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Bad Time To Buy Property, Says Capital Economics

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http://www.mortgagestrategy.co.uk/economy/bad-time-to-buy-property-says-capital-economics/1023820.article

Buying residential property at the moment is unwise, says Capital Economics.

Paul Diggle, property economist at Capital Economics, says that growing fears over inflation and high house prices means house price rises can not be relied on.

He adds that residential property is currently a poor prospect for those looking for decent real terms capital gains over anything less than the very long-run.

Diggle says: “Real house prices look to be something like 20% too high relative to trend. If they fell by that amount over the next two to three years, it would take a further ten years of trend house price growth before investors broke-even in real terms.

“And that’s before factoring in mortgage interest payments, running costs, depreciation and the opportunity costs of the equity tied up in the property.”

He also warned that inflation will be more of a problem next year than either we or the Bank of England expects.

He goes on to talk about unemployment, inflation, real house prices, the Nationwide...

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The head line of this piece is all about 'residential' property meaning, to me, a nice cosy home to live in.

Then his angle is all about 'real term capital gain'.

He is an economist, so financial gain and loss is his bag, but is buying a residential property (i.e home) all about future price gain? Apparantly so. How 2005. How mercenary.

When can we expect an economist view looking from the currently house-less?

As a by-the-by, I'm glad his surname is Diggle and not mine.

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The head line of this piece is all about 'residential' property meaning, to me, a nice cosy home to live in.

Then his angle is all about 'real term capital gain'.

He is an economist, so financial gain and loss is his bag, but is buying a residential property (i.e home) all about future price gain? Apparantly so. How 2005. How mercenary.

When can we expect an economist view looking from the currently house-less?

As a by-the-by, I'm glad his surname is Diggle and not mine.

You have a good and valid point but would the currently house-less buy now if they knew house prices were, as he claims, 20% over-priced?

Of course, saying HPs are 20% over-priced and getting a seller down by that much are two different things.

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The head line of this piece is all about 'residential' property meaning, to me, a nice cosy home to live in.

Then his angle is all about 'real term capital gain'.

He is an economist, so financial gain and loss is his bag, but is buying a residential property (i.e home) all about future price gain? Apparantly so. How 2005. How mercenary.

When can we expect an economist view looking from the currently house-less?

As a by-the-by, I'm glad his surname is Diggle and not mine.

We also just need a simple little house - a home - to live in, and hopefully start a family. But if we pay a price too high for it (say 20% too high), it will take much longer to finish paying for it (more than 20% longer by the way, considering interest.)

Besides, if we get into negative equity we will be trapped in one location, and reduce our flexibility, regarding jobs for instance.

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  • 312 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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