pkotak

Its very, very simple. 1) Take a map of London 2) Put on a blindfold 3) Stick a pin on said map of London 4) Buy your property there .... "Feel free to correct me if I'm wrong" so ... 2. All markets are driven by sentiment, especially the housing market. - if you mean the sentiment to own a house, then yes, otherwise disagree 4. Claims of a 'new paradigm' are always wrong - flaty disagree. 7. Some people's whole careers and lives are based on trading stocks, bonds, commodities and shares. It is difficult to beat them at it. 8. Going with the herd can be profitable (if you get your timing right). - it's my observation that those people whose "whole careers and lives are based on trading stocks, bonds, commodities and shares" are the ones who do the most "Going with the herd" bit.

Not sure I agree that £ and Euro will rise much further. In an effort to offset the deficit from chinese imports by generating exports, the US allowed the $ to drift lower. It helped a little, but they are now left with a low $, relatively hight interest rates, and nowhere to turn. If rates are left where they are (or go higher), it will stifle any prospect of avoiding the impending downturn. If rates are lowered, they risk further spending on imported goods. IMO they will keep rates high, allow a downturn and attempt to keep it small and managable, but these things have a momentum of their own. I think a side-effect of this is likey to be that the $ will start rising against other currencies within 3 to 6 months. The joker in the pack is the dynamism and positivism of US entrepreneurial spirit, which has dug them out of a hole on more then one occasion in the recent past. I wonder if it will this time.

Same though has been going through my head. Soon (in 6 to 12 months) it will be the perfect time to pickup bargains from distressed developers, even for overseas buyers. My conclusion is to wait before the $ starts rising against the £ before taking the plunge. Once the direction changes, it will keep going of months, perhaps years and will provide a buffer against further erosion. Need to borrow in/with £s to start wiith, and then switch to a $ mortgage after building some equity to take full advantage.

Unfortunately its very difficult to buy in Japan if you need to borrow. I've looked.

You're not far wrong I reckon. BTW I don't mean to imply all bears abuse all bulls, just that most bull posts seem to be attacked by one bear or another with some mindless bile. Perhaps the bear community should adopt the following lines in their mission statement: "Surely some revelation is at hand; Surely the Second Crash is at hand." from "The Second Crash" (whose first line would no doubt begin, "Turning and turning in the widening yield gap"; ) W.B.Y, like W.S, has a quote for every situation.

Amusing! But I will only believe you when its real. When its triamphalist, finger-stabbingly, convincingly real.

I firmly believe that the internet is one of the reasons "its different this time". In tandem with the phenomenon of "packaging" (taking away the "pain" associated with buying outside your vacinity by offering a one-stop buy point), it allows UK people to buy all over the world, and the whole world to buy in the UK with a few clicks of the mouse. Often investments will be made without seeing, touching or visiting what you are buying. The point is that although I agreee that "once it starts to go, it may plummet at an unexpected speed", I think that this will only happen once the world money-go-round is corrolated to such an extent that the whole world is a single market. In the meanwhile, the differentials and gradients which exist in prices, IRs and currency movements are viewed by a globalised investor community as opportunities, and the internet has the effect of speeding up the boom by an order of magnitude. This globalised investor community behaves like a shoal of pirranah, continually looking for the "next big thing" to strip bare. For example, I think that the UK is viewed as a fantastic place to invest by this global community because of cosmopolitan-ness, openness and generous tax laws. The main thing holding them back is the comparitively high value of the pound. If the pound depreciates over the next couple of years, (which is likely enough) then UK assets will seem cheap and a wall of international money will descend, principally on London property but with spill-over into the rest of the UK. In that scenario, it can happen that the London property boom of the last 10 years will look like a chimpanzee's tea party by comparision, and the local population will look on as they are quickly priced out of swathes of their own market, in much the same way as the Eastern-Europeans are now.

The Bears and Bulls on this site seem prepetually engaged in a cartoon fight. If you are a Bear, every Bull post is treated with disdain and often abuse. If you are a Bull, every failure of Bear prophecy (and lets face it, there have been many) is an opportunity to crow. You can be a Bull but still think HPI is unfair and divisive: you simply happen to believe that propery will keep rising. You can be a Bear who is just waiting to pounce once propery crashes. Along with Bear or Bull, I think the perhaps the posters should also be made to designate themselves with another classification, to say, "I sympathise with your pain" or "I am here to wind you up" or "I will NOT consider any other opinion then my own" or "I SO hate you lot who have property that I will shout you down regardless", etc. For myself, I am a bull, I have been and will be a bear (but not right now), I am a VI, I also think HPI is a bad thing and socially divisive, but no amount of wishful (or spiteful) thinking will make the property boom go away, simply so that excluded stratas of society can afford a home. Being someone who's stupid enough to put his money where his mouth is, I am also investing in property. I am interested in this site because.. ...because I am fascinated by this topic at the moment ...because I sympathise: but for a few lucky random chances, I could be priced out too ...because I have a vested interested, and the best way to keep your thinking clear is to really listen to and understand opposing points of view ...because (to mix metaphors) you guys are a bellweather, so sensetised to the issue that you are the best chance of detecting exactly when the tide turns. I suspect the whooping on this site will be so loud that every bull in the country will know its time to get out. "All neighbourly content and easy talk are gone, But there's no good complaining, for money's rant is on. He that's mounting up must on his neighbour mount, And we and all the Muses are things of no account." W B Yates

We've looked at doing this for ages (and still aim to when we can secure the right plot). We used to be in Milton Keynes, where the English Partnership sell plots (to the highest bidder) with planning permission. We kept losing out in the bidding (once by only £3000 pounds) 'cause I could never nerve myself to make the killer bid. Those were the days when I was frightened of overpaying. If we were in MK now, I wouldn't bat an eyelid, I would make damn sure we won the bid. We are now in Bedford, and the only possibility is to find a smallish or poorly maintained or 60 - 100 year old house on a large plot, with the aim of demolish and rebuild. Again, 2 have come up in the last year, and we lost both to local builders, who got in quicker and with full price offers. Still, we live in hope. BTW if you manage to land a plot, you can get the bulk of the finance from people like Buildstore, but you will probably need about 50K upfront resources of your own to get past the cashflow issues.

Exactly how it works (I know this from experience, having bought in this mode, and yes, like CATFLAP says, its a gamble) However, a few points about subtleties in the situation: 1) The discounts are often genuine-ish. You might get 5%, 7% if you are lucky, if you went to the developer looking to buy one property, but you won't get 15%. Having said that investment companies will typically take about 3% back in commissions anyway, so you will be left with a discount of about 7% on RRP, ie about the correct price if you were to resell immediately. The point is, you have managed to aquire an asset (or debt if you prefer!) with virtually zero outlay. 2) The lenders are NOT being hoodwinked, they have access to the same internet as everyone else, face it, they are incahoots, they are turning a blind eye, exactly the same as they would if you get a residential mortgage and then let out the property. Lenders don't care as long as payments are met. Man from the building society is not going to turn up at your door demanding to know why you let the property. The max retribution you will face if found out is a letter from the lender to tell you to put in an extra 5% equity (not the biggest deal). 3) It's not fraudulent if you do things and show the money in the right order: if you show the lender you have the 15% deposit upfront (it may have been borrowed temporarily!) and then the developer gives you back 15% after the transaction completes, the lenders will typically know this is happening and won't object. 4) It doesn't need any FTBs to fall for it and pay the full price (although that helps), a couple of "transactions between friends" at RRP, involving the developer, will do the job as far as valuations are concerned. 5) The real victim in the game is the poor patsy who is under pressure from his/her better half to buy, pointing to internet research which shows the RRP being paid. The discounts are masked, and the said poor patsy will be more inclined to pay higher prices in the face of irrefutable evidence. 6) when CATFLAP says "How could any gambler not take the bet? - it's like betting on a one horse race to win using someone elses money" this is exactly right. If you can, Why would you not do it? As long as you are not stupid and set aside enough to subsidise the shortfall from rent and IR swings, perhaps 2K to 3K per annum for 2 to 3 years, say 10K in total, it's a bet with considerable upside potential and some downside risks. If prices go up you are ok. If rents go up you are ok. If IRs come down in a year or so, you are ok. If prices crash but you can find tenents, you are not forced to sell and you will be ok in the long run. If prices keep rising for say 18 months and then crash, well as long as you were smart enough to have MEWed after the rise, you will be in a position to use the banks own money (which they wouldn't lend you post crash) to subsidise rent shortfalls, voids etc while you wait for better times. There are many subtle ways to protect yourself with this type of buying. You could hedge against a crash by making small (but high-return) bets on house prices falling on IG Index. If prices don't fall, you lose your bet but HPI should cover that. If they fall, you can use your winnings to offset your HP loss. If you can also buy say, in Europe, with a Euro mortgage, perhaps that asset will rise even though this one in the UK falls in value. You could then perhaps do MEW on your Eurpoean mortgage in a couple of years and subsidise the shortfall here. Given that there is an IR gradient, if you can transfer UK debt to a Euro mortgage, all sorts of properties which look as though they won't pay for themselves, suddenly will. You may get double-bubble (or suffer a double-whammy) if the exchange rate moves. If prices crash and you can't find tenents for an extended period you are screwed, but you are losing, mostly, the banks money. IMHO I think there is some likelihood of a mini-crash within the next 24 months, but I also I think there will be a superfast recovery post crash within perhaps 18 months, (like the Equity markets after 1987), because of the structural shortfall in housing in the UK, and SWOM. All those waiting to benefit from a crash are likely to find the banks more wary, and credit much tighter and you may not be able to borrow enough to aquire the assets you want. The time to do it is now, when the banks are stupid enough to lend.

You want "large amount of credit", here's a strategy: You could get highly leveraged BTLs with 90% mortgage which accept 15% gifted deposits of developer discounts. You may be overpaying, but the deals results in "Cashback" in your hand around 2% of your total debt after costs. You can use this cashback to place spread bets on the housing market. Article in the 04/02/07 Sunday Times about betting on the Housing Market. You can use Cantor or IG or similar to "hedge" whichever way you think house prices will go. In effect, it's traded-options for the housing market, with the added benefit that you won't pay tax (as you would be profiting from bets on asset price movements, not the asset itself) If you guess right, you will be in a position to wipe out the overpayment and more besides. BTW, I cannot see any reason why BTL landlords cannot protect themselves (to some extent) from the potential effects of a downturn using this mechanism, after all thats what hedging using spread bets is meant for. Come to that, I cannot see any reason why all the bears on this fora cannot profit from their dearly held view of an impending HPC using spread betting, either.

Yes, but... Your Real UK house price projection line I,III,V is not accurately drawn. Its clipping III to show a crash at V in 2007. An accurately drawn line will show the peak V circa 2010 (if you believe in HP patterns and predestination). Like those climbers in your logo, you might just find that the peak is a tad further away than you thought. I mean: what is the point, that you are so exhausted when you get to the top of the peak, you can't enjoy the view over the precipice?

By definition this has to be true over short periods, otherwise everyone would have the guarantee of a win and become richer at everyone else's expense: a tautology. Obviously, those few who manage to intuit, guess or manipulate any market for a short period can become very rich. Or simply having a little more information then the crowd and making a few savvy decisions results in coming out ahead of the game, not fortunes but enough to get by. We bought 4 months ago after selling in 2005 thinking the market had peaked. Bought a similar sized house in a different town 12 months later for about 40 grand more because we could see that the market was getting away from us. I'm also going to BTL soon, so you can accuse me of turncoat-ury if you wish, but its a gamble I want to take. Totally agree with the sentiment of loating GB, but its futile to blame GB, TB, the tories or anyone else. The real reason for HPI is me, you, everyone else in the country, globalisation, the internet, and worldwide changes in human sensibility on a scale which rival the industrial revolution. We live in "interesting times" and old certainties (along with the icecaps) are melting. It IS different this time. The UK housing market as a phenomenon is being bashed by a combination of local and global tidal waves. I think it is totally possible that outrageous HPI will be a reality for several years to come if the economy doesn't dive.

Reminds me of the Prophet Zarquon... Shouldn't you add another catagory: "5 mins. before the end of the Universe"? Nevertheless, speaking as a turncoat who sold in mid2005 anticipating a crash ... and then bought again mid2006 when reality dawned and before too much damage was done (only 45K extra for a house similar to the one I was in, DOH!), ... I'm still cheering on you followers who are keeping the faith. I'm sure you will have your 5 mins. of wild cheering before the Universe ends.

My theory for what its worth: GLOBALISATION I mean by that, its not "traditional" speculation or cheap money. We now have a situation where perhaps 5% of the world population (including many many from the third world) is in a position to "move around", ie born in one country, educated in another, work in another, investments in many, retire in another. For such people, if they paid a million in one country to buy a pad, they will not baulk at paying half a million in another country where the locals might be paying a fraction of that. Douglas Adams (Hitchhikers Guide) once made a crack about the pointlessness of making it so easy to get to "exotic" places that the said exotic places become exactly like the place you came from. This is in effect the trend to "packaging", a form of automation which is making everything easy to buy, not just goods, but the most complex second and third order derivative products which is what property is. Whole countries are "packaging" themselves so as to be easier to sell (changing migration, tax, and investment laws, harmonization). In this mix, the Internet, merely a decade old, is the catalyst which allows people to buy and sell anything anyhwere (without seeing touching or feeling what they are buying), with the inevitable effect of even-ing out prices. Prices are rising because the strata of people who can do this come from the wealthy west or are the wealthy of the poor south.