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House Price Crash Forum

Marpolian

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  1. I rent a Semi detached up North and my 'attached' neighbour moved out in December of last year. I'm assuming that it was rented as a much older guy than the one who lived there has been coming round every couple of weeks to mow the lawn. Anyway the house was 'SOLD' about a month ago then a couple of weeks later a for sale sign returned. Yet the house has remained for sale at the same price on Rightmove the whole time! So, he has not 'lost' any of the equity in the house but he has definitely lost money every single month due to mortgage payments or interest lost if the equity had been invested in shares or a bank account. Its only a matter of time before he accepts a capital loss and reduces the house price to prevent the monthly bleeding away of his cash...and that is how the crash will pick up speed! On the positive side it's been great having nobody next door these last few months as I met my new girlfriend in February and its nice to know that we are not being overheard late at night if you know what I mean! Good old BTL landlords!!
  2. Ahhh, but the fall in mortgage approvals is Good News for homeowners according to the This Is Money article: "Howard Archer, chief UK economist at Global Insight said the statistics were good news for existing homeowners as rate rises were hitting purchase figures, not property prices. He said: 'The latest data suggests that house prices are proving to be resilient and softening relatively slowly, indicating that the pressure on the sector coming from higher interest rates and stretched affordability rates is manifesting itself more in fewer transactions than in sharply falling prices.' " On a seperate note, i have been keeping an eye on rightmoves website, with a search for properties within 1 mile of where I live that were posted in the last 3 days. Throughout January the figure was between 10 properties and 17. I was amazed to see that the current number is at 71, including 5 in my street alone! So, nobody is selling their houses...but the good news is that asking prices aren't falling! My neighbours WILL be celebrating tonight I'm sure!
  3. Obviously he suggested that Greek house prices were going to fall 30% over the next two years!!
  4. As a FTB I come to this board to see recent developments in the Housing Market and reasoned arguments. As an accountant and economist I would hope that I could see some of the truths and faults in arguments used by boths Bulls and Bears. Sadly many of the Bull arguments are one dimensional and are too easily torn apart by the bears who use this forum. As for 'choosing life'. This seems to be a common theme, that renters are not enjoying quality of life. I can't see the logic in this argument. If anything renting is cheaper than buying at the moment so fiancial considerations aside where is the added quality of life to be gained from renting compared to purchasing? Is it from decorating? Thanks but no thanks. And if my landlord wants me out then there are loads of similar places in the area so if I am asked to move I'll just hire a van, get some of my rugby mates and girlfriends together and I'll move to a new house...no big deal. However if prices fall to the point where I am in negative equity and my job becomes unsafe or I have to move for whatever reason, well THAT could seriously damage my quality of life!
  5. We are awash with for sale signs in my street, 6 for sale signs and 2 To Let signs in a street no longer than 200 metres. This includes both my neighbours. I mention the To Let signs because other properties up for rental have tended to stay unoccupied for a while with one having their To Let sign replaced with a For Sale sign in the last couple of weeks. Its a nice street too... quiet, fairly new houses, a range of semi detached and detached, lots of nice cars.
  6. Ahh! But the 'predicted' annualised price drop from Q3 04 to Q3 05 of 31.4% drags the Q3 04 price of £313,254 down to £214,718....wiping out all the gains since Q2 2004!!!! And thats nominal gains, factor in inflation and you can kiss goodbye to all the gains made since the turn of the century. Still never mind, in the long run.....
  7. The %age fall should be based on the initial value of £350,216... so a drop of 7.9% (that'll be approx 31.4% annualised). But of course BTL landlords are in it for the long term so a 31% fall doesn't matter as in the long term....say by 2020 prices will be up!
  8. What a load of rubbish from a man claiming to be an expert. Dividend yields are running at 3% because not all earnings are distributed as dividends, the remainder being reinvested in the hope of increased future dividends. This expectation of higher future dividends should raise the share price and with shares being numerous and liquid then investors can sell a portion of their holding to realise the capital gain. Gilt returns are running at 4%+ which is effectively as low risk a return as you can get, unless the Government goes bust then your returns are guaranteed. So property rental returns, at 3.5% are lower than the returns from the asset with the lowest risk....Gilts! Yet property through the potential for void rents, the potential for disaster such as tenants from hell or a leaking roof are very risky assets. So a return of 3.5% seems ridiculously low for such a risky asset! With gilt returns of 4.4% surely an asset as risky as property would be returning 7% or 8% net!!! By the way I'm a Chartered accountant with a Masters in finance and I spent 8 years working for Investment companies in The City so i'm stunned that this guy can make the statements he has made in The Guardian. Unless he was misquoted.
  9. I live in the North West on a nice, newish estate about a mile from the motorway near Bolton, great for commuting to where I work and about an hour or so from Manchester. Since I moved in 18 months ago my rent for a 2 bed semi has been £500 a month, the 12 month renewal came and went with no increase in the rent. I like the place so am happy to stay on for the time being but there are plenty of other properties to rent in the area at similar prices, one 3 bed detached in particular has had a 'to let' sign outside for most of the time I have been here. Anyway, just before the New Year a couple of 'for sale' signs started to appear on my street. I checked the price and they were looking for about £129,000 for an exact replica of my rented semi. Since the New Year the signs have begun to sprout and now both of my neighbours houses are up for sale. I was amazed yesterday as I drove down the road to see THREE new 'for sale' signs up in the street and checking the prices this morning they are all in the £120k to £125k region. I did a count and in a street of 60 houses there are 9 for sale signs. However every single house up for sale is a potential buy to let house, i.e. a 2 bed or 3 bed. None of the 4 and 5 bed family homes are up for sale and they make up about a third of the properties on the street. Now I'm looking forward to todays drive home, how many more will have sprouted since I left this morning, will my own place have a sign outside?? Or will they all have been replaced with 'Sold' signs!!!!
  10. I live up in Bolton, have been renting at £500 a month since July 2003. I have seen the asking price for identical 2 bed semi's on the estate rise and rise, they hit a peak at £135,000 (my rent being 4.4% of this amount!). This last couple of weeks they have fallen back to a 'realistic' £130,000. But there are 'for sale' signs shooting up everywhere! Next door just went for sale and next but one on the other side! It should be interesting in the next few months!!!!
  11. If you look at the November Hometrack report, while prices have dropped 0.6% the fall in percentage of asking price accepted has also dropped by 0.6% from 93.7% to 93.1%! So, while house prices are falling asking prices are not. With the gap between supply and demand growing rapidly it is only a matter of time before the penny finally drops and asking prices start to fall.
  12. How does earning £725 a month on £149,000 property give a 6% yield?
  13. Time to raise the Rents says: "If you could knock a large amount off the asking price & rates fall in the not too distant future, what have youy risked? Not that much IMO." Well, personally I think the risk is huge! A bit of research into buy to let says that gross returns should be about 8% or 9%. To me that seems reasonable as I think that property with all the risks attached of bad tenants, floods, etc, plus management fees and hassle of buying a place and the lack of liquidity in the asset makes it a riskier option than the stock market and therfore requires higher returns from your investment. So, with a rent of £500 a month the house of the house price required for an 8% return is: 500/.08 times 12 = £75,000 and for a 9% return £66,666!!!! So, even if I can get £10,000 off the asking price to buy the place at £120,000 I am still 'risking' the chance that prices could fall to by £45k or £53k!!! That would eliminate my hard earned deposit and leave me well in negative equity, thats quite a risk to take IMO. While there is a chance that this will not happen there is still a RISK that it will whereas what is the risk that prices will rise £50,000?
  14. But if prices go up the gap between renting and buying will widen. sooner or later something has to give! Either rents have to rise massively, interest rates fall or prices come down. It reminds me a lot of the rise in internet share prices in the 90's. watching from the sidelines and thinking 'this makes no economic sense whatsoever yet people are making a ton of money out of this, do I stick with my logic or abandon it and run with the crowd?'
  15. Hello everyone I haven’t posted before but have been reading the site for a while to keep up to date with developments and get evidence to convince my girlfriend that now is not the time to get on the property ladder. I am posting because I today saw something that left me stunned as to the level of insanity in the market. I moved up North from London to work as a chartered accountant and live in the Bolton region, I’ve got £40,000 in investments and a good wage so I have always been confident that we could buy when we felt the time was right. For the last year we have been renting a nice, newish 2 bed semi for £500 a month, with no kids and good road and rail links its been ideal for us. The rent was not changed when we renewed the contract and in fact if we wanted to go through the hassle of moving we could have moved to an identical property on the development for about £25 less a month or to a larger 3 bed round the corner for not a lot more. Anyway, getting to the point, I was driving home yesterday and saw three houses identical to ours up for sale in our small street, one of which has been up for letting and sitting vacant for a few months at £500 a month. Checking the website today I was stunned to see the three houses going for between £125,000 and £130,000. The previous time I had looked a few months ago the going rate was about £105,000. Doing the maths, if I was to buy the house with a 10% deposit the cost over the next three years using a fixed rate mortgage to 2007 calculated from The Halifax mortgage calculator for First time buyers, the cost would be: Monthly cost of £117,000 mortgage times 12 months times 3 years: £18,489 Lost interest on my £13,000 deposit money @3%: £1,365 Lending Fee: £1,199 Product Fee: £399 Valuation Fee: £265 Stamp Duty @ 1%: £1,300 Giving a total cost till 2007 of £23,017. The cost of renting for three years, assuming rents do not go up (or down!!) is 500 times 12 times 3 = £18,000 So the cost to me of being able to buy a house and live in it for the next three years, ignoring maintenance, wear an tear, insurance, and the risk of floods, gale damage and the rest is £5,000. Enough for me and the girlfriend to enjoy a nice holiday away in each of the three years while we wait and see what happens to the market. Insane? What do you think??? If anyone wants to know the websites and areas mentioned above I would be happy to provide them
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