dinamo

Bath is a p1ssbowl, inhabited by nasty drugged-up locals, faux hippy types and idiots from London who revel in the cliquey social circuit. Prices were hit just as hard there as anywhere else last time. Do yourself a favour and move to a proper city with a semblance of reality and culture (i.e. Bristol)

1855 can't believe it's gone up about 20% in less than a week

ok, here is my opinion fwiw. had to relocate to this neck of the woods because of a job move. sadly this meant leaving bristol which is truly a fabulous place to live. it has oft been mentioned that the south east is a load of characterless commuter towns, which i broadly agree with. the attraction is a vast number of jobs within commuting distance of this area; major corporate hqs are littered around reading, bracknell, surrey, heathrow and west london plus central london is do-able on the train. with a bit of digging you can still find places with character, though you will be struggling to find a lively metropolis. like you, i have been frustrated at the lack of price falls but in the last week or so i sense reality is finally beginning to kick in. most of the price cuts to date have only been on the hilariously priced stuff. my landlord put the place i am renting in sunningdale up for sale 3 months ago and has had 2 viewings. next door has gone under offer after a good year on the market. SUNNINGHILL is my favourite village. Not as overpriced or overrated as Sunningdale, but a cut above most of Ascot. Bustling village centre, seems to be a friendly place. Some of the modern developments aren't great, there a couple of utility based blots on the landscape and it can be hard to escape the railway line but is recommended. Price-wise, we came close to buying a couple of victorian semis with large gardens around the £330-£350k mark at the peak of the market but will sit tight for a while and hope to pick something similar up for £250k in due course. decent curryhouse too, though they like trying to scam you on the bill. WINDLESHAM is just up the road. I know less about this place but you may have heard of a place on the market here for £70m. I don't personally think it is as charming as Sunninghill but still well worth a look. Some of the modern stuff is OK and the Snows Ride development is *still* laughing in the face of the downturn. Houses here will be under offer within a couple of weeks, guaranteed. VIRGINIA WATER of course has WENTWORTH but the privilege of living next to TARBIE, BRUCIE et al doesn't come cheap and the cheapest thing i have seen in this place was a dilapidated bungalow at £575k. It is stuffed with decent restaurants (the thai and italian particular highlights IIRC) but little else and for me is slightly lacking in soul, though not entirely ruled out. stray away from wentworth and you can pick up stuff at more reasonable prices though it is still not cheap. one bonus i think is that the station is on two lines into london so the trains are more frequent. SUNNINGDALE has some nice nubiles on the tills at waitrose but that does not justify the cost of living here. i quite like CHOBHAM up the road but it is a bit too far away for me and they do not appear to have discovered tarmac up there so a 4x4 is a prerequisite. ASCOT is, well, alright and we may end up here. I haven't really worked out whether south or north ascot is better, both have decent and less than decent parts. CHEAPSIDE looks to be the prime bit though, and would probably be my second choice after sunninghill. i like horse racing too, so the track is a bonus. i kind of like the way the old stables dominate the top end of the high street. WINDSOR i have never quite understood completely and always found that the majority of housing stock is complete shit. I like the bottom end of town aroung st leonards road and some of the older stuff around here is lovely. cats rule living around here out though and i have struggled to find anywhere decent out of town. I had a drive through DATCHET the other day though and this probably warrants further investigation. obvious tourist issue with windsor, but the upside is that it is one of the only places in the area with some sort of nightlife. EGHAM is one of those places that people who don't know it think is really posh where in fact it is mostly a tip, despite the largest ferrari dealership in europe. the main problem is that it is hemmed in by the m25 / bypass. some truly suicidal estates next to the london orbital, best avoided. ENGLEFIELD GREEN just up the road is probably a better bet though i don't know a huge amount about it. a lot of it backs onto windsor great park / crown protected land which is a good thing but there seem to be some relatively heavy chav estates. both areas are close to RH&BNC, i don't know whether you think students bring life to an area or are irritating (unts. STAINES i know little about but i do quite like the modern centre. prima facie it is not as bad as is made out from the ali g gags but i am not an authority. forget WRAYSBURY unless you are deaf or have a low-flying aircraft noise fetish. upside of staines is quicker commuting into london. BRACKNELL is bottom of the list but ironically is probably where we will end up renting until the market goes completely tits up (due to space requirements). cannot find a redeeming feature about the place other than convenient location and the EAs are utterly odious. However, if you head up towards WARFIELD and WINKFIELD ROW things do improve somewhat. winkfield row also has an utterly, utterly outstanding primary school if that is imprtant to you. hth

great stuff, thanks for taking the time to write all of that.

1004! Hooray!

I find it hilarious that this site is trying to get people to take it seriously e.g. through press releases yet has puerile threads with people Photoshopping images of Kirsty Alsop.

Er...unlucky for them then that there isn't a credible alternative to the current regime. And yes, it does pain me to say that.

Brilliant, looks like Right Move will be negative next week too (courtesy of a TMF poster): http://money.msn.co.uk/investing/Insight/T...ors/default.asp Economic Indicators Monday 17 January The Wriglesworth Consultancy Rightmove House Price Index - indicator of residential property prices in England & Wales, showing a fall in asking prices for the 3rd consecutive month. Brian Thorn B.Thorn@Wriglesworth.com The Wriglesworth Consultancy 020 7845 7900.

Could be - there are plenty of impressive houses there, including one mansion that was featured in the Sunday Times for £70m. Though it is well located, I've never quite worked out why it is so sought after as it isn't that picturesque.

Yeah, noticeable pick up around me too. Strange thing is that stuff in Windlesham (Surrey) *still* seems to be shifting.

Amazing that the markets adjust the HBOS share price based on an internally created headline figure without looking at the detail. Maybe I'm just being naive.

Yep, reading that made me feel better. Three consecutive quarters of falls is defined as a recession, no?

How did they manage that? http://www.hbosplc.com/economy/NationalPressRelease.asp

This is the one that came closest to making me spit drink on keyboard (compounded by the clownish spelling throughout): http://www.findaproperty.com/cgi-bin/agent...prop&pid=260458

A very lucid post on rent v buy. http://boards.fool.co.uk/Message.asp?mid=8966944 Warning: Very Long Post. It amazes me that people still cannot seem to get away from the tired old rental clichés of “I'm not paying someone else's mortgage for themâ€, or the other old chestnut “renting is dead moneyâ€. Essentially these phrases are a metaphor for trying to say something completely different; people who quote these are actually trying to say - “I want to make some money on property, like I've seen people do on the telly†The general public lives in a fog of confusion whenever the words debt, interest, capital, and inflation are concerned. This confusion is seized upon by irresponsible TV shows implying that property is a one-way bet – a ladder to climb out of the poverty trap to untold wealth. Today's generation is totally unable to grasp basic concepts of finance, brainwashed by endless style over substance cheap programming spewed out by all the channels trying to grab the viewer's attention. Given this scenario, I thought it would be useful to set out the financial aspects of the purchase v's renting decision AS I SEE THEM. In this explanation I'm not saying that I'm right, only that this is what I believe and understand the situation to be. I welcome constructive criticism on the assumptions made. The first point to accept, and to me the most obvious one, is that the mere OCCUPATION of any property, whether through outright unencumbered ownership, ownership through borrowing all or part of the funds required to purchase, or by simple rental, comes at a financial cost. This is the cost of capital. In the outright unencumbered ownership example, the cost of capital is the potential bank interest on capital foregone. For example, the cost of capital for the lucky owner of an unmortgaged property estimated to have a sale value of £150k, and assuming interest rates for savers of 5% pa amounts to £7.5k pa. This is the lost opportunity cost of bank interest foregone by choosing to hold capital in the form of bricks & mortar instead of cash in an interest bearing account. In other words the choice of ownership over rental and thus not crystallising the asset into liquid cash, which can then generate an income, manifests itself as an missed opportunity cost to the owner. In essence it is a hidden occupation cost. (Note: the option of renting out the property to a tenant is another way of explaining the missed income. That is, by choosing to live in the property himself rather than renting it out, the owner is forgoing a potential income stream from a tenant). In the purchase scenario through borrowing, the cost of capital is the interest levied on the loan taken out in order to hold legal title to the property PLUS the loss of interest receivable on the equity or deposit element of the value of the property. In a simplified example again with a property costing £150k, bought with a £100k mortgage @ 6% and £50k “savings†currently earning 5%, the occupancy cost would be £8.5 pa (£6k pa interest payable ADD £2.5k pa interest receivable foregone). This is the standard annual cost for the privilege of being an owner-occupier. In the rental scenario the cost of capital is the rental charged by the freeholder, LESS the interest receivable on the “savings†of the occupier. Taking the above example of the £150k property, the landlord may be able to secure a return of 6% on the value of the property, and therefore the occupancy cost would be £6.5k pa (150k @ 6% yield = £9k LESS £2.5k interest receivable on savings) That seems to be the simple bit (and the bit that is most often forgotten in the fog of rhetoric on the subject). Whether owing or renting a property, occupation comes with a basic annual cost regardless of the state of the market. That annual cost should be easily calculable for any ownership option. Without changes in interest rates, inflation, property yields, or capital appreciation, or property taxes and expenses, that is all that is need to make an informed balanced decision on the relative merits of one course of action over another. Life, however, is not so simple. It is necessary to overlay a whole raft of financial and personal considerations on the basic assumptions laid out above. I will now attempt to set the main ones out. FINANCIAL CONSIDERATIONS: 1. Capital Growth – Without question the most important aspect to be overlaid on the basic calculations. Recent spectacular annual rises have elevated this factor to supreme importance in the decision making process, with comments such as “this is my pensionâ€, and “you can't go wrong with property†being ascribed almost biblical status. For the renter, capital growth does not apply. For the purchaser, capital growth is paramount. However the main issue overlooked in the current frenzied climate is the old maxim “past performance is no guarantee of future performance†(even the Halifax now says so!). Capital appreciation (and depreciation) is a gamble, and all about timing – a fundamental point lost on most people. Enter and exit at your peril. Without capital growth as a factor, property considerations would have to fall back on other less glamorous factors. 2. Equity withdrawal – A factor of tremendously increasing importance, almost unheard of a generation ago. Riddled with misconceptions, and expected to be a real bogy in years to come. The biggest misconception around is that equity withdrawal (to buy the new 4x4 BMW or Merc, the expensive foreign holiday, pay off the large CC bills, or purchase any other luxury normally out of the reach of the aspiring middle classes) is banking (ie spending) one's gains. The informed amongst us of course know equity withdrawal is nothing of the sort, it is simply a form of secured borrowing for which the borrower will have to pay back an element of interest each and every year, and eventually the capital sum advanced. Few people seem to equate equity withdrawal with obtaining a bank loan, yet the fundamental principles of the two are the same, the only difference being in the timeframe for repayment. Actually, in the long run a £40k bank loan for the new BMW would be cheaper than another £40k on the mortgage – but hey who cares – “bank loans are for people with no equity to spend†being a common argument touted by the nouveau rich. As equity withdrawal is not an option for the renter, this goes some way to explain why renting is currently perceived as the poor relation to buying. The truth is more subtle, as there is no opportunity for equity withdrawal to fuel current consumption, the renter is far more likely to come out of a property downturn unscathed. 3. Interest Rates: As we all know interest rates are a major element in the purchasing decision, yet they also affect the calculation for renting – a factor often overlooked or simply ignored. Assuming a 1% increase in interest rates for both borrowers and savers, the £2k differential between purchase and renting in the scenario above would increase by a further £2k to £4k (£1k additional interest payable, ADD £0.5k interest receivable foregone both against the purchaser v's an additional £0.5k interest receivable on the deposit account of the renter). In essence anyone with a sizable capital sum at their disposal, currently deciding whether to buy or rent, has to do 3 calculations to fully appreciate the effect of any interest rate movement - upwards or downwards. This is a process often overlooked or deemed too complicated. 4. Inflation – There still seems to exist a perception that one day in the distant, rosy future, the outstanding debt on properties recently bought on an interest only mortgage will be quite insignificant, just as it now is for our parents and grandparents today on properties they bought 20 or 30 years ago. Sadly this misconception will come back to terribly haunt the naive amongst recent buyers, as they find in this low inflation environment that now seems to be here to stay that debt is real and large debt is a real headache. Whereas a £10k mortgage loan to anyone 30 years ago at the time seemed like a millstone but doesn't today, a £200k mortgage loan today WILL be a be a millstone to many for many years to come. The erosion effect of inflation is no more; the public, however, have still to wake up to this salient fact. 5. Rental Yield – This can vary significantly, by property price, property type, and location. There is no rule of thumb on yield, and whilst a £100k property at £8k pa rent may yield 8%, a £200k property may only rent for £12k, a £400k property for £16k, and a £750k property for £25k. In each case the % yield is diminishing, achieving only what the market will bear. Keeping one's % yield in line with perceived capital values in a strong market is very difficult, and, particularly for higher priced properties, renting can offer tremendous financial benefits - if one acknowledges the other factors discussed here. 6. Entry/Exit Costs – Another important aspect to be factored into the comparison. Assuming removal costs to be equal, the purchase option incurs legal and stamp duty fees on purchase, and legal and agency fees on selling. There are no similar costs to renting. All other things being equal then, rental offers a significant cost benefit over purchase. PERSONAL CONSIDERATIONS: 1. Security of occupation is a paramount factor. It is undeniably true that on a like for like basis the owner occupier has much greater security than a tenant occupying under an Assured Shorthold Tenancy. But contrast this with a situation of a highly geared recent purchaser, borrowing 5,6,8 times income on a 95% or even 100% mortgage for a somewhat speculative purchase, with an astute tenant who has secured a long leasehold tenancy agreement at an acceptable rent. One is fully exposed to the whim of interest rate fluctuations and is quite vulnerable; the other has a known level of exposure coupled with a fixed security of tenure. Effectively the security of tenure argument boils down to what is best for the individual, coupled with how astute that person is at choosing the right property or landlord, and how good they are at negotiating a deal that suits THEM, not the other party. Renting gives just such opportunities, purchasing does not. Finally on this point, renting does offer a degree of mobility that purchasing does not, although I feel this is a minor factor. 2. Personal Freedom. As in 1. above, there are some distinct advantages to purchasing over renting, but again the arguments are not conclusive. The freedom to do as you please with a property you own outright or are purchasing by way of mortgage is a strongly persuasive argument for ownership over renting. However with such a freedom comes the prudence to also maintain a standard of upkeep and repair. Not all house expenditure is on fancy decorative “showy†items. Sometimes thousands of pounds are required to be spent on damp eradication, roof repairs, structural problems, heating improvements, electrical rewiring, and a host of other unglamorous items. For the renter, this obligation falls on his landlord, and whilst many landlords insist on no alterations or redecoration, some are quite happy to give a renter a fair degree of decorative freedom. On the matter of repairs, it is acknowledged that whilst many landlords choose to skimp on property maintenance, many do not, and maintain their tenanted properties in excellent order. Whatever the case, at the end of the day the tenant has the ultimate answer to repairs and structural problems, and that is to move – the owner-occupier does not. Any unfortunate fool who has got this far will realise by that now that, under the current property climate, I'm broadly in favour of renting over purchasing. This is a personal observation based on an appraisal of the current state and future prospects of both the selling and rental markets, an estimate of the likely future trends in capital values, interest rates (both mortgage & savers rates), and inflation. Saying this I still believe there is a time and place for the owner-occupier, and under normal market conditions would advocate such. Unfortunately today or the foreseeble future is not that time and place. Please feel free to disagree.