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House Price Crash Forum

Tommy

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Everything posted by Tommy

  1. Maybe if we told them... They only seem to have a usability feedback form under http://www.nationwide.co.uk/hpi/ . I have not been able to find an email address to which to write to. Yeah, I would also be interested in seeing the correct figures. BTW, sorry if this has been discussed already, I must have missed the topic :-(
  2. If you go to: http://www.nationwide.co.uk/hpi/ and go to the data download section: http://www.nationwide.co.uk/hpi/historical.htm and download "UK series" -> "UK house prices adjusted for inflation" you'll notice that all the historical data ends with: DATE HOUSE PRICE ADJUSTED PRICE TREND------------------------------------------------------------------2005 Q1 £152,790 £170,697 £129,4152005 Q2 £157,494 £173,934 £130,2852005 Q3 £157,627 £173,449 £131,1612005 Q4 £157,387 £172,201 £132,0432006 Q1 £160,319 £174,957 £132,9302006 Q2 £165,035 £177,005 £133,8242006 Q3 £168,460 £179,137 £134,7232006 Q4 £172,065 £181,062 £135,6292007 Q1 £175,554 £183,278 £136,5412007 Q2 £181,810 £181,810 £137,459 Now, 2007 Q2 looks a bit strage! The average house price increased from 175,554 to 181,810 which is an increase of 6,256 (+3.56% in the quarter). However, they show the price adjusted for inflation (real house price) to have decreased from 183,278 to 181,810, a decrease of 1,468. This, in my opinion could only be true if the inflation (RPI?) in the quarter was greater than 3.56%, it woud have had to be around 4.4% to cause the prices adjusted for inflation to fall! Now, annual RPI was reported a few weeks ago at ~4.4%, but this was *annual*, not for the quarter! The increase of 3.56% in house prices is for the quarter, this alone would correspond to 14.24% annual. So, I guess that only an annual RPI inflation well above 15% could have caused such a drop in "real house prices" (the ones adjusted for inflation). What do you think?
  3. if workers from the third world came to the UK they would not be able to work anymore for third world wages because life in the UK is more expensive. we only compete with workers from the third world via outsourcing and cheap labour that occurs in those countries, this is nothing to do with immigration. Also most immigrants are not from the thirld world. The current immigration is mostly polish, they are europeans and they have decent living standards in poland. When did I say this? Yes, immagine what our forefathers would say if they saw the huge number of lazy people who sit at home in a free council house and do nothing because they happily leave on benefits (I am not talking about the ones who cannot work, but only about the ones who decided not to work). In reality I find your forefathers argument a bit ridiculous...
  4. A young family with huge students debs, no jobs, no house and no future... Umh, I do not understand this... If low skilled immigrants manage to find a job surely this young family can too. If they are picky and want a better job, the fact that they have a student loan hopefully means that they have a degree which means that they should be able to easily get more than the minimum wage. No house... I consider this a bad thing, but on this forum this seems to be a good thing, so what are you complaining about ;-) No future... well if you think you have no future and you give up you'll probably have no future. If you instead believe in yourself, if you are a hard-worker, dedicated and have ambitions I am sure you'll have a future.
  5. I am sure it is very very rare to find children aged 9 who have never been to school... Having said this, it is much more common to find children aged 9 who do not speak a word of english, but children are very fast learners, I am sure they will learn the language very quickly. As for the interpreters, I think it's a bad idea! The only effect of employing an interpreter is to slow down the pace at which the kid will learn english (plus it is a cost as you mentioned and also I do not see the point!). So, assuming schools do not employ interpreters I do not see the problem! As for their parents, I am sure they increase the GDP, but also employing interpreters increases the GDP, so let's stop talking about GDP and economy in general. The thing is that in the UK there are not many people prepared to do low skilled jobs... Most people will want to do only nice jobs and the rest, well the rest of the UK population, rather than doing the low paid hard working jobs they decide to stay home and claim benefits. So I think that immigration is beneficial. You have a lot of people who are prepared to do the jobs nobody wants to do just because the pay here is better than in their countries. Immigrants do not only do the low-paid jobs, immigrants who are doing better jobs are bringing skills in, which is again a good thing. I fail to see the problem with legal immigration. I am for tough rules on illegal immigration but I welcome legal immigration.
  6. so what you have proven? That you should not do BTL in some places and you should instead in some others true. Still BTL can be profitable in the right places buying the right houses. By the way I live across Leeds and Cambridge so my view is not that "distorted". Also prices have just about tripled since 1998 in leeds, so I am not talking about an area that did not experience any boom. BTW, Leeds is not the only place. There are for example some place 20 minutes away from Cambridge that area also good. I just would not buy a 300k one bed flat in the belvedere tower in front of the Cambridge station.!
  7. you can do everything you want. But why do you not deduct the lost interest when you move from one saving account to another: 1st saving account 4% 2nd saving account 4.2% therefore I only get 0.2%. If you deduct you get the difference: I get 0.2% more. If you do not deduct you get the total: I get 4.2%
  8. here we are again.... I have shown you a good BTL investment and I do not want to waste my time showing you more. Of course there are... bad investments. You can lose money on stocks, but if you lose it does not mean that stocks in general are performing badly, you just picked the wrong ones. City flats in Leeds are now too expensive to be profitable. They cost a lot, they have service charges and they rent for just a little bit more than ones away from the city centre. You should not buy yet another empty flat in Leeds. If ex-council houses in the suburbs are more profitable, yes, you should buy them, what is wrong with them? and what is wrong with you!? You should never buy all the properties in the same street, diversification is the key to reduce risks. So there is probably only one or two in that street. You buy two and then if you have other cash, then you can buy some in Armley (good parts), some in Wortley, some in Stanningley, they all have similar prices and similar good investments. There are many many many properties like the one I have shown you. You are tiring me. You keep saying the same. If ameteurs are making mistakes and are buying bad properties they are going to lose money. So?! BTL can still be profitable if you are just a tiny bit smarter than that. Do not buy that property in Brighton, do not buy a 150k 1 bed apartment in leeds city centre in a block where 90% will be for BTL and you'll be competing with other landlords. Buy instead a property that is profitable. There is still plenty of them. You jsut need to do a simple maths. Good, I am really tired of your posts! I have provided you a real investment property, I am sure there is better ones, but that is already acceptable and can yield decent returns. Why do you keep asking about Leeds City centre flats?! Why can't you buy 10 minutes away from the city centre. Yeah, many flats in the city centre are empty, yes if you buy one now you probably have negative yield, yes they are building a huge number of them, so?! Let other people if they are prepared to lose money, you should buy only where profitable. This is obvious, I do not know why you do not understand. If you want to buy only city centre apartments, then it's you bloody fault and problem. 4 years ago it was a good time to buy in leeds city centre, now it's not.
  9. Take inflation by itself please: friend of borrowers, enemy of savers. Now, take interest rates by themselves please: friend of savers and enemy of borrowers. Given the fact that we already have high interest rates (which is bad for borrowers) I have said that at least moderatly high inflation (which we also have) is good for borrowers. People were saying that because of high interest rates the situation for borrowers was bad and I have said, yeah, but consider that IR are high because of high inflation and inflation is good for borrowers. then you tell me that the two come together... you have told me nothing new.
  10. I have just given you an example (and I had already provided an example in my original post anyway). The answer is simple: do not buy that property in Brighton. What are you trying to prove?! That there are bad properties that if you buy for BTL you are going to lose money on them?! Yeah, I agree, this is true. This does not mean anything however! You need to do you maths and buy a property that has a positive yield. I have provided one example of it I found in 5 minutes. I am sure if you spend more time and attend auctions etc.. you can find even better and more profitable deals. You are getting boring. You can provide us another 100 example of bad properties but you would be wasting your time, as I have told you already: as long as there are some properties (even if very few) that are good for BTL then BTL can still be profitable. The fact that there is 1 or 1 million bad properties does not change a thing.
  11. NO, I was talking about leveraged investment. Of course leveraged to a degree that still puts you in profit on the rents. You need to find a good property and I have given example of decent properties. If you really think unemployment will reach 14% and that house prices wil fall by 25% and that interest rates will hit 12.5% then you should not do BTL, I agree. However I feel you are too pessimistic. THis is very unlikely. I think a crash is possible, but the scenario you describe is extremely unlikely. If you are this pessimistic than you should also factor in a meteorite crashing into the earth, a new world war, the UK being invaded by France etc... Ok, I am joking but i think you're taking it too far into the very very unlikely.
  12. Because if I have 100 pounds I can buy 100 pounds worth of bonds. If I borrow 1M at 5.5% from BOE I can then buy 1M and 100 pounds worth of bonds. I would pay 5.5% on the 1M and get 6% on the bond. If however use fractional reserve banking to transform the 1M into 10M, I then pay 5.5% interest on 1M, 4% on average on the whole amount on deposit (liability) and get at least 5.5% on the 10M i loan out. So on average I get the difference betwen 4% and 5.5% on 10M. Without doing this I would only get the difference between 5.5% and 6% of 1M.
  13. No, economics teaches us that inflation is usually friend of borrowers and enemy of savers. First link I found: http://www.telegraph.co.uk/money/main.jhtm.../19/cmian19.xml QUOTE: "Inflation is an insidious enemy of savers but can be the borrower's friend." "By eroding the real value of money - that is, its purchasing power - inflation eases the burden on borrowers, who can repay debts with cash that is worth less than it was when the loan was taken out. For the same reason, by reducing what every pound can buy, inflation robs savers who are repaid for their thrift with 'funny money'." Why people have to always accuse other people of being foolish. I say something and you think I am foolish. Can't you just accept that I have a differnt point of view?
  14. Just to reiterate that I have given 2007 prices and not 1998 2002 or 2006 prices in my calculations. I am tired and I am not going to do any more calculations, but I will show you a property which might be good. You need to go and see it though... http://search.manningstainton.co.uk/mnssit...mend=1180015223 3 bed (or 4 bed) semi-detached fro 99k, 10 minutes outside Leeds. This type of property can easily let for 550 unfurnished. Also being a freehold property there are no management fees. Now, if you go and see it and the house is in a good condition, you should be able to offer 95k and the offer might be accepted. This house for 95k could be a good investment supposing you can rent it easily for 550 as I think. You need to go to other agencies and ask what a property like this could rent for, then you need to look at similar properties for rent in the area. If it all adds up, you'll see that 95k and 550 a month unfornished can be a decent investment. Of course in 2002 you could do better investments, but hey, such is life. I am sure that if you keep an eye on the market you might find even better properties and you can even find some at auction. I took me 5 minutes to find this one on the web, I am sure in a month or so I could do better. I have already given my calculations for a property that costs 100k and rents for 550 partly furnished, they were incomplete but a good indication. This time the property could potentially be bought for 95k and could rent for 550 unfurnished. Again, a person from Leeds might decide not to use an agency and therefore you might want to do your calculations with and without estage agent fee. Finally, if prices did go down and that property in a two years time was worth 85k, well, as long as you are making a profit on the rents all you have to do is wait until the price catches up again. If prices stagnate you'll make a small profit on the rent. If prices keep increasing by something below RPI-X (this is my prediction) you can make >10% profits considering both rents and equity. If prices keep rising at a faster rate, well, it's possibly just a too optimistic!
  15. it's not beating the odds when you can do most of the maths before hand and you also factor in reasonable risks like boe base rate at 6.5% and 3 months void and whatever. Then of course interest rates could reach 15%, very unlikely now, but then again you can buy government bonds and the governments decides not to pay it back when it expires. Very unlikely but not completely impossible. I think you're not making any point here. You're trying to prove me wrong without constructing any constructive and coherent argument.
  16. yeah and for each one you find I can find a good one. As long as you can still find at least 1 good one that you can buy, then it can still be profitable. The fact that some or most properties are bad, does not mean much.
  17. diversification is the key... you should have some money in a saving account, some money in stocks, some in BTL, some hedge funds, etc... If you can get >10% guaranteed with no risks after tax then do it, you would be crazy to do BTL now. However, you'll see that that >10% is not guaranteed and risk free. So some people have experience and trust in the BTL and think of it as less riskly thatn your carefully picked funds. I for example would be very scared to pick a fund. Funds do go down and it's not in my control. However, when I buy I property I have more control. So I see the risk as smaller. True house prices can fall. All you need to do is make sure that you are prepared to (and in a position to be able to) keep the property in the long term.
  18. No! You can do most of your calculations before buying: - price of the property - how much properties like that one rent for in that area - service charges (if any) - etc... Some things are left to "fate" like interest rates etc.. (although you can do a fixed rate mortgage), but the data to choose your property right is almost all there. So it's not at all like betting on horses. The element of luck is not that important. Maths and experience becomes more important.
  19. True. False. You can still find a good property that gives a decent profit. You then need to make sure that you at least break even even if interest rates keep climbing so that you are not forced to sell when prices are going down and lose your equity. Then you need to be prepared to make the investment as a long term investment. If prices stagnate or keep rising below RPI then it can work out well even as a short term investment. However if prices start falling then it can only work out well as a long term investment. Also while house prices are falling rents are usually increasing, so as a long term investment it could turn out to be not too bad. Remember that the equity you have only counts when you actually sell the house. If house prices fall by 20% but you sell when they pick up again to the same leve it's as if prices never went down and stagnated for the whole period (and if you wait more they'll actually go up). So, my final comment is that I think house prices will rise below RPI-X for a number of years but I don not thnk they will fall in nominal terms so... I might actually want to wait to see what direction the market is about to take, but I would not call morons people who do a BTL investment now especially if they can do their calculations right.
  20. that example was an example of a remortgaging chain that would cause problems with capital gain tax when selling the properties. You have not proven me wrong. All you have done is find a property that should never be bought for BTL and then proved that this particular property was not a sound investment. I have on the other hand showed you that another property was a sound investment. So there are properties that are good investments and properties that are not. BTL can still be profitable, but you need to chose your properties.
  21. In my example, the 10M deposit is what they created with fractional reserve banking with the 1M they borrowed from the bank of england. You did not understand this. Read my post again. (and maybe also the wikipedia article again).
  22. What you get is >10% including voids and service charges but not including maintenance and management fees (i said I assumed you were now using an agent). >10% is probably worth the hassle. The yield could well be 6.6% depends how you calculate it, there are various ways you can do it. The point about the yield is that it has to be above base rate to be a worthwhile investment and your 6.6% clearly is. (ok, if you included all the things you said are not included it might not be above rate). I would have to see your calculations I guess... Well, first of all if you get more than a saving account and you're prepared to go through the hassle to get this tiny bit more you're not stupid it's just a choice. Secondly, the advantage is that rents will be increasing over time, so if you make >10% now, you probably will make more and more over time. Since house prices might not increase for a few years now and rents are instead likely to go up, this means that even your yield figure is going to improve over time. So, if you like rental yields figure, they are certainly going to improve in a stagnating or falling market. Your yield would probably become lower if house prices were booming again, but the equity would be instead increasing. So sometimes low yield are not a bad thing if house prices are booming... On the other hand in a stagnating or falling market yields get better and better. So we are now in the most difficult point: the peak of a housing boom: - house prices have been increasing like crazy for many years thus bringing the yields down. - rents have not increased due to the boom thus bringing the yields down. - house prices are not increasing anymore so you do not see your equity growing. - rents are low since they are just beginning to pick up now This is the worst point. From now on yileds should get better (equity might not!).
  23. I have not used 1998 figures: http://www.houseprices.co.uk/e.php?q=1%2C+...kshire&n=10 this was 68k in 2002 and just above 100k. In 1998 it would have been way less than 68k... This 110k 2-bed apartment (CURRENT PRICE) rents for 550 partly furnished (NOW). A friend of mine is renting an identical one in the same estate. I do not know why you thought I was giving 1998 figures. The example you give is of a property you should NOT buy for BTL investment. You have to buy a property that will yield something positive and not negative. If you do not know how to choose properties then you should not get into the BTL business.
  24. I have not made up the prices. Borrowing at 5.50% to then lend it out at slightly more than that would not be really lucrative if I did it as there is risk involved (people might not pay off the loans they take from you, you need to charge more to cover this case.). Also nobody is going to lend you a lot of money if you then lend it out again, the reason you get a mortgage is because a house is an assett and if you do not repay your debt they take your house. the bank could still make money even if it's lending below the base rate, all the bank has to do is make sure they pay less then the base rate (and less than the loans they are offering) to the depositors. Considering most current accounts pay less than 1% and most saving accounts less than 4.5% it is possible for a bank to make money even if they loan it to less than the base rate. Again read: http://en.wikipedia.org/wiki/Fractional-reserve_banking I do not see why my post was insulting to you. True, banks make money by pay little interest to depositors and charge a lot of interests on borrowers. So?! it indeed is. True the first part of your last sentence, I have no idea what you mean in the last part however. I have to admit I do not understand this post of yours. What are you trying to say with this post? In my previous post I said that banks can lend more than they have via fractional reserve banking so they can earn money if they borrow at base rate and then lend out for less. You said this was insulting and yet you have not proved it's wrong nor tried to prove it's wrong. If a Bank borrows 1M and then lends (via fractional reserve banking) 10M holding 0.5M as reserve (via various iterations of depositing and lending to various customers as described on the wikipedia article) they have to pay BOE base rate on 1M and then some interests to the depositors holding the 10M (let's say 4% on average) and then they receive 5.5% from people taking out secured loans (only base rate). So they pay 5.5% of 1M + 4% of 10.5M (55k + 420k = 475k) And they receive 5.5% on 10M (550k) So even if they lend out at base rate they can still make money (75k profit for having *borrowed* 1M, so this is leveraged!). They could make money even if the lent money for a bit less than base rate. > If you can borrow Sterling at 5.5%APR I have borrowed at 5.5% for my house as I have told you, and my bank is making money do not worry!
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