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The Judder

The Waiting Game

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HI there,

I have been a regular browser of this web site for at least a year and have finally had the courage to put my two pennys worth in.

I am currently renting and will continue to do so until the P/E rato falls back to around 3.5 - 4, but how long will that take? It could be at least 7 years and I'm not gonna wait that long? any views?

I am a 1st time buyer and I'm not prepared to fork out £160K for a shed when it was worth 75K four years earlier and therefore renting is my preferred option against all of my friends advice who have stepped onto the ladder in the last year.

I remember the Bradley Stoke/Sadley Broke era of the early 90's and I don't want to fall into that trap.

I'm hoping that the investors in the property market will pull out and invest into the rising stock market, I hear that it is at the highest point in three years.

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Once the UK economy hits rock bottom at crimbo, we could start to see big moves southwards... followed by some gains next year... followed by some large drops next crimbo...

Overall timescale to 2001 prices? possibly never, possibly as short as two years away. Uber-bull EA on the C4 forum has just admitted today he reckons 20% drops are a cert, they just are not going to happen as quickly as the HPC'ers want them to. Once this message etsout to be common knowledge, then the housing business is going to be in dire straights.... Just before SIPPS come in hopefully. Im not sure we will see 40-50% reductions unless the economy takes a severe nose-dive. Which it probably will, however, Im hoping for 30% reductions, GB not making PM as a result of a damaged (but not destroyed) UK economy. Just my 2 cents.

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could be 4 years could be 7 years,

we won't know until it happens

depends on your earnings, if you earn 30k then not too long, but it wont have reached bottom,

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Well, it took over 4 years to dip last time so I think it would be silly to buy in the next year or two at least.

Amazingly some of my colleagues have recently bought or are about to buy!

Their reason? Because they wanted their own place and were fed up renting. In two years' time they will be in negative equity and REALLY fed up.

Buying a property does not change your life or somehow 'move you to a higher place' The true benefits don't appear for many years (decades?) so if you are young then be patient (and keep renting).

HTH

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HI there,

I have been a regular browser of this web site for at least a year and have finally had the courage to put my two pennys worth in.

I am currently renting and will continue to do so until the P/E rato falls back to around 3.5 - 4, but how long will that take? It could be at least 7 years and I'm not gonna wait that long?  any views?

I am a 1st time buyer and I'm not prepared to fork out £160K for a shed when it was worth 75K four years earlier and therefore renting is my preferred option against all of my friends advice who have stepped onto the ladder in the last year.

I remember the Bradley Stoke/Sadley Broke era of the early 90's and I don't want to fall into that trap. 

I'm hoping that the investors in the property market will pull out and invest into the rising stock market, I hear that it is at the highest point in three years.

A P/E of 3.5 - 4 would imply a yield betwen 28.5% to 25%.

Either you can't do maths or need to repost.

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Guest wrongmove

P/E = average house Price/average Earnings, not yield = average annual rent/average house price ?

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I'm curious about this p/e thing. Is my thinking here correct?

Take the flat I recently sold. I sold it for 90000. Similar flats rent for around 450 a month, but minus the service charge of 40 a month, letting agent fees (no idea but say 30 a month), and a little for depreciation, say 20 a month, that leaves 350 a month as income. My mortgage was for 49000 and cost me 300 a month when I left. A mortgage costing 350 a month would therefore be worth around 58000. Therefore the 'true' value of the flat is 58000. If interest rates were 3% the true value would be no more than 75000 so it's still overvalued even if interest rates drop dramatically, which I don't think they will (or if they do it will be because of a recession and many people will be unemployed and no one will want to buy). In other words, the current 'yield' on the flat is something like minus 22% (100-(350/450x100)). Therefore prices need to fall 25% at least to get back to normal.

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I'm just going to rent I think for the next year at least. I think the knowledge that you can flexibly move whenever you like just has too much of a +++.

Another reason not to buy at the moment...areas will change dramatically I think.

Image a couple earning say 25k between them... they buy a property for 50k and then its not worth 150k they release equity and then the price of their property drops dramatically, houses in that area now become more affordable to "less desirable folks".

I belive that areas which havent grown as significantly will hold their value more and I hope to move into one of these areas!!!

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I am a 1st time buyer and I'm not prepared to fork out £160K for a shed when it was worth 75K four years earlier and therefore renting is my preferred option against all of my friends advice who have stepped onto the ladder in the last year.

Any first time buyers for this 2-bed box???!!!!!!!????? It won't be me!

Paul Marshall Property

Some hopeful EA. Does anyone think the seller has a snowball's chance of getting this price? :blink:

Oh dear... Page doesn't seem to come up... Click on "buying, then scroll to the bottom of the page - 2 bedroom in Hurst.

Edited by FedupTeddiBear

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HI there,

I have been a regular browser of this web site for at least a year and have finally had the courage to put my two pennys worth in.

I am currently renting and will continue to do so until the P/E rato falls back to around 3.5 - 4, but how long will that take? It could be at least 7 years and I'm not gonna wait that long?  any views?

I am a 1st time buyer and I'm not prepared to fork out £160K for a shed when it was worth 75K four years earlier and therefore renting is my preferred option against all of my friends advice who have stepped onto the ladder in the last year.

I remember the Bradley Stoke/Sadley Broke era of the early 90's and I don't want to fall into that trap. 

I'm hoping that the investors in the property market will pull out and invest into the rising stock market, I hear that it is at the highest point in three years.

According to Dr. Bubb, the "natural" crash speed is around 1% per month (I think he got this from analysis of the last crash). Much much slower than a stocks crash due to the fact that a house takes time to sell, and people are living in it etc.

To be conservative, let's say 0.5% per month. That makes 6% a year nominal falls. Plus you've got inflation at around 2% annual, so that's 8% falls in real terms. So over four years we should have prices down by 32% in real terms. It doesn't look like a crash while you are in the thick of it, but in 3 and a half years time it will (I reckon it has aready been going for a bit, depending on the area).

frugalista

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According to Dr. Bubb, the "natural" crash speed is around 1% per month frugalista

There is surely no "natural" speed , except a slow one compared with liquid asset deflation. The rises in the last four years have been spectacular. The fall may well reflect the rise. Since many properties in some areas have already fallen between 5 and 10%, I would guess 1% per month is a bit of an underestimate. Once the dominos fall I see a deflation almost equal to the inflation of the last couple of years.

VP

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I'm really not sure what we will have is a natural crash at all!

...given all the madia property hype on the way up,I think it totally within the bounds of possibility we will have a NASDAQ style correction(short and very sharp),we are only now getting into the interesting bit,but I'm convinced sentiment alone will be enough to tank this....the BTL's,flippers,developers will realise:

this is no longer the route to riches

the asset is now LOSING money

my money could make more elsewhere

more people are selling now so I better had if I want to bag some profit

OH MY GOD,THE PRICES ARE PLUMMETING,I'M LOSING MONEY FAST,IF I DON'T SELL NOW I'LL BE IN NEGATIVE EQUITY.

OH CRAP,CAN'T AFFORD MORTGAGE,TENANTS HAVE LOST THEIR JOBS AND CANT PAY ME,NO CHOICE,GOTTA SELL UP NOW!

................................................................................

......................................................wait a minute......................look at that!....OIL....its $100 a barrel....I THINK I'LL SELL UP AND PUT MY MONEY IN THAT INSTEAD,THAT'S SAFE ENOUGH!!!!!!.......EASY MONEY,I CAN RECOVER MY LOSSES!!!!

isn't it??????????/

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  this is no longer the route to riches

  the asset is now LOSING money

  my money could make more elsewhere

Many speculators entered the market too late, and borrowed

too much.

They were in it for quick money, but were amateurish, ill-informed

ill-prepared and too greedy.

They are the ones most likely to try and correct their problem

by leaving the market (again too late !) and they will be already getting

desperate.

Too late, they will realise that, in a falling market advertised prices ..

"the market price"

are far, far above the underlying current of true selling prices.

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I'm curious about this p/e thing. Is my thinking here correct?

Take the flat I recently sold. I sold it for 90000. Similar flats rent for around 450 a month, but minus the service charge of 40 a month, letting agent fees (no idea but say 30 a month), and a little for depreciation, say 20 a month, that leaves 350 a month as income. My mortgage was for 49000 and cost me 300 a month when I left. A mortgage costing 350 a month would therefore be worth around 58000. Therefore the 'true' value of the flat is 58000. If interest rates were 3% the true value would be no more than 75000 so it's still overvalued even if interest rates drop dramatically, which I don't think they will (or if they do it will be because of a recession and many people will be unemployed and no one will want to buy). In other words, the current 'yield' on the flat is something like minus 22% (100-(350/450x100)). Therefore prices need to fall 25% at least to get back to normal.

Youve been robbed Mate.

90,000 on a five year fix at 4.5% IO is £337.50 you could have let it for 450Pcm.

I make that a loss, I would see if you can get some compensation from the Association of Estate agents. I would suggest a visit to the Citizens Advice Burea and tell them what has happened to you.

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A P/E of 3.5 - 4 would imply a yield betwen 28.5% to 25%.

Either you can't do maths or need to repost.

No, TT, it wouldn't........as if the market corrects itself as before..... rents and salaries would both rise about 70% over a decade with HPs remaining constaNT.....

This would push yields up from the current 5% ??......to 8.5%.......

With the exception of the last boom when nominal prices actually fell.....the market has always corrected itself in this way........and i'm talking 5 booms over 70 years!

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Agreed.

There is some serious bad news daily out of the UK press now - it appears to be snowballing - almost every economic aspect is turning negative.

Interesting if you take Sydney, Australia which is 18 months into deflation mode, they have experienced around 15% drops of which 7.5% falls were over four to six months. In between you have your "cruise speed" of 1% & a couple of seasonally adjusted spurts along the way. I hear another 20% to come. 35%(?).

Are we agreed that overall the UK is on average 10% off, forget the massaged VI numbers -if you want to sell today in today's market, this is what you can expect at best and every month cruise speed rules and properties head further south.

If one turns to previous cycles, you can see in the booms the increases were up to 65% & more over two years ( HK a prime example )- they may not always come off in one go to the same extent when the market turns down, however monthly cruise speed prevails with some serious quarterly falls during the cycle.

Maybe this should be on ****, but I am interested in the speed other western markets are falling. We know about Oz falls ( 15% & rising ), UK( 10% and rising ), how about about Spain I hear up to 7%+ is this so? Ireland? The US appears to have some life in it - maybe up to two years.

Anyone have any input?

" the "natural" crash speed is around 1% per month "

What I actually said was that "crash cruise speed is 1pct per month"

And what I meant by that was that the market could go on falling at 1pct

for a long time, and that a series of months averaging that speed could/would

bring a crash.

The point is that it need not be a sudden drop of 20 to 30 pct in a few months,

and people should be ready to be patient

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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