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Cash Buyers Drive The Housing Market

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http://www.bbc.co.uk/news/business-13116262

Robert Bartlett, the chief executive of Chesterton Humberts estate agency, says the number of cash deals being done in the housing market is historically high.

"In certain regions, the proportion of cash buyers will be even higher than these figures suggest," he says.

"For example, in south-west England, I would say it is probably more like 50 to 55%.

"In some areas of London, it can be up to 80%," he adds.

The people driving this trend are "typically the Saga generation", according to independent housing expert, Henry Pryor.

"They are downsizing and pocketing a profit from previous housing booms, divorcees benefiting from financial settlements and foreigners or expats returning to the UK," he says.

He believes cash buyers are investing in property because they see it as one of the few investments which they can make money from and use at the same time.

"Putting the money in a bank account may be safe, but you will get a woeful return on it, while stocks and shares look like the two ugly sisters - leaving property as the Cinderella of the investment world," Mr Pryor says.

Seems pretty clear to me that this is clear evidence that prices are too high and first time buyers are unable to enter the market.

Adds up with the constantly reducing mortgage approvals data, and HEW figures showing £7bn a quarter spend on paying down mortgages.

Sentiment is terrible and it would seem to be only a matter of time before prices fall to levels that tempt FTB back.

Nice VI spin from "Henry Pryor" though, also "Teresa Taylor". Not sure how the obvious conclusion seems to be totally ignored. House prices are clearly unsustainably high.

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http://www.bbc.co.uk/news/business-13116262

Seems pretty clear to me that this is clear evidence that prices are too high and first time buyers are unable to enter the market.

Adds up with the constantly reducing mortgage approvals data, and HEW figures showing £7bn a quarter spend on paying down mortgages.

Sentiment is terrible and it would seem to be only a matter of time before prices fall to levels that tempt FTB back.

Nice VI spin from "Henry Pryor" though, also "Teresa Taylor". Not sure how the obvious conclusion seems to be totally ignored. House prices are clearly unsustainably high.

People will pretty soon start to run out of cash to buy houses with.

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I am one of those cash buyers, I've just bought a house for cash. I've been waiting for 18 months for a good enough deal for me to buy, now I think I've done that and got a small house for 45k.

I still expect prices to fall, but I'm fed up not having me own place.

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as a cash buyer in the last 6 months I would agree that cash in hand secures a good purchase price and a smooth transaction - and those are the ones that are going ahead without chains breaking etc.

the reasoning behind putting most of your cash into your home (speaking as someone who never saw property as an investment) is the dire returns on savings (and taxed on that return) and the feeling that even if property prices fall you will NEVER be in negative equity and can always buy your next house cheaper ;)

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Well my cash is staying in the bank.

4% per annum interest may not be a good return, but I'd rather that than lose 10%+ per annum on an illiquid, depreciating "asset".

As long as your rent is less than the interest you are getting.

For some people buying a house cash and living in it will make really good sense.

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As long as your rent is less than the interest you are getting.

For some people buying a house cash and living in it will make really good sense.

That is the calculation I've made - it is cheaper to buy than rent I've also been a bit worried of late holding so much cash, inflation is eating it away

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As long as your rent is less than the interest you are getting.

For some people buying a house cash and living in it will make really good sense.

My rent is less than the interest I'm getting.

But, even if it wasn't, I'd rather pay £10K a year in rent than lose £35K a year in capital depreciation.

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as a cash buyer in the last 6 months I would agree that cash in hand secures a good purchase price and a smooth transaction - and those are the ones that are going ahead without chains breaking etc.

the reasoning behind putting most of your cash into your home (speaking as someone who never saw property as an investment) is the dire returns on savings (and taxed on that return) and the feeling that even if property prices fall you will NEVER be in negative equity and can always buy your next house cheaper ;)

Your housing equity is being eroded by inflation and you have the prospect of increasing negative HPI being compounded onto that loss.

Halifax latest data + RPI, about a 8% loss, plus if HPI falls start to increase with inflation around the same you could be looking at 15%+ YOY falls on your equity. If the FED continue QE 3,4,5 etc then most likely your equity will buy you a tin of beans at the end.

Good luck.

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The devil is in the volumes.

I think this is the crux of it - transaction volumes have plummetted as sellers price expectations have far exceeded normal lending multiples, pricing out most buyers. At the same time, stock market uncertainty, low interest rates and high inflation have led people to put their cash into bricks and mortar.

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But, even if it wasn't, I'd rather pay £10K a year in rent than lose £35K a year in capital depreciation.

No disagreement there, but the thing about houses, as opposed to other forms of investment is that we all need somewhere to live. Perhaps some people would rather spend that £35k/year ( :huh: ) to secure schools for their children or just to get the missus off their back. To each their own, although I personally think it is bonkers.

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The people driving this trend are "typically the Saga generation", according to independent housing expert, Henry Pryor.

"They are downsizing and pocketing a profit from previous housing booms, divorcees benefiting from financial settlements and foreigners or expats returning to the UK," he says.

And who do these mystical 'cash buyers' rely on to buy their houses in order for them to downsize? Oh that's right, people upsizing and probably needing mortgages to do so. And who will buy their house? And so on down the chain...

Whichever way it is spun, the market requires overleveraged FTBs to support the ponzi.

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That is the calculation I've made - it is cheaper to buy than rent I've also been a bit worried of late holding so much cash, inflation is eating it away

If the cash was earmarked for a house, it's unlikely house price inflation would have been eating it away :unsure:

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this is VI spin at it's best, it's a completely biased article that ignores any risk or alternative point of view.

+1, and a good indication of why were in this mess.

Property spivs given space on state funded media to trot out such gems as:

cash buyers are investing in property because they see it as one of the few investments which they can make money from and use at the same time. and;

Putting the money in a bank account may be safe, but you will get a woeful return on it

Point 1 - you want to let it out and use it at the same time? :unsure:

Point 2 - unlike say, property which will yield 5% gross and probably less than 3% net.

The spin continues :(

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My rent is less than the interest I'm getting.

But, even if it wasn't, I'd rather pay £10K a year in rent than lose £35K a year in capital depreciation.

...the savvy that buy for cash or the majority in cash realise that, but it all depends how long they plan to live there to ride the curve, a forced sale before planned could make for a nasty loss......buying for the right reasons over the longer term would reduce the risks.

...renting is great for the flexibility it gives, if the price is right, the house is right and the owner is right. ;)

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+1, and a good indication of why were in this mess.

Property spivs given space on state funded media to trot out such gems as:

cash buyers are investing in property because they see it as one of the few investments which they can make money from and use at the same time. and;

Putting the money in a bank account may be safe, but you will get a woeful return on it

Point 1 - you want to let it out and use it at the same time? :unsure:

Point 2 - unlike say, property which will yield 5% gross and probably less than 3% net.

The spin continues :(

Although rental yield increases as the price falls :lol:. At least it does if you calculate yield on current market value, as you should.

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Some of the quotes are comedy gold- check this out from the Wilsons' neck of the woods:

Buy-to-let

Teaching assistant Teresa Taylor, aged 54, paid £113,000 in cash for a two-bedroom apartment in Ashford, Kent.

She plans to rent the flat out so she has an income from it when she retires.

Ms Taylor is confident in her investment despite the recent fall in house prices.

"We've seen it all before and when we look back, we say, 'If only we'd bought then,'" she says.

"I'm not looking to sell in the short term and who knows what is going to happen in the long term - I could lose it all on the stock market instead."

It is hilarious to see people compare two equally implausible scenarios and then make an investment decision based on the obvious- Either lose all my money in the stock market, or get an income from BTL. Hmm. I know..!

Hardly strikes you as someone who has done their homework.

EDIT. Fair to say Ashford is dripping with 2 bed flats for sale. Asking rents for 2-bed flats vary from £500-£800, which implies a gross yield of 5.3% to 8.5%. Is that really worth the risk? The top yield is fantasy as I doubt a place that rents for that much could be bought for £113k.

Edited by cheeznbreed

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as a cash buyer in the last 6 months I would agree that cash in hand secures a good purchase price and a smooth transaction - and those are the ones that are going ahead without chains breaking etc.

the reasoning behind putting most of your cash into your home (speaking as someone who never saw property as an investment) is the dire returns on savings (and taxed on that return) and the feeling that even if property prices fall you will NEVER be in negative equity and can always buy your next house cheaper ;)

you see, I understand your point about no return on cash and not being in negative equity, but my problem (and perhaps that of many like me) is that I don't quite have enough cash to buy a house without a mortgage, I could put 70% down but would have no savings left and still a 30k mortgage. I would feel more comfortable putting 50% to have some savings but still would need a mortgage this time 50%. So I am waiting, putting more money aside each year and hoping for prices to drop in the meantime. Yes I pay a rent but I would otherwise pay a mortgage and importantly, I am not spending anymore money on the house I rent. I could not live in a house like this if it was mine (and would be spending a lot of my money putting it right) but because it isn't my house I am not bothered.

Anyway, it is not a very pleasant situation, I would like to have my own house, I would like my kids to grow up in their own house, but I have been deprived from it by Labour and now the Tories, I am at their mercy but at least I am not a debt slave as well...

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No disagreement there, but the thing about houses, as opposed to other forms of investment is that we all need somewhere to live. Perhaps some people would rather spend that £35k/year ( :huh: ) to secure schools for their children or just to get the missus off their back. To each their own, although I personally think it is bonkers.

£35k/year to get your missus of your back... I would change missus!

£35k/year for a good school... I would spend £5k/year/child on private (primary) school! (obviously I would think again if I had 7 children, but then again with such an expensive missus, I probably wouldn't...)

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Some of the quotes are comedy gold- check this out from the Wilsons' neck of the woods:

It is hilarious to see people compare two equally implausible scenarios and then make an investment decision based on the obvious- Either lose all my money in the stock market, or get an income from BTL. Hmm. I know..!

Hardly strikes you as someone who has done their homework.

EDIT. Fair to say Ashford is dripping with 2 bed flats for sale. Asking rents for 2-bed flats vary from £500-£800, which implies a gross yield of 5.3% to 8.5%. Is that really worth the risk? The top yield is fantasy as I doubt a place that rents for that much could be bought for £113k.

Buy-to-let

Teaching assistant Teresa Taylor, aged 54, paid £113,000 in cash for a two-bedroom apartment in Ashford, Kent.

She plans to rent the flat out so she has an income from it when she retires.

Ms Taylor is confident in her investment despite the recent fall in house prices.

"We've seen it all before and when we look back, we say, 'If only we'd bought then,'" she says.

"I'm not looking to sell in the short term and who knows what is going to happen in the long term - I could lose it all on the stock market instead."

what is it about f*cking teachers - is the market being driven entirely and only by this profession having been grossly overpaid if they began before about 2003

all i hear about in this market - personally and on the web - is teachers getting into property in quite a big way, and acting as if they are de facto cleverer than everybody else. 'I teach RE/French/English therefore I am an investment God'. I get this sh*t from my family. Ye Gads.

does the over-confidence derive from being overpaid? i have never heard so much financially illiterate drivelk come from any other profession save council workers and EAs. FFS.

Edited by Si1

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what is it about f*cking teachers - is the market being driven entirely and only by this profession having been grossly overpaid if they began before about 2003

all i hear about in this market - personally and on the web - is teachers getting into property in quite a big way, and acting as if they are de facto cleverer than everybody else. 'I teach RE/French/English therefore I am an investment God'. I get this sh*t from my family. Ye Gads.

does the over-confidence derive from being overpaid? i have never heard so much financially illiterate drivelk come from any other profession save council workers and EAs. FFS.

:lol:

You'd think some of these people had no pension entitlement in the first place, such is the zesty appetite for alleviating their former pupils of hard-earned money. Pure unashamed greed. Perhaps you'd expect a teacher to be able to recognise the damage it does to a community, but I think a fair number of teachers are actually quite thick, especially where numbers are concerned. That's not to say they are bad teachers in thier subject though. I see the lady in the article is quoted as being an assistant however, so perhaps gold-plated retirement is not guaranteed in the same way as for the regulars.

However, in Ashford, it's the maths teachers you have to watch out for...

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  • 311 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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