Jump to content
House Price Crash Forum
Sign in to follow this  
PricedOutNative

Buy Property Now Before The Panic!

Recommended Posts

My sister’s just bought a flat she plans to rent out (she already owns her own house outright) and it’s partly down to this forum and my doom laden conversations about the state of the economy, at first she dismissed my arguments as fringe and laughable but as events have unfolded she’s got concerned that her substantial savings were loosing their value.

She did not want to risk her & her partners hard saved money on stocks/bond/PMs etc.. an she does not understand them, while she is certain there will always be a demand for nice flats. She said she will feel relieved once her money is transformed into the flat.

Share this post


Link to post
Share on other sites

My sister’s just bought a flat she plans to rent out (she already owns her own house outright) and it’s partly down to this forum and my doom laden conversations about the state of the economy, at first she dismissed my arguments as fringe and laughable but as events have unfolded she’s got concerned that her substantial savings were loosing their value.

She did not want to risk her & her partners hard saved money on stocks/bond/PMs etc.. an she does not understand them, while she is certain there will always be a demand for nice flats. She said she will feel relieved once her money is transformed into the flat.

So what are you asking us lot for?

Don't mean to be harsh, but you won't find many people here who are going to say she's doing the right thing...

Share this post


Link to post
Share on other sites

You'll find that not many people on this forum will:

1) understand your sister's thinking

2) acknowledge that lots of people think like her

3) realise that there seem to be enough people like her to sustain property prices

Estate agents I know tell me the market has been driven by cash ever since the credit crunch. No sign of the cash running out yet.

Share this post


Link to post
Share on other sites

Totally agree, IMHO it is the sensible thing to do in her position. I believe in a crashing pound, rising inflation dash to assets outcome IF things really go to the dogs. However libcon are doing alot better than labour in staving this off and the Armageddon outcome I was starting to expect is further away than before..

Edited by AteMoose

Share this post


Link to post
Share on other sites

So what are you asking us lot for?

Don't mean to be harsh, but you won't find many people here who are going to say she's doing the right thing...

Are you completely sure she's wrong?

It strikes me that inflationists (and there are many on here) who are waiting for a property crash have slightly contradictory ideas.

Share this post


Link to post
Share on other sites

Don't be so sure, a lot of people here are open minded and if presented with facts that contradict their opinion will consider changing it rather than dogmatically clinging onto one theory despite contradictory evidence.

I have been reading this forum for years as I felt house prices were unsustainable but that was before the unprecedented economic events we have experienced. I now think we may not see a substantial fall in house prices as people with significant savings decide to dive into property for safety, then we may see inflation take off to such a degree that it comes up match house prices.

A work colleague of Indian origin was telling me that in his parents’ homeland it was not uncommon for an extended family to have to club together to buy a house in an urban area, he asks if that’s the situation there, why not here?

So what are you asking us lot for?

Don't mean to be harsh, but you won't find many people here who are going to say she's doing the right thing...

Share this post


Link to post
Share on other sites

I know a few HPCers who have done this in recent months - bought a house rather than have the cash eroding in the bank.

I also regularly chat with a small group of HPCers on here re the same.

I am not sure about flats - well, I was not sure up until this weekend when Duncan Smith started talking about getting people to move to where the work is. Looks like they are going to get people to move to London so maybe flats will soar in price there now with the mass influx of people... or maybe some Tories own massive flat portfolios in London.

Share this post


Link to post
Share on other sites

My sister’s just bought a flat she plans to rent out (she already owns her own house outright) and it’s partly down to this forum and my doom laden conversations about the state of the economy, at first she dismissed my arguments as fringe and laughable but as events have unfolded she’s got concerned that her substantial savings were loosing their value.

She did not want to risk her & her partners hard saved money on stocks/bond/PMs etc.. an she does not understand them, while she is certain there will always be a demand for nice flats. She said she will feel relieved once her money is transformed into the flat.

We have been in a 60 year bull market for housing (coincidently rising with the 60 year credit bubble that finally burst in 2007), where is the panic going to come from?

I know very few people that are not already fully invested in property, it will probably only be a few more months before I am the only person that I know (outside of hpc) that is not fully invested in property with just 2 more friends/acquaintances that were left taking the plunge shortly.

Share this post


Link to post
Share on other sites

I'm all for protecting your cash but that is one asset I wouldn't touch with a barge poll! She doesn't understand the bond Market which is fair enough but she obviously doesn't understand the housing Market either! Her money would be better off in cash IMO.

Share this post


Link to post
Share on other sites

While I'm certainly not adding to property (though I would buy land), I'm pretty comfortable with my exposure to property. Cash is losing 5%+ a year, Equities are....interesting, PMs are peaky already, bonds are losing 3% a year with added risk. If it all goes completely tits up, I will be comfortable in that I own the value of a decent house in a very good area, whatever that will be worth in pure monetary terms.

As to the OP, I would have thought that buying a flat now is risky (prices must be close to peak), unless she got a very good discount indeed.

Share this post


Link to post
Share on other sites

She did not want to risk her & her partners hard saved money on stocks/bond/PMs etc..

If you're talking about risk, putting all your savings into a single, illiquid asset at time of economic uncertainty doesn't sound like sensible risk analysis, even if she does turn out to be correct.

Share this post


Link to post
Share on other sites

My sister's just bought a flat she plans to rent out (she already owns her own house outright) and it's partly down to this forum and my doom laden conversations about the state of the economy, at first she dismissed my arguments as fringe and laughable but as events have unfolded she's got concerned that her substantial savings were loosing their value.

She did not want to risk her & her partners hard saved money on stocks/bond/PMs etc.. an she does not understand them, while she is certain there will always be a demand for nice flats. She said she will feel relieved once her money is transformed into the flat.

Before the grammar nazis pipe up. ;)

http://loseloose.com/

Share this post


Link to post
Share on other sites

My sister's just bought a flat she plans to rent out (she already owns her own house outright) and it's partly down to this forum and my doom laden conversations about the state of the economy, at first she dismissed my arguments as fringe and laughable but as events have unfolded she's got concerned that her substantial savings were loosing their value.

She did not want to risk her & her partners hard saved money on stocks/bond/PMs etc.. an she does not understand them, while she is certain there will always be a demand for nice flats. She said she will feel relieved once her money is transformed into the flat.

kindly ask you sister to:

- search for properties on the Right Move with the Property Bee in your area for last 3 days

- she will find out that usually 30% are price reductions; 30% are failed sales and 40% are new properties

- based on an average discount of £10k she needs to ask her self, how long it is going to take her to make £10k on her BTL ...

in general everything including South East and London is tanking ....

Share this post


Link to post
Share on other sites

If you're talking about risk, putting all your savings into a single, illiquid asset at time of economic uncertainty doesn't sound like sensible risk analysis, even if she does turn out to be correct.

+1, plus not only will be fully invested in housing, but also fully invested in Sterling, both of which could peel apart like a banana if the miracle economy falters...

Share this post


Link to post
Share on other sites

If you're talking about risk, putting all your savings into a single, illiquid asset at time of economic uncertainty doesn't sound like sensible risk analysis, even if she does turn out to be correct.

+2

Share this post


Link to post
Share on other sites

You'll find that not many people on this forum will:

1) understand your sister's thinking

2) acknowledge that lots of people think like her

3) realise that there seem to be enough people like her to sustain property prices

Estate agents I know tell me the market has been driven by cash ever since the credit crunch. No sign of the cash running out yet.

The upside of any cyclic market is essentially fueled by precisely the sentiments you list but eventually the sentiment ceases to backed by sufficient cash to keep it going. Cash availability (or lack of) leads sentiment in the cycle. So even given that (3) is true right now it doesn't undermine the fundamentally cyclic nature of the market.

Anyway, now is clearly a dreadful time to buy - she should at the very least wait a year until the effects of the budget cuts really start to bite. Also by that time a downward trend might have established itself and she might rethink.

Share this post


Link to post
Share on other sites

kindly ask you sister to:

- search for properties on the Right Move with the Property Bee in your area for last 3 days

- she will find out that usually 30% are price reductions; 30% are failed sales and 40% are new properties

- based on an average discount of £10k she needs to ask her self, how long it is going to take her to make £10k on her BTL ...

in general everything including South East and London is tanking ....

How do you know her plan is to make money by it increasing in value? If she bought it outright for cash then if she gets tenants in say even 50% of the time she is getting a quite a bit of extra income - probably lot more than the interest from the bank? So if the plan is to make money off the rent then its may not be a bad idea - if it all revolves around an increase in the value of the flat then yes indeed it may not be such a good idea....

Share this post


Link to post
Share on other sites

The upside of any cyclic market is essentially fueled by precisely the sentiments you list but eventually the sentiment ceases to backed by sufficient cash to keep it going. Cash availability (or lack of) leads sentiment in the cycle. So even given that (3) is true right now it doesn't undermine the fundamentally cyclic nature of the market.

Anyway, now is clearly a dreadful time to buy - she should at the very least wait a year until the effects of the budget cuts really start to bite. Also by that time a downward trend might have established itself and she might rethink.

yes, the UK property cycle is about 17 years ... another 15 years to new peak from 2007 ... no reason to buy this year at all ...

Share this post


Link to post
Share on other sites

How do you know her plan is to make money by it increasing in value? If she bought it outright for cash then if she gets tenants in say even 50% of the time she is getting a quite a bit of extra income - probably lot more than the interest from the bank? So if the plan is to make money off the rent then its may not be a bad idea - if it all revolves around an increase in the value of the flat then yes indeed it may not be such a good idea....

right now she can make 3 or 4% rental yield. in 2 years about 10%, I would not buy BTL this year for sure ...

Share this post


Link to post
Share on other sites

yes, the UK property cycle is about 17 years ... another 15 years to new peak from 2007 ... no reason to buy this year at all ...

OK so even if your right (which you arnt), where is the cash (principally credit actually) going to come from to keep prices rising for another 15 years ?. Anyway, 2009 was clearly a dead cat bounce engineered by the BOE and gov and it was a one-time stimulus since we cant lower IRs any further.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 259 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.