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House Price Crash Forum

KieranE

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Posts posted by KieranE

  1. For me the topic of this thread is literally the million pound question ...

    Around here (outer west London) at the moment a typical property which costs £1800 p.c.m to rent is £650,000 to buy.
    That is, the property is priced at 30 years gross rent (1800 x 12 x 30 = 648,000).
    Or conversely, the annual gross rent is 3.3% of the price.

    It feels to me like that in a less certain world "30 years gross rent" could conceivably go back down to a more historic norm of "15 years" (gross return of 6.6%).
    Which would be a 50% crash in price down from £650,000 to £325,000.

    And yet at the same time, it also feels conceivable that in a new negative rate low growth world ...
    Investors could be prepared to take a gross income of just 2.0% per year.
    Which would put the price up from £650,000 to £1,000,000 !

  2. I wonder how often the housing benefit caps are recalculated, I think they're based on the 30th percentile market rent. Can they even go down?

    They do seem to act as a bit of a floor for rents - around here the housing allowance for folks who need 2 bedrooms is about £330 per week or £1400 per month, so you'll rarely see anything much below that.

    Hmm, isn't this a bit circular though if the rents feed into the calculation of the allowance which feed into the rents which feed into ...

  3.  

    Isn't West London pointing towards Berkshire, Thames valley, space and countryside? (If so I'd expect it to be a place of increasing demand as people flee urban London??)

    You might be right ...

    But I find it a bit hard to imagine someone in inner West London like Kensington or Fulham saying to themselves:

    "Now we don't need to commute into Soho every day and theatre land is dead, why don't we move 5 miles further west to, err, Brentford?"

    I can see them saying:

    "... why don't we move 20 miles further west to Windsor, Virginia Water, or Sunningdale, and buy something much bigger?"

    That is, if they're going to move out of London, there doesn't seem much point doing it by halves.

    And if for some reason they did not want to totally leave London, they'd probably use their "mad gains" from inner London prices to pick a nicer and leafier postcode than TW8 ... like e.g. Chiswick or Richmond.

  4.  

    Not seeing any weakness at all where I am in west London and other areas I’m looking slightly further west. Nice areas holding up unfortunately. 

    Same here in TW8 (outer west london).

    Maybe slightly more available than normal and prices maybe a tiny bit lower but not much effect yet.

    Prices for 2 bed flats have been about the same for the last few years really:

     - 1300-1400 for the "housing benefit" ones
     - 1600-1700 for the "nice" ones
     - 2100-2300 for the "more money than sense" ones

    This search is showing 82 2-bed flats to rent as of now, be interesting to see if it changes much in a few months:

    https://www.rightmove.co.uk/property-to-rent/find.html?locationIdentifier=OUTCODE^2731&maxBedrooms=2&minBedrooms=2&maxPrice=2500&minPrice=1000&sortType=1&propertyTypes=flat&primaryDisplayPropertyType=flats&mustHave=&dontShow=houseShare%2Cstudent%2Cretirement&furnishTypes=&keywords=

  5. big-drops123.thumb.png.ce4ad8954bc6a9adbd6d157039b07773.png

    Spotted some reasonably big drops (15% ish) in my Brentford/Isleworth/Northfields search area today ...

    https://www.rightmove.co.uk/property-for-sale/property-72311973.html 
    https://www.rightmove.co.uk/property-for-sale/property-84846301.html
    https://www.rightmove.co.uk/property-for-sale/property-81822298.html

    All decent size (well, for London) houses with gardens so not just flats coming down!

    Oddly all the same estate agent - probably co-incidence? Or maybe they valued them too high in the first place ...
     

  6.  

    Foreign cash, unless you plan to spend it, is retail foreign exchange speculation which is a mug's game.

    Oh I agree, retail FX trading is a sure-fire quick way to loose lots of money!

    However, if one was living in

    • Germany in 1920
    • Argentina in 2000
    • Venezuela in 2012
    • Turkey in 2017

    and decided not to move some savings to a foreign currency because retail FX speculation is for mugs one might have regretted that decision two short years later ...

    To some extent, someone in the UK does indirectly need USD (because oil is sold in it and hence petrol/plastic), and need EUR (lots of food grown in Spain), and (though this is arguable!) nowadays need CNY (because all the stuff I buy on Amazon is made by people paid in it). Not sure about CHF - I don't buy that many Toblerones!

     

     

    For the rest, have a read of this.

     

    Thanks, hadn't seen that, looks like an interesting thread covering lots of what I've been thinking about.

    Maybe that's why buying a house is popular - don't need to think about this sort of thing!

  7. Pretty sure any real world financial adviser is going to say pretty much the same thing that has worked well for the last 50 years like:

    • 50% - UK Residential Property (that is, buy a house and put most of your income there)
    • 10% - GBP Cash
    • 15% - UK Equities
    • 10% - US Equities
    • 5% - EU + Asia Equities
    • 10% - Corporate Bonds

    With a bit more/less equities vs bonds depending on age, and more/less cash depending on how much that percent works out in terms of months of spending.

    But given that:

    • this the house price crash forum I assume that folks here are not so putting so much in UK property;
    • this thread is talking about financial crashes and global shifts, which might mean what has worked well for the last 50 years won't work so well in future

    I just thought folks might have some interesting alternatives - I mean, if you believe a financial crisis is coming then presumably you should do ... something differently?

  8. Assuming that some sort of financial crash and possibly some sort of "shift" as shlomo mentions is coming  ...

    Then thinking in terms of preserving wealth over the next few years rather than earning income ...

    I'm curious how others think you should allocate your savings and investments as a percentage across say:

    • GBP Cash (incl. Premium Bonds + gilts)
    • USD Cash (incl. TIPS)
    • EUR Cash
    • CHF Cash (Swiss Franc)
    • CNY Cash (Chinese Yuan / Renminbi)
    • Gold Bullion
    • Crypto (Bitcoin, Ethereum)
    • Collectibles (Jewellery, Watches, Classic Cars, Art, Etc)
    • UK Equities
    • US Equities
    • European Equities
    • Asian Equities
    • UK Corporate Bonds
    • US Corporate Bonds
    • UK Commercial Property
    • UK Residential Property
    • non-UK Commercial Property
    • non-UK Residential Property
    • Farmland (incl. woodland - and goats I guess!)
    • umm, is there anything else?

     

  9. 17 hours ago, simon2 said:

    The second one makes no sense, surely nobody is living in that.

    £450k and 44 years left on the lease?

    Suppose even if you never extend the lease maybe it kinda added up if you thought of it as locking in long-term rent ?

    £450K divided by 44 years = amortized you pay £10K per year + maintenance (which might be high admittedly!)

    Before COVID you could rent each room out for say £500pcm x 3 x 12 = you get £18K per year (before tax + voids)

    Depressingly in London you probably could find tenants willing to put up with the state of it for not much less than that!

  10. 56 minutes ago, Mikhail Liebenstein said:

    What really surprised me about Doncaster was how low some of the house prices are: https://www.zoopla.co.uk/for-sale/property/fishlake/#expired

    I didn't realise you could still get houses for £80k

    Go a bit further outside Doncaster and you can (just about) get a house for under £50k ... e.g. https://www.zoopla.co.uk/for-sale/details/51037910

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