Risk

In addition to my previous message.... good website: www.swingacat.info LL has bought a flat beside a friend in Edinburgh and turned a 2 bed 1 box room into a 5 bed flat! Big flats but not that big!

sorry should say click on the results link on the left

Have a look at the following link: http://www.barnardmarcusauctions.co.uk/ First point to note is this is the first time I have seen NI properties beening auctioned here. Second is have a look at lot number 240 ..... sold for 100k in oct this is from ourproperty.co.uk 2005-10-10 2 Apartment, 7, Collier Street, Manchester, Greater Manchester, M3 4NA £176,000 Manchester is ahead of Belfast but will go the same way.... unfort it will be hit harder

Hi Super Ted, thanks for the message I know what your trying to say and that is not the point i'm making. I'm talking about current market situation and not the size of my LL mortgage. Let me assume that my LL has no mortgage and ownes the property outright, lets also assume that they could sell it for the 364,000 next door sold for (reasonable considering they are similar) My LL would then take home 10,500 pa (875 x12) before tax vs 22,167 pa if you put 364,000 in a bank a/c @ 6% compounded twice in the year. What would you do?

Hi all, Not a regular poster but wanted to have a little competition to see who has the most subsidised property in the UK. I think mine is pretty good. I currently live & rent a in Edinburgh, moved in just over a month ago so the rent is around current market levels. Next door sold 2 weeks ago for 364,000. 2 bed flat plus box room close to city centre. I pay 875 a month. 364,000 at 6.25% over 25 years (using BBC calculator) = 2,429 pm Rent = 875 pm Difference = 1554 pm (Please note thats 18,648 or 1,264,174 over 25 years compounded at 7% interest s/a) Is there anyone who can top that? PS - if you were to invest the savings through a SIPP the numbers look more like 1.6m @ 22% and 1.7m @ 40%!!!

Hi RaveDave, I would like to make a point relating to the demand side. You mention that people are on the side line waiting to enter the market if prices drop (a small amount) and will therefore provide some level of support for the market if prices do start to fall. Unfortunately, in my opinion this is not the case and the US is currently finding this out the hard way. I track the US market and I recall similar commemts in mid 2006 (same about "price growth will slow but never fall") The reason stems from the easy credit conditions they have experienced in the past 3-5 years. This brought forward "future" demand by a couple of years. Hence pretty much everyone who wanted to be long, is long. Prices have fallen but no one is entering the market because unfortunately this support level was brought forward and is actually working in reverse - with prices falling and people up to their eyes in debt, foreclosures are increasing resulting in more supply. Similar story in the UK? Let me know what you think.

spotted the article on "Patrick" ... felt compelled to post it but see I'm way behind the curve. An illiquid assets fair value will only equal what someone is prepared to pay for it. This is why you will see new builds tank first because you have a very motivated seller.

Dear all, I don't post very often on this site, however there is one issue I wanted to discuss. I keep a close eye on property markets globally with the US being my main focus for the last 12 months. One aspect of this market I wanted to draw your attention to was this issue of Capitalised Interest. Many of the 2/28 loans issued in the US were issued as negative amortisation loans. What this means is each month, for the first two years, you pay less than the interest on the mortgage and therefore the loan size actually increases. Not an issue in a rising market but can cause serious problems in a flat to falling market. Maybe nothing new so far.................... The point I want to rise is that US Financials such as Countrywide and Downey Financial, to name two, have been booking this additional loan value as income on their balance sheet even though they have not recieved a penny. I want to stress that this is not illegal in anyway, however to me it smells very like the tech boom stocks of the late 90's inflating their balance sheets through accounting pratices. Interested to know your thoughts Cheers...

Bit of a side track.......however VI's using this 25bps move as a get out clause makes my blood boil :angry: http://business.guardian.co.uk/story/0,,1988133,00.html "Today's interest rate increase is bad news for the housing market. The impact of the August and November rate hikes still needed some time to take effect and this move by the MPC will prematurely increase pressure on home buyers. We expected the market to slow naturally in 2007 but a more abrupt adjustment is now more likely," said Warren Bright, chief executive of propertyfinder.com. David Bexon, head of SmartNewHomes.com, called the Bank's decision "dangerous". "[This] could prove detrimental for the housing market and could sabotage a buoyant start to the year. The many first time buyers who have stretched themselves over the last year to take their first steps onto the housing ladder could be severely affected and this decision could deter many future young buyers from entering the property market." surley the drugs these people take are illegal?... Panic I like the term panic!

Many thanks to all who responded to the post. I would still be interested to hear from people with experience of the issue. Been tracking the UK credit card market..... anyone agree that the situation is similar to what happened in South Korea? (not that long ago) Times "Barclays to write off 1.5bn in credit card debt as bankruptcies hit record level" BBC "everything changed in 1999 when the government saw a boost in consumer spending as a quick economic fix after the Asian financial crisis. "

Hi All, Just wanted to get peoples views on the topic of "Liar Loans" I have been tracking the US market for some time and this issue appears to be rasing it's head (helped by such sites as www.iamfacingforeclosure.com). Wanted to ask if people had any experience of this in the UK? I remember a couple of years back a friend was telling me that a financial adviser was able to help them obtain a relatively high mortgage with low documentation and few income checks. Any feedback would be much appreciated.

Been tracking the Halifax Auction site for a while..... the auction was held on the 28th Nov in London and the results have now been posted..... I am sure everyone has received those junk mail adverts from EA's saying "did you know a house in your street has sold for a massive X amount" I am not sure how the residences of Tideslea would feel if they received a mail shot saying " did you know that Flat 67 has just sold for 212K down from 360K? and has just set the benchmark for the development...oh and by the way flat 60 didn't sell because no one would pay the reserve!" I know how I would feel

thanks for the responses. As stated the book uses regret as a way of calculating your personal risk for investing (in anything from houses, equities to a friends start-up) Personally I think this is an excellent addition to the investors tool kit. It is difficult to quantify, agreed... but lets take me as an example. i am a first time buyer and I have two (some would argue more, co-ownership etc) basic decisions to make to buy or to rent. I'm 28, so i've had this decison to make, lets say for the last 6 years. I did not buy 6 years ago or since, because I thought the market was overvalued, this opinion was obivously not correct based on the current market, and my decision has been very painful! However my current regret (don't get me wrong i'm in pain... real pain) is less than if I had bought and prices had fallen. I would not have been able to sleep at night had I bought a place in the past 6 years only to see prices fall. Now lets ask time_and_tide the same question? (I'm not trying to upset anyone) I know this is not a perfect situation but: 2000 - Own a property worth GBP 90,000 bought for GBP 45,000 sell and market moves up 25% = how much regret? hold and market moves down 25% = how much regret? I'm not sure what your answer will be but I can feel your pain from here. The point - every situation is different. I don't know where the market goes from here, I have opinions but they have been wrong for a long time. However think the Keynes quote (look up the hedge fund LTCM!) is the point. Even if the market only rises from here (25%, 30%, 40%, 50%) I can remain solvent...... I can not say the same if I buy and the market falls.......

Hi All, This is my first post, i've actually been tracking the site since the end of last year and signed up a number of months ago. I wanted to share something with you. It is not my words it is actually the words and opinions of Ron Dembo and Andrew Freeman. I quote: "Now lets move to England in 1989. Our subject is a naturally cautious bank clerk who is keen to move into his own apaprtment. Again, the housing market is in full bubble mode. Prices are rising effortlessly and quickly. Would-be buyers are desperately competing to buy almost anything, on the gounds that it can only be worth more in the future and will thus be the basis on which they can "trade up" for something bigger. Our clerk could rent a place. But funding a mortgage will be cheaper in the short term" The story goes on telling of "the clerk" buying a shoe box for the equivalent $75,000 (US publication) in an "unfashionable area of London, putting down $20,000 deposit and asks "what could go wrong?" "Everything. As the british economy began to deteriorate in 1990 and 1991, the housing market came sharply off the boil. Prices fell across the board. But they fell especially hard at the bottom of the market. Studio apartments had been created by the thousands, by developers with keen noses for a quick buck. Suddenly, there was no demand for them, so the prospective chain of "trading up" simply disappeared. First-time buyers withdrew, fearing that they would instantly lose money in a falling market" Ok so we all know it ended in tears! However the conclusion is the key: "Such "negative equity" scared and hurt a generation of British home buyers, many of them young and ill-equipped to bear the financial shock. Indeed, as we write this book, it is remarkable that a new house-price bubble is underway in Britain. Have those who were so badly burned forgotten the lesson that prices do not rise forever?" The book is called "the rules of risk - A Guide for Investors" I can throughly recommend it. The authors use regret as a way of assessing risk. The book was published in 1998!!! 1998 and they are talking about a bubble!!! What then is the current situation? Would be interested to know your thoughts....thanks