Just Had A Chat With A Btlaquaintence Of Mine

[Spoony]

If he had his way I would be swapping my cash for a string of houses and debt. He keeps trying to get me to join his club everytime we speak. He claims:

That public sector cuts will not be enough to cause a further housing downturn.

That most people have been over paying their mortgages since rates dropped, rather than spending the savings on all the other rising costs of living that I pointed out. So this means that people are not overstretched anymore

Unemployed people will have their mortgages paid, interest + capital by the government so no distressed sellers.

And councils will always need to use private rented to house people on benefits so his BTL empire will be safe.

He keeps claiming I missed the boat in Spring 2009. I am still convinced buying a house is too risky and the next legdown will come. When it will come I don't know - it may flatline for years. His answer - if it flatlines then I will gain nothing by waiting for more years and I should buy now before inflation eats my savings. Do you think he has a point?

Inflation eatig my savings is the biggest thing I am worried about. What are any of you doing to protect against it? I know Gold is a favourite, but I should have done that years ago, likewise to get into US$. What other low risk investments would you do? NS index linked certs are good but you need to hold for 3 years, which is not good if the crash finally comes and you decide to buy!

Edited May 3, 2010 by Spoony

[REP013]

If he had his way I would be swapping my cash for a string of houses and debt. He keeps trying to get me to join his club everytime we speak. He claims:

That public sector cuts will not be enough to cause a further housing downturn. He may be right but I suspect, at least on an area by area basis he is very wrong!

That most people have been over paying their mortgages since rates dropped, rather than spending the savings on all the other rising cots of living that I pointed out. So this means that people are not overstretched anymore This is Excellent - it will remove the, "I have to sell for xxx"

Unemployed people will have their mortgages paid, interest + capital by the government so no distressed sellers. 2 Years is running out fast!

And councils will always need to use private rented to house people on benefits so his BTL empire will be safe. I agree, the only question is how much can councils afford to pay?

He keeps claiming I missed the boat in Spring 2009. I am still convinced buying a house is too risky and the next leg will come. When it will come I don't know - it may flatline for years. He answer - flatline then I will gain nothing by waiting for more years and I should buy now before inflation eats my savings. Do you think he has a point? No

[blobby o mr blobby]

I guess he does have a point if you have the cash to buy it, may be less risky to put it into a home than have it sitting in the bank with risk of inflation erosion. But its worth hanging on to see what's going to happen a few months after the election, supply of housing is up and prices are at least now stalling. We could have the next leg down or more government meddling :angry:.

It pisses me off that people like your friend have been in a round about way proven right by the governments actions to maintain the bubble. Taxes of the home owning and non home owning people in this country seem to getting diverted straight into the housing market. Take for example the cut in stamp duty for FTB's, this money could be used to plug the hole in the deficit to the benefit of everyone but instead this is a direct use of tax payers money to prop up the market. Im surprised more people are not taking to the streets over property prices, but the only people who understand what a con the whole system is, are the ones who have researched the way the banks are manipulating the market with their lending. Everyone else just assumes that prices are rising as a direct result of god knows what...supply and demand

Edited May 3, 2010 by blobby o mr blobby

[South Lorne]

If he had his way I would be swapping my cash for a string of houses and debt. He keeps trying to get me to join his club everytime we speak. He claims:

...all ponzi schemes need new recruits to keep the bubble going.......

[bendy]

chinese yen.

aussie dollars too risky now.

eastern currencies will do well, they are on a bout of protectionism and to hell with the west.

[South Lorne]

chinese yen.

....new currency...?....

[clockslinger]

chinese yen.

aussie dollars too risky now.

eastern currencies will do well, they are on a bout of protectionism and to hell with the west.

Thanks for the tip. I think I'll buy a load of Korean rupees!

[Spoony]

I guess he does have a point if you have the cash to buy it, may be less risky to put it into a home than have it sitting in the bank with risk of inflation erosion. But its worth hanging on to see what's going to happen a few months after the election, supply of housing is up and prices are at least now stalling. We could have the next leg down or more government meddling :angry:.

It pisses me off that people like your friend have been in a round about way proven right by the governments actions to maintain the bubble. Taxes of the home owning and non home owning people in this country seem to getting diverted straight into the housing market. Take for example the cut in stamp duty for FTB's, this money could be used to plug the hole in the deficit to the benefit of everyone but instead this is a direct use of tax payers money to prop up the market. Im surprised more people are not taking to the streets over property prices, but the only people who understand what a con the whole system is, are the ones who have researched the way the banks are manipulating the market with their lending. Everyone else just assumes that prices are rising as a direct result of god knows what...supply and demand

I nearly did buy one in Nov. But I couldn't do it, as I was convinced the next 6 months would bring a fall. What has happened since then has confounded me. The bottom line is, would you swap you hard earned life savings pile for a risky asset called a house at times like this?

[Georgia O'Keeffe]

....new currency...?....

perhaps he meant the Japanese Renminbi?

[South Lorne]

I nearly did buy one in Nov. But I couldn't do it, as I was convinced the next 6 months would bring a fall. What has happened since then has confounded me. The bottom line is, would you swap you hard earned life savings pile for a risky asset called a house at times like this?

...good time not to deal ...

[porca misèria]

Explain opportunity cost.

Ask him how long it would take to lock in £97k gains on a £48k investment (net of all taxes and fees). Then tell him your online acquaintance did that in the 2009-10 tax year without leverage. And that he wasn't just recouping losses from 2008-9, 'cos he hadn't made a loss.

The opportunity in question being twofold: one is rising markets, but the more important one - and the one that won't turn round and bite in a bear market - is tax-efficient investment.

If that's not good enough, mention liquidity. I could lock in my gains in a day if I see a crash coming. How quickly could he realise his assets?

(yes of course there's a downside, but you didn't ask about that )

[SleepyHead]

If he's a Buy to Let guy, why is he trying to talk you into 'buying' rather than advising you to rent?

His advice betrays his motives, me thinks!

I bet he knows just the perfect "investment property" to off load introduce to you !

Edited May 3, 2010 by worst time buyer

[AteMoose]

If he's a Buy to Let guy, why is he trying to talk you into 'buying' rather than advising you to rent?

His advice betrays his motives, me thinks!

I bet he know just the perfect "investment property to off load introduce on to you !

Because increased demand increase cost, which means he can re-mortgage or means he has more equity..

[The Masked Tulip]

I am giving it till the end of Aug/Start of Sept - if there is no serious economic news by then, no big public sector job cuts, etc, then I do not think the crash will happen.

It will mean I would have paid part of my STR fund for rent, part of it would have been eroded by inflation and, in my area, asking prices are going up at about 20% to 25% which is just nuts but, feck, there you go.

[kingsgate]

If he had his way I would be swapping my cash for a string of houses and debt. He keeps trying to get me to join his club everytime we speak. He claims:

That public sector cuts will not be enough to cause a further housing downturn.

That most people have been over paying their mortgages since rates dropped, rather than spending the savings on all the other rising costs of living that I pointed out. So this means that people are not overstretched anymore

Unemployed people will have their mortgages paid, interest + capital by the government so no distressed sellers.

And councils will always need to use private rented to house people on benefits so his BTL empire will be safe.

He keeps claiming I missed the boat in Spring 2009. I am still convinced buying a house is too risky and the next legdown will come. When it will come I don't know - it may flatline for years. His answer - if it flatlines then I will gain nothing by waiting for more years and I should buy now before inflation eats my savings. Do you think he has a point?

Inflation eatig my savings is the biggest thing I am worried about. What are any of you doing to protect against it? I know Gold is a favourite, but I should have done that years ago, likewise to get into US$. What other low risk investments would you do? NS index linked certs are good but you need to hold for 3 years, which is not good if the crash finally comes and you decide to buy!

Well I don't know about "most people" but we have been paying down our loans at quite a fast rate this last 18 months(paid back £100K in 12 months) so that when rates do start to rise, we will owe a lot less.....

[The Masked Tulip]

The bottom line is, would you swap you hard earned life savings pile for a risky asset called a house at times like this?

No.

But I might in 5 or 6 months.

We are being told that economic cuts are coming that will mean the UK ends up worse than under Thatcher - you had to be there to realise how terrible that was for large parts of the UK so, IMPO, anyone who has brought recently is either naive, brave or has bags full of cash.

They might be proved right of course but, logically, with all 3 parties openly talking of cuts and the BOE Governor saying the cuts are going to be dire then, well, I wish i had not bought a car last year let alone a house.

Have to say thought, so far, I have been proved wrong and I do wonder now whether I should have bought 3 years ago when I inherited my Mum's house.

[libspero]

Well I don't know about "most people" but we have been paying down our loans at quite a fast rate this last 18 months(paid back £100K in 12 months) so that when rates do start to rise, we will owe a lot less.....

Jeez! you guys must earn about £250k a year.. Screw worrying about the mortgage, get yourself a deposit on one of these bad boys..

Edited May 3, 2010 by libspero

[blobby o mr blobby]

nearly did buy one in Nov. But I couldn't do it, as I was convinced the next 6 months would bring a fall. What has happened since then has confounded me. The bottom line is, would you swap you hard earned life savings pile for a risky asset called a house at times like this?

Tricky one, could you buy 100% outright? There is everything to gain from waiting, in 6 months prices are unlikely to keep on rising, and supply is substantially increasing, there was a post in the Bristol sub forum with numbers of the current housing stock for available for sale. Stock went up something like 18% overall, and some areas as much as 25% within an eight week period. If this mirrors the rest of the UK prices are set to fall or stagnate for as long as supply is increasing. So even if your savings are being eroded against the price of bread as long as you don't need to dip into them to actually buy your bread you should maintain your purchasing power in the property market. Of course nothing is certain and the feeling of security you might gain from owing a home may prove to tempting in comparison to the alternative of holding cash.

[hirop]

It will mean I would have paid part of my STR fund for rent, part of it would have been eroded by inflation and, in my area, asking prices are going up at about 20% to 25% which is just nuts but, feck, there you go.

Come on dude, 20 to 25%? what the heck are you looking at in this market that is showing that kind of increase? I appreciate you have lost your hpc mojo of late - but are you really saying that in your spot you are seeing completed sales averaging 2% up per month, and have done month on month?

[The Masked Tulip]

Come on dude, 20 to 25%? what the heck are you looking at in this market that is showing that kind of increase? I appreciate you have lost your hpc mojo of late - but are you really saying that in your spot you are seeing completed sales averaging 2% up per month, and have done month on month?

I kid you not and myself and several other local HPCers are very depressed by it.

Houses that had 250K asking prices as of last Dec - they were 180K about 2007 I kid you not - are now asking 300K and the SOLD signs are going up left right and centre.

I have been both shocked, surprised, and a tad worried I have to say, seeing this.

It is just madness in a town where over 50% of the economy is dependent upon public sector jobs.

[Giordano Bruno]

I am giving it till the end of Aug/Start of Sept - if there is no serious economic news by then, no big public sector job cuts, etc, then I do not think the crash will happen.

It will mean I would have paid part of my STR fund for rent, part of it would have been eroded by inflation and, in my area, asking prices are going up at about 20% to 25% which is just nuts but, feck, there you go.

Asking prices are arbitrary, are they not, until someone actually buys at those prices? I mean, the seller can simply pluck an asking price out of the air and it is just a whim until he or she sells.

[hirop]

No point getting disturbed by this visual trend, spend the money on getting the land registry sold prices for 10 of these properties you have seen sold boards go up on - then you will know for sure. Forget the indexes, get to the specifics of the houses you have seen, you might find not is all it seems - and if it turns out they are selling at your worst fears, then you at least know you need to widen your search and find alternatives (like opening a brothel beach-bar in Costa Rica).

[The Masked Tulip]

Asking prices are arbitrary, are they not, until someone actually buys at those prices? I mean, the seller can simply pluck an asking price out of the air and it is just a whim until he or she sells.

These properties are going within weeks - not as if they have been on the market for years - so one can only assume the seller is selling within a short time because their asking price has been reached.

A surge of properties came on the market about Easter time and have gone - sold. It is nuts.

[magneticworld]

I kid you not and myself and several other local HPCers are very depressed by it.

Houses that had 250K asking prices as of last Dec - they were 180K about 2007 I kid you not - are now asking 300K and the SOLD signs are going up left right and centre.

I have been both shocked, surprised, and a tad worried I have to say, seeing this.

It is just madness in a town where over 50% of the economy is dependent upon public sector jobs.

This is right on the money. ... hindsight is a great thing. My area in South London had houses going at the same price quoted above in 2008 dec hell we're talking even semi detached with garage @199K in the south norwood area/border with crystal palace!. Ok distress sale possible but there were quite a few then. I taught the fall might cont .just a a bit more (greed on my part..damn learnt my lesson ) and now those houses are back up to 250k mark..

The will to stay out of the market is dying every flipping day.

Edited May 3, 2010 by magneticworld

[tomwatkins]

chinese yen.

aussie dollars too risky now.

eastern currencies will do well, they are on a bout of protectionism and to hell with the west.

Do you mean rest or have you got a lisp? I'll get me whatever.