Foundthelight Posted September 16, 2009 Author Share Posted September 16, 2009 Indeed. Must be one mutha of a flat for that rent. Does it come with its own staff? And roof top pool? And daily freshly cut flowers for the missus? Unfortunately that’s what you pay in London. It’s not that nice and there’s an insane Scotts man living in the flat below, that if you merely cough he starts shouting and swearing... And when I say Clapham South... Poynders road if any of you know it... not that nice... Quote Link to comment Share on other sites More sharing options...
Nationalist Posted September 16, 2009 Share Posted September 16, 2009 In the next years: (1) Rents will go down; (2) Interest rates will go up; and (3) Property prices will crash.To keep a Buy To Let will be a lose-lose-lose proposition. (And all this is very obvious. It does boggle the mind that someone can't see this.) 1) Rents have already gown down; they may fall a little more, but remember: London is different. 2) Interest rates are going nowhere - no government has anything to gain by bankrupting everyone (and they have plenty to gain by letting inflation rip, makes all that nasty debt go away.) 3) Property prices have already crashed; now they're just going to stagnate, up some months, down others. If serious inflation takes hold they will soar. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted September 16, 2009 Share Posted September 16, 2009 what was the question? Quote Link to comment Share on other sites More sharing options...
RandomBear Posted September 16, 2009 Share Posted September 16, 2009 Please don't listen to this, it is terrible, terrible advice. Money is made by buying low and selling high, houses have a long way to fall still, that means sell now if you can before the general public wakes up to the HPI lie. In the long run (house price cycle normalised) house prices seem to track wages, hence the return of mean house prices to 3.5x mean incomes at the end of each property cycle. Real wage growth is pretty slow - the Average Earnings Index divided by RPI is up about 40% since 1970, a gain certainly but not exactly spectacular returns. Almost all investments - bonds, tracker funds, deposit accounts - would have returned more. Also, real interest rates would have increased your real mortgage debt by much more than 40% in the intervening 39 years, so I would not advise anyone to take this course of action! Hey, incoherent argument man, don't give people advice on things you don't understand. Quote Link to comment Share on other sites More sharing options...
404 Posted September 16, 2009 Share Posted September 16, 2009 (edited) If rents are really that high around london then I would tend to think there will not be such big falls. If I can rent the house for 2.5% or rent the money for 6% I'll rent the house. If I have to rent the house for 8% or rent the money for 6% I'll think about renting the money. I think rents are a good indication of what people are willing and able to pay; you can't offset the cost to another year nor kid your self that paying more than you can really afford is somehow adding to your retirement fund. You always have the option to share with someone else if you really want to live there but find it too expensive. If rents are high it's an indication that people are willing to pay alot to live in those locations. Coupled to that I have yet to meet a landlord who is not charging as much as he possibly can get. Rents are only going to dramatically drop in places where there is plenty of surplus housing that is being kept out of use. Look at Ireland post their crash, lots of people did not even bother to rent out investment properties , everyone had a second home and the builders kept whole estates off the market, 8 years after being built places were being sold on with only a builders finish.) Rents have dropped in ireland but not anywhere near as much as the house prices. Edited September 16, 2009 by 404 Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted September 17, 2009 Share Posted September 17, 2009 (edited) 1) Rents have already gown down; they may fall a little more, but remember: London is different. 2) Interest rates are going nowhere - no government has anything to gain by bankrupting everyone (and they have plenty to gain by letting inflation rip, makes all that nasty debt go away.) 3) Property prices have already crashed; now they're just going to stagnate, up some months, down others. If serious inflation takes hold they will soar. 1) See the stocks in prime London going up in the chart below. What do you think this will do to rents next? 2 e 3) The government is borrowing (mostly from the BoE's presses, and some from abroad) and spending £200 billion this year, 12% of GDP. They will not be able to keep doing that. Even if they wanted. They won't afford it. The BoE will not risk hyperinflation, as they can't scare foreign lenders. This mini-boom is artificial, and unsustainable. If serious inflation takes hold then interest rates will go sky-high, and the market will crash in real terms (nominal terms are for idiots). Properties didn't even start to crash. We are entering the worst financial crisis in a century. And you think it is all over already?! My god... If you want to stay in properties, please do so, by all means. You deserve it. But don't give bad advices to others. Edited September 17, 2009 by Tired of waiting Quote Link to comment Share on other sites More sharing options...
RandomBear Posted September 17, 2009 Share Posted September 17, 2009 Good graph. Where is that from? Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted September 17, 2009 Share Posted September 17, 2009 Good graph. Where is that from? Sorry. I forgot to mention the source: primelocation. You'll have to click the centre top tab "prime lettings index", from the page below: http://www.primelocation.com/house-price-index/ Quote Link to comment Share on other sites More sharing options...
Dorkins Posted September 17, 2009 Share Posted September 17, 2009 Hey, incoherent argument man, don't give people advice on things you don't understand. Those two posts are completely coherent, the first one is about short term cycles (we are near the top of the house price cycle btw) and the second is about the long term growth prospects of property vs other types of investment once we are at the bottom of this cycle and property is relatively cheap again. Quote Link to comment Share on other sites More sharing options...
RandomBear Posted September 17, 2009 Share Posted September 17, 2009 Those two posts are completely coherent, the first one is about short term cycles (we are near the top of the house price cycle btw) and the second is about the long term growth prospects of property vs other types of investment once we are at the bottom of this cycle and property is relatively cheap again. No, you never answered my question. You asserted that inflation would not erode your debt and that it would be wise to pay down mortgage balances as fast as possible in an inflationary world. When the opposite is in fact true. Quote Link to comment Share on other sites More sharing options...
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