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lets get it right

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Everything posted by lets get it right

  1. Say you've got £40k cash. You're getting 2% on it in the bank - £800 a year. You buy a 3 bed semi with a 150k mortgage from HSBC that you pay 3% on. Mortgage interest is £4500. Rent is 9k. I'll leave you to work out how many people think it's a good idea. Tip: the answer is ... enough to sustain house prices. Even if you pay cash - that's 4.7% yield - a lot more than most bank accounts pay. And, of course, rightly or wrongly, people think that in the medium term the house price will go up. Historically, that would be true. And I know you'll all go on about voids and maintenance - well we all have to maintain our houses - no-one said BTL was trouble free - and, more worryingly, I saw some figures somewhere this week about the average size of a portfolio and the average LTV of the portfolio. It was (I think) 9 (might have been 12) properties with an average value of about £2m but with a LTV of just 37%. Seems BTL scumlords are not all borrowed up to the hilt. Which is why a mass withdrawal from the rental market is the only thing that will cause a crash. Because that would cause SOME landlords to sell at any price - just to get out. Other than that, I can't see where the crash is coming from anymore. I used to have this blind faith that the market was overvalued and must correct. Well it hasn't happened in the last 7 years which is at least how long the market has been overvalued around here.
  2. I can't see how you can compare Ireland - 4 million population, massive new build housing boom with the UK - 60 million population and, generally accepted, a housing shortage. This baby won't crash while people are prepared to pay £550 to rent a house that cost 40k at auction and 5k to do up (yesterday's Homes Under the Hammer - filmed in 2010) - and more generally, while young people will pay £750 to rent a 2 bed flat or house and a grand for a 3 bed semi and others will pay £1500 for a 4 bed detached estate box. At these rent levels and with current interest rates - property investment based on yield still makes a lot of sense - at least to about 99% of the population. Young people have effectively withdrawn from being buyers in the housing market - not of their own volition but because they can't borrow enough to buy. The market couldn't care less. Young people need to withdraw from the market as renters - then you'll get your house price crash. Move home and bug your parents, move in with your brother or sister, do anything - but stop paying the rents that sustain the market.
  3. But they DO! If you are buying and want a 4 bed detached house - and there are 20 of them on the market in your locality - and they are all aspirationally priced at 500k - you start thinking 'I'll need 500k to buy a 4 bed detached house in this area'. You don't think - they are all 100k overpriced and I just need to wait until someone sees sense. What happens is that of the 20 on the market maybe one, just one, really wants or needs to sell. And he will go down 5, or 10k at a time until someone thinks 'that one is now 475k - I'll offer 465k and get a bargain!' That is how the market works - which is why you never get really dramatic falls. It's just a drip, drip, drip of falls on the way down whereas in a rising market prices jump in leaps and bounds.
  4. Not true. The removal of joint tax relief on mortgages was the catalyst for the last bust. House prices were driven up by the usual culprits - the banksters and loose lending - and a feeding frenzy caused by an idiotic chancellor flagging up 6 months in advance that joint tax relief was to be removed. Every potential FTB linked up with anyone, brother, sister, mate, mate of a mate - to get their foot on the ladder before the tax relief was removed. On the day of removal (think it was July 31st 2008) the market came to a standstill overnight. Suddenly there were NO FTBs and, as a result, the market crashed. Nothing to do with IRs - we were used to high IRs. I was paying 14.25% on my mortgage in 1985. I think it's true to say that this market bears little resemblance now with the market in the late 80s/early 90s.
  5. In a sane world, that is not much to ask for. Dig some strip foundations, fill them with concrete. Lay a couple of rows of blocks up to ground floor level, dig some trenches and stick in some drains and cucts for services. Lay some pre-stressed concrete beams across the blocks and infill them with concrete blocks. You now have your ground floor. Put up two lifts of brickwork and blockwork - install first floor joists. Take brickwork and blockwork up to plate. Stick trussed rafters across from one side to the other. Cover the rafters with felt and battens and add roof tiles. Do first fix carpentry, plumbing and electrics. Install windows and door frames. Tack the ceilings. Plaster throughout. Second fix joinery, plumbing and electrics and decorate. It's not fecking rocket science and the materials and labour is not that expensive. Yet, somehow, by some weird twist of fate from invisible powers - most of us spend most of our lives paying bankers interest to live in a poxy shoe box.
  6. What's the alternative? Think about the situation if we all bought just what we need - never went out for meals, never upgraded our phone, never downloaded music, made do with a saucepan instead of using an electric kettle etc. etc. - half the world would be out of work. Ever since we moved off the land, consumerism is essential.
  7. It's odd. The indexes show INFLATION way above target yet the man whose remit it is to control inflation sees DEFLATION. Surely what he must mean is that inflation of 4% is not high enough to offset the huge debts he allowed to accrue on his watch.
  8. This question has been answered on here numerous times. The government borrows money by selling gilts - which are government bonds. The government sells a gilt say for £100. It promises to pay (say) 3% interest on the gilt (usually for a fixed period) and, at the end of the fixed period, promises to give whoever bought the gilt their £100 back. From an investors point of view UK government gilts are supposed to be as safe as houses(!) - in that it is allegedly inconceivable that the UK government could default on its debt because a government can always raise taxes to pay its debts. The people who buy bonds - pension funds, fund managers and 'overseas investors'. Gilts are tradeable - so the price can go up and down. When people are scared of investing in the stock market they will buy gilts - forcing the price above the issue price and, therefore, causing the yield to fall. It seems there is an unlimited desire amongst 'investors' to finance the UK government's over spending.
  9. Yes, it is a well known fact that doing up a barn makes one suicidal. My Dad lived in a rented house in Essex for a few weeks when he was a child. The flat had a boarded attic with a light and when they moved in he made it his den. He used to go up there to draw. He saw someone watching him sometimes and reported same to his father. An enquiry at the local pub revealed that the previous owner had hanged himself in the attic. So, the message is - don't buy barn conversions or houses with boarded attics.
  10. I'm sure they put something in the water here. By rights the City of London should have been marched on and unpleasant things should have happened - instead of that we bail the banksters out with billions of borrowed money and they continue to pay themselves billions in bonuses leaving a debt our children's children will be paying off. Are we angry? Not at all. A shrug of the shoulders at most.
  11. Not where I live it hasn't. Not if they keep someone else in the market by paying them a high rent. The market doesn't care who owns the house - as long as the mortgage is paid. And if buyers priced out of the market pay someone else a high rent enabling them to stay in the market, then stalemate ensues. Which is what we have here.
  12. Not as long as buyers who won't or can't buy pay high rents. Staying out of the market and paying someone a high rent is worse than useless - it perpetuates the market and high prices.
  13. The would be FTBs not participating now, and for the last 2 years, do not seem to have much affect on the market.
  14. My wife is watching the local market closely using Globrix which seems to flag price changes. Very little is selling and a few houses are coming down in little steps - 5k, the odd 10k, one or two 15ks - but an awful lot of them are just not selling and not reducing their price. Still not enough forced sellers to cause serious falls. Still too many people willing to pay ludicrously high rents. For my money the issue now is rents. All arguments about affordability, requirement for FTBs, transaction levels etc - are irrelevant. The market has proved that. While youngsters will pay £750 to rent a 2 bed flat and young families will pay £1000 to rent a 3 bed semi or terrace - property prices are going nowhere. £1000 a month services a £300k landlord's mortgage and as long as £1000 rent is being paid, 3 bed semis will be £300k. Unless interest rates go up and not much sign of that. The worry is that the longer this goes on (7 years now in my area) the longer it will go on. When high house prices have been entrenched for 10 years or more, there is a huge amount of people and debt vested in the market. The longer it goes on, the longer it will go on.
  15. The comments under her piece in the Telegraph were all very hostile. If she reads them she must be beginning to think ... 'everyone hates my guts and thinks I am a feckwit'
  16. If you'd told me 2 years ago that the market could function with almost no FTBs, rationed mortgages, high deposits required and transactions down to about a third of what they used to be, I'd say you were truly nuts. But, what do I know? So far throughout my almost exactly 7 year 'house price journey' I have been repeatedly wrong. I guess I'm just facing up to it now and admitting that I got it wrong.
  17. Still a hell of a lot of people with the money to buy new cars.
  18. She hasn't had a slug of the adrenalin of publicity lately ... so she pens some vacuous article and, I wouldn't mind betting, some mate, friend, friend of a friend or family member at the Telegraph pays her a wad of money for the right to publish a load of nonsense. I'd rather that ran white space than that nonsense. It would save them some ink and the money paid to her.
  19. Why don't you stop and think about that for a minute. Surely, if you do, you must see it is complete and utter tosh. We live in some sort of one man, one vote democracy. What sort of lunatic would run a political party for the benefit of 1% of the population - or even 5% of the population. Have you been asleep for the last 20 years? Have you not heard they all want to occupy the 'middle ground'? They need to get the votes of as many people as possible to get into power. If you think they all lie and really represent the rich and that anyone who votes Tory, who isn't rich, hasn't twigged what is really happening - then all I'd say is that the Labour party did a pretty good job of lining the bankers' pockets over the last 13 years. If you were to hang the absurd moniker of 'the party of the rich' around any political party's neck, surely that party would be New Labour - the professional tossers.
  20. Good for you. You're certain about something. Which could mean you have analyzed a complex situation, understood everything - and are right, or it could mean you are believing what you want to believe. As long as people are willing and able to pay the daft rents currently being paid, the housing market is going nowhere. This is the fundamental building block upon which the house of cards now rests. How many times have you read that people couldn't sell their house for (what they think) it is worth and who rented the house out and went ahead and bought another one? How many BTL landlords are selling up because of voids? Because while rents are high, voids are the ONLY reason they will sell up. Even if the property price is falling, as long as they can pay the mortgage they will hang on until prices rise again. Because, rise again they will. One day. The housing market limps on with just a third of the transactions in the boom years. But prices have not collapsed. Anyone afraid we're all wrong? I am.
  21. Darling didn't have a plan. Or a spending review. He just made a promise to halve the deficit (abracadabra) in 4 years - starting in a year. Even at the end of the 5 years we'd still be borrowing £80 billion a year. Call that a plan? Somehow the whole entitlement mentality of the public sectors needs to be turned round - from their entitlement to gold plated pensions to their entitlement to rising budgets.
  22. 20 year stagnation with mild wage inflation. Problem is a generation will never own a home. Alternative is a depression, social unrest etc. The generation that will never own a home need to make their plight known - but they won't.
  23. Seems that the only place you can build new estates these days is next to a motorway. Why anyone buys them is beyond me. A new estate in Bracknell is under construction at the moment - 1500 houses in total. Right next to the A329M. I've stopped there a couple of times over the last couple of years to have a nose around the show houses ... you almost need ear plugs. I can't imagine sitting out in the garden reading the paper on a summer's day - the noise would drive you bonkers. In a sane society the opposite would be true - all motorways to be built in cuttings with the spoil moved to the sides to create berms and no new housing within a mile - or something like that. But no, nimbyism is so entrenched that the only place you can build is right next to a 6 lane highway.
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