25% Peak To Trough Now The Consensus Opinion

[zebbedee]

Price crashes are an inevitable part of the cycle, but the impacts in many areas are minimal, and I live in one of those areas. If prices here fall by another 30K to 40K, below Jan 07 prices, then by all means gloat as at that point I'd have been better off renting. But it's rather unlikely given they have yet to drop to Jan 07 levels.......

So hamish, what about the first property, if you had saw the crash coming and sold up in jan '07, stuck the money in the bank, how much would you net wealth be now in relative terms (assuming you're renting it out for the purposes of this calculation) and the first home (not in aberdeen) has lost value?

If you really are so sanguine and unreliant on relentless capital growth in your properties why are you so unremittingly unwilling to consider that we are living through rule-breaking times. The run up has been beyond anything witnessed in house price increase history; why shouldn't the crash?

Give the bears thier due, the crash could be of epically small and therefor anomolous proportions in relation to the bubble. A view which I ofcourse do not hold.

Edited June 26, 2009 by zebbedee

[Damik]

Only one house in Aberdeen, which is still up since I bought it. The other out in the country, which has earned me close to 400% since I bought it.

let's assume 400% in 5 years

let's imagine that the house costs 100k

2007: 100k

2012: 400k

2017: 1,600k

2022: 6,400k

2027: 25,600k

......:

McTavish, we will be ALL rich!!!

[profitofdoom]

yep. he is totally in the shit.

I have forecast -35% from the start.I must admit that I am now willing to think that it wont quite be that much,I think 30% now.

[eric pebble]

Ya cannee gaw wrong wi' prawperteee

Absolutely SUPERB!!! F*CKING BRILLIANT!!!

Edited June 26, 2009 by eric pebble

[HAMISH_MCTAVISH]

So hamish, what about the first property, if you had saw the crash coming and sold up in jan '07, stuck the money in the bank, how much would you net wealth be now in relative terms (assuming you're renting it out for the purposes of this calculation) and the first home (not in aberdeen) has lost value?

The first one is in outer Aberdeenshire... In the country, probably down close to 10% from peak. It's not rented out, I let an aging relative whose circumstances changed live there for free.

I could have sold, but would then have had to pay transaction costs, and paid for the relative to rent somewhere as well. WIth rental yields up here being 5% to 8% typically, it makes no sense.

[Damik]

Hamish bought in 2007?

Hahaha...explains it all.

it is not enough he bought on the top. he believes that he is still making money ...

[HAMISH_MCTAVISH]

it is not enough he bought on the top. he believes that he is still making money ...

Not making money, saving money......

Value then 200K, value today (according to RoS actual sold prices) 206K and rising.

Cost of interest for last 2.5 years approx 15K..

Cost of rent for last 2.5 years approx 34K.

I make that approximately a 24K saving by buying then over delaying purchase and renting, and that saving is increasing by a grand a month at the moment.

[eric pebble]

Value then 200K, value today (according to RoS actual sold prices) 206K and rising.

[HAMISH_MCTAVISH]

Yes Eric, not all places have fallen back to Jan 2007 prices.......

Massive differences in falls by area, from less than 5% to more than 40%.

Surely even you can grasp this concept?????

[Flat Bear]

LOL, chillax FFS.....

Own another house free and clear as well as sitting on a 6 figure sum of savings & investments. Riding the tracker because it's BOEBR plus half a point. and the cash is making far more than that. Could pay off 60% of the mortgage if needed, and could sustain 15% rates if I had to even with the full mortgage.

Bought at a low multiple of income (2.7) and have zero other debt.

Rent would cost me more than full repayment mortgage at 5% interest. Renting makes ZERO sense.

Seriously, I have over 2000 posts, and this has been discussed with every ignorant bear who wasn't aware of the Aberdeen market's miniscule falls to date on multiple occasions. Old news.

The only people panicking around here are the bears firing of the ad hominems to try and discredit the bulls, who are about to be proved right.

It is not difficult to see that you are trying to convince yourself more than others, I'm sure others would agree

However, I've been doing a quick check on Aberdeen prices and it seems the place is in another reality.

I found a 4 bed detached for £165,000 but the lowest rent for a 4 bed was over £1250pcm!

Even 2 bed flats/apartments are being marketed at over £950pcm!

Rental prices are considerably higher than most towns in SE England and comparable to London.

Question

Why are rental prices so high in Aberdeen?

How do people afford them?

Why are purchase prices so low in comparison?

What is the strange phenonomen affecting the area?

[HAMISH_MCTAVISH]

However, I've been doing a quick check on Aberdeen prices and it seems the place is in another reality.

I found a 4 bed detached for £165,000 but the lowest rent for a 4 bed was over £1250pcm!

Even 2 bed flats/apartments are being marketed at over £950pcm!

Rental prices are considerably higher than most towns in SE England and comparable to London.

Thats my point. It's not just Aberdeen, there are many markets where rent is the same as a mortgage, or even higher.

Question

Why are rental prices so high in Aberdeen?

How do people afford them?

Why are purchase prices so low in comparison?

What is the strange phenonomen affecting the area?

Balanced housing market.

Average wage 36K

Balanced housing market.

Common sense.

[right_freds_dead]

I have forecast -35% from the start.I must admit that I am now willing to think that it wont quite be that much,I think 30% now.

your dreaming.

[the flying pig]

Yes Eric, not all places have fallen back to Jan 2007 prices.......

Massive differences in falls by area, from less than 5% to more than 40%.

Surely even you can grasp this concept?????

you always seem to place too much faith in regional stats, which suffer badly from problems associated with small samples.

in the peak years of the boom inter-regional differences in HPI did exist but werenot especially pronounced. this is not surprising given that HPI had nothing to do with fundamentals such as 'supply and demand' [as you know, scottish HPI was right up there with the best of them despite its population being famously in decline & currently comfortably below what it was in the 1970s] or job creation/earnings growth [as you know since HPI massively outstripped both], and everything to do with loose lending, which was applied uniformly throughout the entire country. house prices now are being articially held up by inflationarily [is that a word?] low interest rates, which again are uniform.

so intuitively i wouldn't expect huge regional differences on the way down.

Edited June 26, 2009 by the flying pig

[Dorkins]

Why are rental prices so high in Aberdeen?

How do people afford them?

Why are purchase prices so low in comparison?

What is the strange phenonomen affecting the area?

Why did sold prices in Aberdeen fall from £190,000 at peak to £155,000 according to Hamish's own data?

http://www.housepricecrash.co.uk/forum/ind...st&id=14946

These numbers are virtually identical to the national stats, I don't see what makes Aberdeen special...

Edited June 26, 2009 by bearly legal

[zebbedee]

It is not difficult to see that you are trying to convince yourself more than others, I'm sure others would agree

However, I've been doing a quick check on Aberdeen prices and it seems the place is in another reality.

I found a 4 bed detached for £165,000 but the lowest rent for a 4 bed was over £1250pcm!

Even 2 bed flats/apartments are being marketed at over £950pcm!

Rental prices are considerably higher than most towns in SE England and comparable to London.

Question

Why are rental prices so high in Aberdeen?

How do people afford them?

Why are purchase prices so low in comparison?

What is the strange phenonomen affecting the area?

Growing up there it's in order

Down to oil industry-landlords and shops etc seem to think everyone is making big bucks because with oil your all rich (never mind most oil industry workers came up from newcastle, did the 2 on 2 off and went home)

They don't, most people I knew lived in grotty sh1t holes

The city is dying, I kid not, when I go back to visit the folks I feel for the city, they don't even realise how out in the backwoods they are.

See above.

Edited June 26, 2009 by zebbedee

[Flat Bear]

Thats my point. It's not just Aberdeen, there are many markets where rent is the same as a mortgage, or even higher.

Balanced housing market.

Average wage 36K

Balanced housing market.

Common sense.

So another more important question for you

How will the biggest economic downturn in history affect the Aberdeen #House price market #Rental market?

As I said, Scotland has not been affected at all yet, thus the sense of stagnation.

[Flat Bear]

Growing up there it's in order

Down to oil industry-landlords and shops etc seem to think everyone is making big bucks because with oil your all rich (never mind most oil industry workers came up from newcastle, did the 2 on 2 off and went home)

They don't, most people I knew lived in grotty sh1t holes

The city is dying, I kid not, when I go back to visit the folks I feel for the city, they don't even realise how out in the backwoods they are.

See above.

Hmmm

Sounds as if Aberdeen could be in for a rude awakening

[drrayjo]

The fact we have a differently-abled Thai emigre wannabe, a curious former renovator with gender ambiguity who would benefit from a crash and a loaded Scotsman whose circumstances, and perma-wealthy oil-boom hometown of course, make him immune to a crash anyway, are all the UK can muster to say rude things about bears...well...it's kinda sweet really isn't it.

Edited June 26, 2009 by drrayjo

[The McGlashan]

It is not difficult to see that you are trying to convince yourself more than others, I'm sure others would agree

However, I've been doing a quick check on Aberdeen prices and it seems the place is in another reality.

I found a 4 bed detached for £165,000 but the lowest rent for a 4 bed was over £1250pcm!

Even 2 bed flats/apartments are being marketed at over £950pcm!

Rental prices are considerably higher than most towns in SE England and comparable to London.

Question

Why are rental prices so high in Aberdeen?

How do people afford them?

Why are purchase prices so low in comparison?

What is the strange phenonomen affecting the area?

It's a geographically-isolated primary sector economy, based upon resource extraction, fisheries and agriculture. Aberdeen suffers from the 'Resource Curse', including: lack of diversification; aspects of 'Dutch Disease'; corruption; excessive borrowing and rent-seeking.

The relatively high rental prices could be argued to be part of this phenomenon. The entire localities' economy depends upon 'passive income', so individuals play along with the result that BTL has been huge there. When we put this in the context of Paul Theroux's observation in his book The Kindom by The Sea we can see why relatively high rents are being sought in Aberdeen:

"It was only in Aberdeen that I saw the kind of tartan tight-fistedness that made me think of the average Aberdonian as a person who would gladly pick a penny out of a dunghill with his teeth."

edit.

BTW, my avatar is a graph from the same data set which Hamish posted earlier. My avatar shows the monthly YoY changes in Aberdeen house prices, which has been negative for the last 11 months.

Here are some other interesting graphs for Aberdeen:

Edited June 26, 2009 by The McGlashan

[Timm]

In fairness, Hamish has always been more realistic than Sibley, Rinoa and Co. He is an estate agent. But he has always been the most realistic estate agent on the forum, apart from "honestEA", eho seems to have gone now. Of course, if Hamish is not an estate agent, he is welcome to say so.

Do ex-agents count?

Question Why are rental prices so high in Aberdeen? How do people afford them? Why are purchase prices so low in comparison? What is the strange phenonomen affecting the area?

Growing up there it's in order Down to oil industry-landlords and shops etc seem to think everyone is making big bucks because with oil your all rich (never mind most oil industry workers came up from newcastle, did the 2 on 2 off and went home) They don't, most people I knew lived in grotty sh1t holes The city is dying, I kid not, when I go back to visit the folks I feel for the city, they don't even realise how out in the backwoods they are. See above.

Exactly. It's an oil town and the oil is running out.

Aberdeen is going the way of Dubai.

But colder.

[Flat Bear]

It's a geographically-isolated primary sector economy, based upon resource extraction, fisheries and agriculture. Aberdeen suffers from the 'Resource Curse', including: lack of diversification; aspects of 'Dutch Disease'; corruption; excessive borrowing and rent-seeking.

The relatively high rental prices could be argued to be part of this phenomenon. The entire localities' economy depends upon 'passive income', so individuals play along with the result that BTL has been huge there. When we put this in the context of Paul Theroux's observation in his book The Kindom by The Sea we can see why relatively high rents are being sought in Aberdeen:

"It was only in Aberdeen that I saw the kind of tartan tight-fistedness that made me think of the average Aberdonian as a person who would gladly pick a penny out of a dunghill with his teeth."

Thanks

I suppose it is important to understand local situations.

Although there are many variables and local factors nationwide the long term prevailing direction will be the same everywhere to slightly greater or lesser degrees.

It sounds as if Aberdeen will fare worse than others.

[The McGlashan]

Growing up there it's in order

Down to oil industry-landlords and shops etc seem to think everyone is making big bucks because with oil your all rich (never mind most oil industry workers came up from newcastle, did the 2 on 2 off and went home)

They don't, most people I knew lived in grotty sh1t holes

The city is dying, I kid not, when I go back to visit the folks I feel for the city, they don't even realise how out in the backwoods they are.

See above.

Indeed, there are many paradoxes to Aberdeen - it is truly a divided town. For instance, Aberdeen regularly features on those 'top ten places to live' surveys, yet also features in the 'bottom ten places with high levels of social exclusion and child poverty' surveys.

[Timm]

This is the man who bought a second home, just as property prices peaked.

This is the man who bought in a town dependant on oil, just as it peaked.

This is the man who is staying on a tracker mortgage, just as rates bottom.

It reminds me of that advertisement for VW in the (?) 80's.

And this is the forum's best bull?

[Flat Bear]

This is the man who bought a second home, just as property prices peaked.

This is the man who bought in a town dependant on oil, just as it peaked.

This is the man who is staying on a tracker mortgage, just as rates bottom.

It reminds me of that advertisement for VW in the (?) 80's.

And this is the forum's best bull?

But didn't the Guy in the advert get something right?

How is Hamish similair?

[The McGlashan]

Exactly. It's an oil town and the oil is running out.

Aberdeen is going the way of Dubai.

But colder.

Here is a graph of North Sea oil and gas production from the Department for Energy and Climate Change.

https://www.og.berr.gov.uk/information/bb_u...ctions_1108.pdf

Oil down 50% from 1999 peak.

Gas down 35% from 2000 peak.

The grinding certainties of geology take hold......

Edited June 26, 2009 by The McGlashan