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waitingscot

Conversation With Aunt: You Must Buy A Flat

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I was talking to my aunt last week and she said why don't I buy a flat now instead of just renting one.

I said I was waiting for the prices to come down first.

She said prices won't come down much more or at all so I better buy sooner rather than later.

Her husband has has six flats that he rents out locally. (Not with mortgages, bought outright pretty much around the peak 2006 to 2008) I think she played a large part in convincing her husband property was a good investment because she is always watching all the propery programmes and scours the local property paper every week.

Just to put the wind up her I asked what they paid for the most recent flat they bought. It was £92,000 in 2008. I said I will buy a flat like that when it drops to about £60,000 because if I bought before that I would probably be wasting my money.

She got a bit annoyed and said not to be ridiculous prices will never drop to that level. I pointed out to her that flats like that were selling for less than £60,000 as recently as 2004. Why on earch can't they drop back to at least that level?

This was her main argument: people won't sell their properties for that amount. They will just hold on to them. Her husband would never sell his flats for so little therefore they will not drop.

What do you think has she got a point?

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I was talking to my aunt last week and she said why don't I buy a flat now instead of just renting one....

What do you think has she got a point?

In my experience most women have two - especially when cold.

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She only has a point if there were no banks and everyone bought houses for cash. Alas it isn't so. Houses are as expensive as they are because easy credit got us there. The easy credit has run out and prices will follow. You aunt's husband is lucky to have been so rich, but he will soon be relatively less rich.

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This was her main argument: people won't sell their properties for that amount. They will just hold on to them. Her husband would never sell his flats for so little therefore they will not drop.

What do you think has she got a point?

yes, I think that she has a point and it is certainly reflected in the market by the lack of property for sale. However, this does not take into account the coming wave of forced sales through rising unemployement, negative equity preventing remortgaging, rising rates and coming inflation. Ofcourse, there is always the possibility the situation does not deteriorate much further and that the governments have used enough sticky plasters but I don't expect that to cause any vast increase in property prices, more likely we stay flat a while. I am banking on things getting worse though, possibly quite soon.

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Tell her to join this forum and put up a topic asking if anyone has ever sold their flat/house for less than they paid for it. She'll get a lot of replies in the affirmative.

House two doors down from me. Bought two years back for £227K. Opening asking price £205K last month. SSTC board up now. If it completes, my guess is that it sold for £190K or less. Land Registry will finally reveal!

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Tell her to join this forum and put up a topic asking if anyone has ever sold their flat/house for less than they paid for it. She'll get a lot of replies in the affirmative.

House two doors down from me. Bought two years back for £227K. Opening asking price £205K last month. SSTC board up now. If it completes, my guess is that it sold for £190K or less. Land Registry will finally reveal!

ouch. Perverse thing about the situation is that only people who need to sell will probably be doing so, but needing to sell means accepting a realistic or any offer. Lower sale prices will set a precident for the street which should only serve to bring prices down.

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Dont worry, she's just a woman with a small brain. Seriously though, her investment might not be that bad in the long run if they bought for cash, sure they could have done better if they'd waited, but the flats will provide an income as they can afford to slightly undercut the market to make sure they get good tenants with minimal voids. As far as your concerned though, politely nod and change the subject, its not worth having an argument with family about. Stick to your guns and buy when you think is right.

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I was talking to my aunt last week and she said why don't I buy a flat now instead of just renting one.

I said I was waiting for the prices to come down first.

She said prices won't come down much more or at all so I better buy sooner rather than later.

Her husband has has six flats that he rents out locally. (Not with mortgages, bought outright pretty much around the peak 2006 to 2008) I think she played a large part in convincing her husband property was a good investment because she is always watching all the propery programmes and scours the local property paper every week.

Just to put the wind up her I asked what they paid for the most recent flat they bought. It was £92,000 in 2008. I said I will buy a flat like that when it drops to about £60,000 because if I bought before that I would probably be wasting my money.

She got a bit annoyed and said not to be ridiculous prices will never drop to that level. I pointed out to her that flats like that were selling for less than £60,000 as recently as 2004. Why on earch can't they drop back to at least that level?

This was her main argument: people won't sell their properties for that amount. They will just hold on to them. Her husband would never sell his flats for so little therefore they will not drop.

What do you think has she got a point?

A lot of people wont. But paradoxically they'll happily accept a loss on the rent every month!

I still think prices will fall for those who *need* to sell, but therefore so will rental prices. If she wont sell at a loss, and if they own outright with no risk of repossesion these people could be the ideal landlords, accepting miniscule yields in the delusional hope of eventual capital gains. See how she feels about property once the yields are barely affording them a basic retirement.

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Market prices are not set by rich people who own 7 flats outright. Market prices are going to be set in the next 3 years by sellers needing to sell due to unemployment or high mortgage payments and ftb and investors jumping in at what they percieve to be the right time. If interest rates remain relatively low, those market prices will remain higher than many on here would like.

Your uncle may not sell at prices lower than he paid, but that does not mean the flats will be worth what he thinks they are.

HTBB

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I now try to avoid talking HPC with friends / family. More so if they have a VI. Saves any argument or fallings out.

But the evidence is there to be seen, most people just don't want to see it.

Take this one for example, Block of Maisonetts not far from me. One seller is getting real, the other, well judge for yourself......

Number 6D

Number 2D

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People who own such a flat as a place to live will sell for less, then they can move up the ladder and buy a bigger property for a similar reduced amount. She seems to have forgotten that most people own properties to live in rather than to rent out / make a profit.

I have heard this why would people sell for less argument before. It is people selling their properties that set the prices, not people holding out for better days.

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I now try to avoid talking HPC with friends / family. More so if they have a VI. Saves any argument or fallings out.

But the evidence is there to be seen, most people just don't want to see it.

I agree, it's not worth the hassel.

Marginal sellers are determining market prices. The masses who are 'holding out' are not testing the market. In a street of 100 identical houses if 10 sellers 'hold out' for £150,000 by not selling, and 2 sellers have forced sales at £100,000, each house on the street will have a market value of £100,000.

After all, it was marginal buyers (BTL, Liar Loans, no money down etc) that drove prices up in this way

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You must buy now, or be priced out forever, and be a rent forever loser. <_<

Edited by Pseudo Lord Sandwich

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....And you can hold your head up high at that those property subject matter dinner parties, instead of sitting in the corner, wallowing in renting, propertyless self-pity.

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Waitingscot, with all due respect, your aunt is the perfect propaganda mouthpiece for the vested interests but seldom will such people discuss issues such as the Balitic Dry Index, the quadrillion dollars worth of derivatives in circulation, Option ARM or Alt_A resets, the size of the public sector debt, China's increasing frustration with the dollar, quantitative easing, growing unemployment, the million plus in negative equity or the tsunami of taxes to come.

Property speculators more than ever have to cherry pick and desparately cling to simplistic colloquial issues to keep their worst fears at bay.

Stick to your guns.

Edited by Dave Spart

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I'm sure the tune will change when he can't find tenants or DSS scum do the place over.

Then he'll sell for anything to get shot of the hassle! He's lost a lot of money, you might as well break that to your aunt!

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Guest happy?

Have you considered the possibility of waiting a few years and then offering cash for this property empire?

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They have already had non-payers and they had to evict one person.

The conversations with you would indicate the seeds of unease and doubt are already beginning to germinate in her thinking.

Green shoots, but not quite the right kind....

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They have already had non-payers and they had to evict one person.

You need to face facts: as someone who doesn't have a mortgage debt you are shunned by decent people and single women find you singularly unattractive. People cross to the other side when you walk by and small children burst into tears.

Listen to your aunt - go by a house.

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I forgot to mention the flat he owns in Dubai - it's not finished yet but he is still paying installments. I said to him maybe it will never be finished any maybe he should cut his losses. He looked at me like I called his mother a whore.

I appreciate people saying not to talk about it with family. I used to be quite close with them because we went on holidays together when I was younger.

But I like to rub it in actually. I resent them for buying flats at a time when we would ideally have bought ourselves (2006 when we got married) and helping to push prices up. And they would boast about buying this or that flat knowing full well I was not prepared to buy when prices had gone up 20% in a year.

Edited by waitingscot

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