden so you can grow some veg and don't buy right in city centres or near to food shops because there's a real chance you could get burned out during a protest or food riot... So: Buying property is no worse than having cash in the bank if the crisis does happen. Buying property is way better than having cash in the bank if it does (and you hopefully have a nice place to live in too) Now, everyone log into Rightmove and BUY, BUY, BUY!
  15. 38, single, live in a flat I rent from my mum that used to belong to my grandparents. A few years back my career started taking off, and I've gone from earning 40k to around 700kpa. I found two new build houses that I liked in the doldrums of early 2009, but in one the developer pulled out asking for more money and eventually sold to someone else six months later for the same price. The other one the developer decided they wanted more money, literally days before we were due to exchange contracts. The developer didn't sell it and now lives there. So I'm still looking for my contemporary £2m pad, while living in my nan's old 1bed ex-council place. The English house buying system is mad. I'm not sure that my situation could arise anywhere else in the world! Every now and then, an estate agent rings about a house that I saw months earlier and is still on the market at the same price...
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