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wish I could afford one

Uk House Price Growth Picks Up In December

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http://www.bbc.co.uk/news/business-35197410

BBC reporting prices up 0.8% in December and 4.5% in 2015. It seems that no matter what happens house prices are always going up every month. So I thought I'd go back and have a look at how big a 'financial' mistake I made by not lying on a mortgage application and buying an 'average Nationwide UK house' back when I first joined HPC in October 2007.

Nationwide House Prices:

October 2007 = £186,044

December 2015 = £196,999

I was surprised that the 'gains' are actually only £10,955 or 5.9% over an 8 year period.

In contrast my balanced portfolio of investments have returned 5.6% annualised over a similar period. That £186,044 would have become £286,172 in comparison.

Demonstrates nicely that the only thing that really makes BTL a sensible bet in the modern age is leverage and cheap debt. Both of which work well until they don't.

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Similar in Cornwall....

CWall_zpslep2kjvw.jpg

If you have been refinancing on the basis of the Daily Express front page for the last 7 years, then you might be in trouble. :lol:

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Similar in Cornwall....

CWall_zpslep2kjvw.jpg

If you have been refinancing on the basis of the Daily Express front page for the last 7 years, then you might be in trouble. :lol:

If I'm reading that right all Cornwall property has either stagnated or gone backwards. The only thing giving that All increase of 4% is sales mix. :lol:

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Similar in Cornwall....

CWall_zpslep2kjvw.jpg

If you have been refinancing on the basis of the Daily Express front page for the last 7 years, then you might be in trouble. :lol:

Where did you get the graph from? Looks interesting!

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If doing a comparison to buy to let, shouldn't you include rental income on top of the capital gain (with the rental income getting a stock market return)? Does your portfolio include reinvested dividends or just stock price increase?

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If doing a comparison to buy to let, shouldn't you include rental income on top of the capital gain (with the rental income getting a stock market return)? Does your portfolio include reinvested dividends or just stock price increase?

Assumed the rent would cover the mortgage, repairs, letting fees and voids. Maybe I've over cooked it somewhat.

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Ah, I thought your comparison was someone with £188k of capital, one who bought the average house (cash) and one who bought stocks/shares etc. Obviously if someone had 188k and bought 20k of property with the rent covering the morgatage, they would get the house capital gain (plus the rent money being added to the net worth), but also have £166k to buy stocks/shares.

There is of course tax, voids and maintenance to take off the rent, but I don't think it will be quite such a big difference as the original example suggests. Or am I missing something?

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Ah, I thought your comparison was someone with £188k of capital, one who bought the average house (cash) and one who bought stocks/shares etc. Obviously if someone had 188k and bought 20k of property with the rent covering the morgatage, they would get the house capital gain (plus the rent money being added to the net worth), but also have £166k to buy stocks/shares.

There is of course tax, voids and maintenance to take off the rent, but I don't think it will be quite such a big difference as the original example suggests. Or am I missing something?

If we use your example and have the £186k up front. What's the rental yield going to be, 5%? Take off maintenance, voids and fees of what 1%? You're right it's a much closer competition.

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The real difference is most people do not have £188k sloshing around to invest. How many can pull together a £20k deposit for a buy to let on leverage with cheap debt (or are accidental landlords).....

So,your original comment on what makes BTL a sensible bet in the modern age is correct. For many, it is the easy way to riches (until it goes wrong). I highly doubt anyone with £188k would invest it all in BTL even if the returns are close as there exposure is massive!

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I think the figures need to be inflation adjusted to compare investments across time.

Combine the data from the Nationwide average house prices adjusted for inflation Graph

and estimates from a UK Inflation Calculator - CPI and RPI

From October 2007 to March 2015

RPI: £186000 in 2007 is equivalent to holding ~£228916 in 2015

CPI: £186000 in 2007 is equivalent to holding ~£225390 in 2015

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The real difference is most people do not have £188k sloshing around to invest. How many can pull together a £20k deposit for a buy to let on leverage with cheap debt (or are accidental landlords).....

So,your original comment on what makes BTL a sensible bet in the modern age is correct. For many, it is the easy way to riches (until it goes wrong). I highly doubt anyone with £188k would invest it all in BTL even if the returns are close as there exposure is massive!

Without a detailed spreadsheet I was trying to do a quick assessment on whether my approach was actually a mistake compared to the many. In hindsight I've made a bit of an ar*e of it and really need to do some more detailed work if I'm going to answer the question. :)

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For the first time since its series began in 1983, a regional FTB P/E ratio has reached double figures (10.1 in Q4 2015 - London).

Nationwide_FTB_PE_London_Q42015.gif

[Nationwide defines the ratio as house price divided by mean gross earnings for a full time worker on adult rates.]

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The Land Registry November 2015 HPI statistical report is up, (I meant it is on their website, but it is up too).

  • London sales volumes still down YoY
  • Kensington and Chelsea up 0.3% MoM, down 1.4% YoY, Hillingdon up 1.5% MoM, 14.4% YoY :blink:
  • Repossession volumes are now staggeringly low, 463 per month. I think you need to go back to the 1970s to see such low repossession volumes, (see this parliamentary briefing paper for a long-run context, not entirely at ease with how these volumes are reported, more knowledgeable heads may need to add to that context)

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