What a difference a year makes

[TheCountOfNowhere]

"prices never even retraced to early 2005 "....errr, unless you count the 4 years of inflation, then there back to 2003.

Most of northants was stuck at 2004 levels (nominally) for 6 years, further north, 2002 levels, factor in inflation and it's lower than that.

There will be many ex-posters on here happy with their 2008 bubble collapsed price that they paid, prices that nominally they wont loose out on now, how can that now be crash ?

The biggest issue I found post 2007 was finding someone to sell to you at new market prices.  The market basically died.  As far as I can tell, it's still dead for most of the British population, the only people keeping it gong are speculators and foreigners. I personally offered sensible prices on several places and the owner just sat on the house for 1,2,3,4,5 years, then Osbornes re-inflation came.  Immediately 2007 were being paid and people have gone all in since.

But, if you look at UK prices in term of foreign currency or gold, house prices collapse 50%, they quite possible still are in many currencies.

This is the reality in this new global market place.

That is why British people are rallying against this new unfair global market place.

You can't just deny facts and arithmetic tho.

Nothing will change until there is a serious event.  

What that event is and when it will come is anyone's guess.

How it will play out for the British people in their own country is a worry too.

 

Edited June 21, 2017 by TheCountOfNowhere

[Sour Mash]

28 minutes ago, TheCountOfNowhere said:

"prices never even retraced to early 2005 "....errr, unless you count the 4 years of inflation, then there back to 2003.

Most of northants was stuck at 2004 levels for 6 years, further north, 2002 levels.

if you look at UK prices in term of foreign currency or gold, house prices collapse 50%

This is the reality in this new global market place.

That is why British people are rallying against this new unfair global market place.

You can't just deny facts and arithmetic tho.

'Massive crash'  - from a brief peak in mid 2007, that never even saw prices fall back to early 2005 levels by the time they bottomed out around a year and a half later.

Rebound end 2008/start 2009 back up to mid-2006 price levels by about 2010 and then three years hovering at that level.

Then steady, strong gains from the start of 2013 until the last few months, going well beyond even that mid 2007 peak.

 

Even had you bought at the mid-2007 peak, during that whole time period, interest rates plunged massively meaning servicing the debt bercame easier and easier, prices never dropped by more than about 20% (they were back to about 10% lower after a year and half) and if you could have held for around 7 years (not difficult with ZIRP) you were back appreciating strong capital growth.  That's with buying at the absolute 'peak' which just about anyone on this site would have said was utterly crazy and doomed to end in tears at that time.

Rising cost of living during that period did nothing to strengthen any imagined 'crash' - given that wages were heavily suppressed it made houses even more unaffordable if anything.

Remember, that graph starts in 2005 at which point prices were already long since considered to be ridiculously high.  Something going back to 2000 or the late 90s would really show the scale of non-crash even further.  We've had around 2 decades during which you could barely lose by buying property - maybe a 6-7 years period of potential losses by people who bought into the market in that one year between mid 2016 2006 and mid 2017 2006 and were forced to sell prior to mid-2014.

Edited June 21, 2017 by Sour Mash
extra info, corrected dates

[TheCountOfNowhere]

20 minutes ago, Sour Mash said:

'Massive crash'  - from a brief peak in mid 2007, that never even saw prices fall back to early 2005 levels by the time they bottomed out around a year and a half later.

Rebound end 2008/start 2009 back up to mid-2006 price levels by about 2010 and then three years hovering at that level.

Then steady, strong gains from the start of 2013 until the last few months, going well beyond even that mid 2007 peak.

 

Even had you bought at the mid-2007 peak, during that whole time period, interest rates plunged massively meaning servicing the debt bercame easier and easier, prices never dropped by more than about 20% (they were back to about 10% lower after a year and half) and if you could have held for around 7 years (not difficult with ZIRP) you were back appreciating strong capital growth.  That's with buying at the absolute 'peak' which just about anyone on this site would have said was utterly crazy and doomed to end in tears at that time.

Rising cost of living during that period did nothing to strengthen any imagined 'crash' - given that wages were heavily suppressed it made houses even more unaffordable if anything.

Remember, that graph starts in 2005 at which point prices were already long since considered to be ridiculously high.  Something going back to 2000 or the late 90s would really show the scale of non-crash even further.  We've had around 2 decades during which you could barely lose by buying property - maybe a 6-7 years period of potential losses by people who bought into the market in that one year between mid 2016 2006 and mid 2017 2006 and were forced to sell prior to mid-2014.

I'm not denying all of that, what I am saying is that you have to factor in inflation ( and deflation ) and a 20% to 50% nominal crash is still a hefty event, you cannot quite simply deny that.

I can see why people would see 30-50% real terms crashes as not a crash when their values have not really gone up but if they had bought gold/shares at the right time or werre living/earning abroad, they've seen one hell of a crash.

You are basing your "no crash" statement on your own experience/position. 

Everyone has a different perspective.

The people who bought my house in 2007 lost approx 20% (nominal prices ) + interest/fees/maintenance in 4/5 years, so maybe nearer 40% real world falls.  Try telling them there wasn't a crash.      

Edited June 21, 2017 by TheCountOfNowhere

[TheCountOfNowhere]

16 minutes ago, buckers said:

Stop trolling and get with the congregation

Healthy debate aint trolling, but as soon as he says he's throwing in the towel and buying...:lol:

I can see where SM is coming from but if you take the bubble levels are a generalization of north south east west then you cant just say there wa sno crash because prices down my street never changed.

Good to see the torys ( post election ) nail their colours to the mast and nsay the bubble needs to schemes to continue, what a bunch of corrupt banker/corporation/serving c***s.

 

 

[Toast]

I'm very much with Sour Mash on this one. For me to call a "crash" a crash, it has to:

1. Bring values (in this case price to earnings ratio) down to below long-term averages, so that prices are objectively cheap.
2. Make people lose their shirts. Crashes are painful for those who bought into the exuberance.
3. Destroy sentiment. People warn their children not to repeat their folly.
4. Mean that, despite being cheap, no-one wants to buy in, because they are terrified that prices will fall further.

By those measures, 2008/9 was not a crash: it was a blip. It certainly had the makings of crash (and this site was spot-on with predicting the financial melt-down that must arise from run-away credit, especially on housing), but the fire-hoses of liquidity were turned full-on, beyond any precendent, to stop it from being a crash. Three years earlier, in 2005, there were the first sparks and glimmers of a crash, but that was stamped out immediately by more conventional policies.

We have had 20 years without a crash in England. The "recovery" from the blip was different in different places: the South went on to new bubble highs, while the North (to a good approximation) just remained critically unaffordable with nobody buying or selling anything.

[Venger]

1 hour ago, buckers said:

Stop trolling and get with the congregation

Bash.  

No congregation.  

Just one view from one HPC member (TCoN).

SM not trolling, although I can't do anything about his dreaming about 'If I were a landlord' and hard-vetting of tenants to his rental properties. 

I don't agree with TCoN about this.  How can I after so many years more as a renter, and house prices 30%-40% above 2007 peaks in areas I track.

Although I have lot of hope for future change/HPC, unlike some.   BTLers have doubled down into it.  Numbskull anarchists, Generation Rent Forever outooks. and others chose their sides by lecturing how BTLers are the wise ones.

A hunter with a visible snare catches few rabbits.

Then came Section 24.   Also then came the BTL cheerleaders about the BTL wise ones, claiming them encouraged into it, when they were lecturing about their own BTL excellence and superior minds just before that.

[flb]

19 minutes ago, Toast said:

, while the North (to a good approximation) just remained critically unaffordable with nobody buying or selling anything.

Not true - the unaffordable part.

Before buying here, I was considering buying in Newcastle. It was incredibly cheap. I'm talking new build, 3 beds (house, obviously), garden, drive, 120k. Almost bought, but wife decided she didn't like the place (as in, the whole bloody town), so we eventually bought elsewhere (here).

...and that's Newcastle. If you go 20 miles outside of it, it's even cheaper (significantly cheaper).

I mean...when you say it's unaffordable, just how cheap would it have to be for you to consider it "affordable"?

P.S Also the entire lot sold in weeks (I think there were about 60 houses), so "nobody buying or selling anything" isn't true either.

Edited June 21, 2017 by flb

[TheCountOfNowhere]

17 minutes ago, Toast said:

I'm very much with Sour Mash on this one. For me to call a "crash" a crash, it has to:

1. Bring values (in this case price to earnings ratio) down to below long-term averages, so that prices are objectively cheap.
2. Make people lose their shirts. Crashes are painful for those who bought into the exuberance.
3. Destroy sentiment. People warn their children not to repeat their folly.
4. Mean that, despite being cheap, no-one wants to buy in, because they are terrified that prices will fall further.

By those measures, 2008/9 was not a crash: it was a blip. It certainly had the makings of crash (and this site was spot-on with predicting the financial melt-down that must arise from run-away credit, especially on housing), but the fire-hoses of liquidity were turned full-on, beyond any precendent, to stop it from being a crash. Three years earlier, in 2005, there were the first sparks and glimmers of a crash, but that was stamped out immediately by more conventional policies.

We have had 20 years without a crash in England. The "recovery" from the blip was different in different places: the South went on to new bubble highs, while the North (to a good approximation) just remained critically unaffordable with nobody buying or selling anything.

1. Like in NI and most places north of Birmingham you mean ?

2. Plenty lost out big time in 2007, I know a divorced couple who bought in Manchester off plan who can back that up

3, I tell my children ever day

4, You mean like everyone here.

Me thinks you live in the S,E,

[TheCountOfNowhere]

1 minute ago, flb said:

Not true - the unaffordable part.

Before buying here, I was considering buying in Newcastle. It was incredibly cheap. I'm talking new build, 3 beds (house, obviously), garden, drive, 120k. Almost bought, but wife decided she didn't like the place (as in, the whole bloody town), so we eventually bought elsewhere (here).

...and that's Newcastle. If you go 20 miles outside of it, it's even cheaper (significantly cheaper).

I mean...when you say it's unaffordable, just how cheap would it have to be for you to consider it "affordable"?

I think there's a certain S.E. biased in a lot of posts, they dont seem to want to factor in the rest of the country.  no one is forcing them to live there.

1 thing I think we all agree on is that prices are at dangerously high levels and way past the 2007 peaks in some areas, given that wages have gone south this is even less sustainable than it was in 2007.

[Toast]

2 minutes ago, flb said:

Not true - the unaffordable part.

 

1 minute ago, TheCountOfNowhere said:

Me thinks you live in the S,E,

OK, I'm very happy to be corrected on anything about the North, as I'm just relying on impressions from a distance (and Sancho Panza's charts of historical rightmove data).

I do indeed live in the South East, although I was abroad for a number of years and following the UK market from a distance.

However, you will always be able to find some people who got burned in any correction to a market, no matter how slight; but what we were nowhere near, was anything like the sentiment change, cheapness and people being trapped in their homes that followed the last crash in '89. That is very definitely my impression from the South - and I would be interested to hear from others if it were generally different further north.

[flb]

1 minute ago, TheCountOfNowhere said:

I think there's a certain S.E. biased in a lot of posts, they dont seem to want to factor in the rest of the country.  no one is forcing them to live there.

1 thing I think we all agree on is that prices are at dangerously high levels and way past the 2007 peaks in some areas, given that wages have gone south this is even less sustainable than it was in 2007.

They're only dangerously high in London and certain parts of the South East, with a few odd spots here and there in the rest of the country where houses go for 1M with no apparent reason.

Truth is, houses are only unaffordable if you're stupid - for example if you live in London but you're on a Newcastle salary. I know a few people in that position and can't imagine what the hell is keeping them in London. I wouldn't stay there on 32k...but they do. So of course it's "unaffordable" for them. But if they moved, they'd laugh all the way to their own home - overpriced as it may seem.

[Toast]

5 minutes ago, TheCountOfNowhere said:

I think there's a certain S.E. biased in a lot of posts, they dont seem to want to factor in the rest of the country.  no one is forcing them to live there.

I've got nothing against the North: I looked for jobs all over the UK before moving back to the. Unfortunately, nothing in my field came up, except in the South East. So in that sense, there was a bit of compulsion.

[TheCountOfNowhere]

2 minutes ago, Toast said:

However, you will always be able to find some people who got burned in any correction to a market, no matter how slight; but what we were nowhere near, was anything like the sentiment change, cheapness and people being trapped in their homes that followed the last crash in '89. That is very definitely my impression from the South - and I would be interested to hear from others if it were generally different further north.

I'll give you that, but even in the 1990s collapse not every lost their shirt, plenty I know lost a few quid but were able to take the hit.

How do you think people in NI dealt with 50% nominal falls ( 70% real ) ?

There were plenty people s**ting themselves for 5 years until Osborne the the insanity loose...I fear many if them will have taken it as a sigh you really cant lose on proprerty and gone all in.

The next phase of the collapse will be spectacular.

 

[Toast]

2 minutes ago, flb said:

They're only dangerously high in London and certain parts of the South East

Just to be clear: I would define affordability by salary multiples, not on whether one can afford the mortgage on current, multi-century-low interest rates.

I'm not saying that makes you wrong about the general affordability of houses outside the South East (and indeed the South West, where retirement homes and flight from London has pushed up prices so that affordability is horrendous by either measure), but that's the measure I would use.

[TheCountOfNowhere]

Just now, Toast said:

Just to be clear: I would define affordability by salary multiples, not on whether one can afford the mortgage on current, multi-century-low interest rates.

I'm not saying that makes you wrong about the general affordability of houses outside the South East (and indeed the South West, where retirement homes and flight from London has pushed up prices so that affordability is horrendous by either measure), but that's the measure I would use.

The bubble is back...make no mistake, only this time it's worse.

Will it collapse this year, there's a good chance...next year an even higher chance, 2019, an even bigger chance, 2020....I doubt it will make it that far.

I'm happy to rent for 4 years or leave the country.  Buying now is insanity.  Investing now, even greater insanity.

[Venger]

So many different views.

How many times have some of us had to push back to those who tip up, and many still active here (Rolex Collection Guy included, who just couldn't resist £5K new watch bargain for the collection), with all the 'be careful what you wish for' (as in HPC) type of positions.

If that's one of the 'different views' that get closed down by reasonable debate, then keep on bringing it, for however boring it is to some of us.

The forum (and other HPCers as individuals) has many members who refused to be complicit in Bubble 1.0.

There was a huge change with credit-crunch, but policy measures overrode it, and even encouraged a double-down Bubble 2.0 soon thereafter.   Wasn't helped by all those who claimed 'innocence of homeowners'.

It's not over yet.

Housing financialsation may have caused me many a problem in life (renting of landlords and HPI+++ extremes)... everything that comes with 2 months notice and amateur landlords who have put down 10% deposit and think themselves boss of housing.

There are greater stakes though to play for.  

On 3/5/2016 at 5:20 PM, anonguest said:

Firstly, I believe yes we have made quite a few preparations (financially speaking) to shelter us from a quite a flood - as have a great many. The fact is that, as history shows those who can see the madness for what it is, and take precautions, tend to survive more than those who do not. Whereas the financial zombies get completely eradicated.

But, as you say, it is indeed well possible that the 'flood' would exceed our expectations and not leave us completely untouched in some form or another (e.g. rising crime rates, etc). But then again are we not already 'touched', harmed and hard done by this ongoing financial madness? I would argue we, and our like, have already (unfairly!) suffered. So IF suffering should come to those who genuinely deserve it? GOOD! It cannot come too soon.

Using the fear tactic that you espouse (i.e. you too will get swept up in the flood) doesn't hold sway with me anymore.

What are you? Man or Mouse?

It has been said, in many different ways, in respect of personal liberty and freedom that it isn't 'free' - it has to, from time to time, be paid for in toil and blood. The same such applies to ensuring restoration of financial sanity to the world. IF I have to suffer some (more than already) to ensure a better world for my children and their children than I gladly do so.

What are you prepared to do?!

These personal stories of people, in this day and age, having to resort to living in vans utterly disgusts me with the 'system' and TPTB. Anyone who is not similarly disgusted simply does not grasp the significance.

If it doesn't you then I put it to you that you have started to lose some crucial essence of your decency and humanity.

Quite a few here are eager future BTLers.  HPI protectionists.  Bash the forum when they can as well with evidenced claims, such as 'chased off' , 'different opinions not allowed' (when much time and reasoning goes into replies against their curt little snipes against the forum).

Although I have took brunt of damaging HPI and housing financialistion (BTLers) I am not a HPCer for improving my own housing situation.  

Got younger family and the future in mind.   So even the 'HPC been wrong' can stow it - doesn't get to me - we couldn't do anything about the policy direction that was chosen (zirp/QE)... and many of us have good reasoning to believe it's partly to get banks into position so they can handle a future correction, for a wider housing fairness future.  Section24.

[Toast]

2 minutes ago, TheCountOfNowhere said:

How do you think people in NI dealt with 50% nominal falls ( 70% real ) ?

I agree that NI sounds like a real crash [and in my post I was careful to refer specifically (and perhaps even then, overambitiously), to England].

 

4 minutes ago, TheCountOfNowhere said:

There were plenty people s**ting themselves for 5 years until Osborne let the insanity loose

... yes, the process was definitely interruped before it had fully worked itself out.

 

5 minutes ago, TheCountOfNowhere said:

The next phase of the collapse will be spectacular.

Fingers crossed.

[TheCountOfNowhere]

1 minute ago, Venger said:

 

There are greater stakes though to play for.  

Quite a few here are eager future BTLers.  HPI protectionists.  Bash the forum when they can as well with evidenced claims, such as 'chased off' , 'different opinions not allowed' (when much time and reasoning goes into replies against their curt little snipes against the forum).

Although I have took brunt of damaging HPI and housing financialistion (BTLers) I am not a HPCer for improving my own housing situation.  

Got younger family and the future in mind.   So even the 'HPC been wrong' can stow it - doesn't get to me - we couldn't do anything about the policy direction that was chosen (zirp/QE)... and many of us have good reasoning to believe it's partly to get banks into position so they can handle a future correction, for a wider housing fairness future.  Section24.

Spot on Venger.  Better to take the hit now than be stuck in your "luxury apartment" while rome burns. 

I have kids and my main concern is for them now, housing/house prices is a false goal, the UK is facing some massive issues, everyone best deal with that how they see fit.

Buy a house, dont buy a house, who cares, if we then face young men being called up to war to support the parasites, then people will care.

Worrying times in the land of nowhere.

[flb]

13 minutes ago, Toast said:

Just to be clear: I would define affordability by salary multiples, not on whether one can afford the mortgage on current, multi-century-low interest rates.

I'm not saying that makes you wrong about the general affordability of houses outside the South East (and indeed the South West, where retirement homes and flight from London has pushed up prices so that affordability is horrendous by either measure), but that's the measure I would use.

Not having a go at you, but that's another typical British problem - a lot of people are only willing to work in a certain role.

Like I said, I recently bought. Because I work from home, I moved away from London (while keeping my London salary). I thought I was doing quite well (total mortgage is 3 times my yearly salary, monthly payment is ~18% of my salary). If the monthly payment somehow gets 4 times higher (can't imagine how, seeing how we've got fixed IR for 3 years), we can still get by on my salary alone (but she makes some money as well). By the end of that period (3 years), I'll be left with 50k to pay - hardly worried about it, even if they hike IR up to 10-15%.

The house we bought is fine, but my wife wants to get stuff done (getting rid of the wallpaper and painting and whatnot). Now here's the thing. We got quotes for that work. They vary between 5 and 7k total - 10 days.

So, I repeat: 2 guys (the ones we're going to go with), 10 days of work, ~6k total (minus ~223 pounds for gear/materials assuming they have nothing yet, which isn't true; I checked on the B&Q website). I also checked on youtube whether it's stuff I could (learn to) do and surprise-surprise, yes I could. It's quite easy in fact - although obviously it would take me longer to get things done.

Meanwhile, there are people I know who are still in London working on 28-35k/year and complaining that houses are unaffordable. When I hear them, all I can think about is "so move, you dense c**t". I didn't bother suggesting a different line of work (like painting or skimming or flooring or whatever), it's not my problem. The best part? You can learn all that on youtube in minutes/hours. Easy a.f with today's gear. Oh yeah - plenty of work like that to go around. Most of the people quoting us also mentioned they were already booked until September, so they couldn't start until then. Imagine that.

If I was stuck in a low paid role in the South East, I'd just move and do whatever kind of work paid more. But the people I'm talking about are instead just whining "bawww, housing is unaffordable!!!" while going to their dead-end boring job that barely pays enough to keep them in London...

Edited June 21, 2017 by flb

[Venger]

34 minutes ago, flb said:

They're only dangerously high in London and certain parts of the South East, with a few odd spots here and there in the rest of the country where houses go for 1M with no apparent reason.

Truth is, houses are only unaffordable if you're stupid - for example if you live in London but you're on a Newcastle salary. I know a few people in that position and can't imagine what the hell is keeping them in London. I wouldn't stay there on 32k...but they do. So of course it's "unaffordable" for them. But if they moved, they'd laugh all the way to their own home - overpriced as it may seem

 

 

Got the view that I have been far more productive to the economy than my elderly landlord has ever been, but he's the one who basically retired 17 years ago with 4-5 BTLs that have trebled in value, sat on £2m+ in housing wealth

Did you also know there are many people working on good money in London who are also massively priced out against house prices in London / SE.

Same is true for Manchester and Cheshire.

On 1/8/2017 at 5:56 PM, Bland Unsight said:

How in holy hell did somebody who was 18 in 2003 "make the bed"  they are expected to lie in come 2012, or 2017 for that matter, if that bed is in Ashford and they find out some puce-faced cretin has bought up literally hundreds of homes with mortgages that should never have been lent and (are now cluttering up the UKAR balance sheet)? And if your response to that is that they can go and live somewhere else, my question to you would be why the hell should they? Why is it OK for the mortgage lenders to transform themselves into insolvent incompetent predators and move millions of homes into the private rented sector?

 

Many BTLers have bought the nice houses in the areas to commute to central areas of employment opportunity.  Don't see why should go to Preston (with its 2004-05 priced housing) or wherever for 'value', away from family, friends, more employment opportunities.

things to do/nice places to eat... even if the BTLers/LL/HPIers get the easiest ride in enjoying all of that, for the moment, vs the rent-forever-losers against this HPI.

And prices are lower there... Preston etc (maybe a tell vs the extra surges of HPI++++ seen in many other areas) for good reasons.

Edited June 21, 2017 by Venger

[Toast]

4 minutes ago, flb said:

Not having a go at you, but that's another typical British problem

I think it's more a human tendency: people invest many years in developing skills, and more importantly, for quite a few people, skilled work is actually enjoyable and fulfilling. People like (and in some cases need) a social network and proximity to family and old friends. I think that commitment to a community, to "patria" in the local, Italian sense, is actually relatively weak in the English.

I agree that a fraction of people are mobile, and able to uproot themselves to make a new start, learn new skills, and seek opportunities far from home; even later in life - but I don't think that should be forced on the sizeable fraction of the population who would find that very painful. That fraction of the population is, I think, very large: it's a rarity (but forced on us by business and educational practices) for someone to want to leave their home region and social networks; and the South, where the housing affordability crisis is particularly acute, is also more populous than the North (which probably account for some of the SE bias here).

It's good that there are still nice places to live and work, even in the UK, if one is ready to re-locate - but I think it's wrong to suggest re-location as a general solution. Apart from anything else, if all the poor suckers from London upped sticks and moved to the NE (as you sort-of suggest), you'd have the devil of a time finding enough houses and jobs (of any kind) for them.

[flb]

4 minutes ago, Venger said:

Got the view that I have been far more productive to the economy than my elderly landlord has ever been, but he's the one who basically retired 17 years ago with 4-5 BTLs that have trebled in value, sat on £2m+ in housing wealth

I never argued whether you were more or less productive than anyone else, but I fail to see the relevance of that.

I'm sure you're also more productive than the Queen, but...what's that got to do with anything?

2 minutes ago, Toast said:

I agree that a fraction of people are mobile, and able to uproot themselves to make a new start, learn new skills, and seek opportunities far from home; even later in life - but I don't think that should be forced on the sizeable fraction of the population who would find that very painful. That fraction of the population is, I think, very large: it's a rarity (but forced on us by business and educational practices) for someone to want to leave their home region and social networks; and the South, where the housing affordability crisis is particularly acute, is also more populous than the North (which probably account for some of the SE bias here).

Like I said - it's a British thing.

You see, all that stuff you mentioned "community", "social networks" etc - that doesn't mean sh!t to me when my personal life and the good of family hangs in the balance. I'll move to the South Pole if I can offer my family a better life....but I'm not British.

4 minutes ago, Toast said:

It's good that there are still nice places to live and work, even in the UK, if one is ready to re-locate - but I think it's wrong to suggest re-location as a general solution.

Hey, if it's between paying rent for life in London and owning elsewhere, I personally think it's stupid to stay in London.

7 minutes ago, Venger said:

Did you also know there are many people working on good money in London who are also massively priced out against house prices in London / SE.

Then they're not on good money - they just think they are.

If people work in London and they're making below 60-65k, they're not too bright. If they're making above that, they can afford to buy (1 bed if they're single, proper home if they're a couple). In my current position, I wouldn't consider going back to London for below 100-120k.

[Venger]

27 minutes ago, flb said:

Not having a go at you, but that's another typical British problem - a lot of people are only willing to work in a certain role.

Like I said, I recently bought. Because I work from home, I moved away from London (while keeping my London salary). I thought I was doing quite well (total mortgage is 3 times my yearly salary, monthly payment is ~18% of my salary). If the monthly payment somehow gets 4 times higher (can't imagine how, seeing how we've got fixed IR for 3 years), we can still get by on my salary alone (but she makes some money as well). By the end of that period (3 years), I'll be left with 50k to pay - hardly worried about it, even if they hike IR up to 10-15%.

The house we bought is fine, but my wife wants to get stuff done (getting rid of the wallpaper and painting and whatnot). Now here's the thing. We got quotes for that work. They vary between 5 and 7k total - 10 days.

So, I repeat: 2 guys (the ones we're going to go with), 10 days of work, ~6k total (minus ~223 pounds for gear/materials assuming they have nothing yet, which isn't true; I checked on the B&Q website). I also checked on youtube whether it's stuff I could (learn to) do and surprise-surprise, yes I could. It's quite easy in fact - although obviously it would take me longer to get things done.

Meanwhile, there are people I know who are still in London working on 28-35k/year and complaining that houses are unaffordable. When I hear them, all I can think about is "so move, you dense c**t". I didn't bother suggesting a different line of work (like painting or skimming or flooring or whatever), it's not my problem. The best part? You can learn all that on youtube in minutes/hours. Easy a.f with today's gear. Oh yeah - plenty of work like that to go around. Most of the people quoting us also mentioned they were already booked until September, so they couldn't start until then. Imagine that.

If I was stuck in a low paid role in the South East, I'd just move and do whatever kind of work paid more. But the people I'm talking about are instead just whining "bawww, housing is unaffordable!!!" while going to their dead-end boring job that barely pays enough to keep them in London...

And I think, HPC the BTLers and the HPIers and the BTLer lecturers.

Maybe they are starting out on those wages, and want to make something of themselves.

Why should they go take their 3-5 year savings and put it down on a terrace in Preston or wherever.

You have a property somewhere outside the UK that you are landlord of and rent out.

Did you get around the extra SDLT thing in the end?

On 1/4/2017 at 0:35 AM, flb said:

Which (along with the fact that you're sticking to extremes) is why you fail to understand how things are.

My first landlord in the UK had over 100 properties. Most of them already paid for. By his own admission, the only reason for which he stopped buying more was that it was becoming too difficult to manage them. When I checked out, he was horribly late simply because ... he couldn't remember where that specific house was. No fantasy here. It sounds ridiculous when you think about it, how could one forget where his house was? But when you own that many...yeah, I can see it happening.

Not familiar with that. Either way, just like my first landlord, that's another extreme, not the average (more on that later)

Because it is, if you're doing it right (again, more on that later, with a personal example)

...and here you go again, assuming every BTL landlord is an idiot who gets a lot of places, most of which aren't paid for, so they're actually in (massive) debt, instead of having assets.

But here's the reality: most BTL landlords own 1-2-3 properties, bought at a fraction of their current value, with one of them usually paid off by now. If things go south, they can simply sell that one property and outlast the "storm" (HPC). That is, *IF* they even need to sell one - because usually the rent will cover the mortgage. Let's assume - for the sake of assuming that my current landlord didn't already pay off the mortgage here, on this flat he bought for 88k. (I know for a fact that he paid this off years ago, but let's assume that he didn't). Assuming it wouldn't already be paid off, he'd be looking at paying 300/month for this property...which I'm currently renting for 1100. Now let's ALSO assume that HPC does happen and that it happens tomorrow. Alright. He might be looking at paying 600/month out of the sudden. Rent might also drop a bit - but just a bit, you know this as well as I do (this is London, rents wouldn't go down by too much). So he'd only be left with 500/month profit (minus whatever taxes/expenses). Of course, it's unpleasant for him. But at the end of the day, he'll be fine.

Short version: because you're not losing anything if you don't need to sell. Because he doesn't lose 100k. He's not losing anything at all. Worst case scenario, he gets slightly less in rent....for a while.

Personal example.

I own a flat (in my country of origin). I bought it for ~90k. It's now worth 75k (after the local HPC). I've paid off my mortgage years ago. The flat is bringing in 300 euros/month (rent; used to be 450; once the current contract expires, it will be ~400). In theory, I've lost 15k. In reality, I've already recovered my loss (rent paid by the tenants so far). My dad's pension (after 45 years of work) is ~250 euros.

I've got roughly 60k in my bank account now. This means that if I went out and bought a similar  (slightly cheaper) flat there now (no mortgage, cash buyer), I'd be better off than my dad (again, after 45 years of work). I wouldn't even need to wait to hit retirement age. We're talking if I completely stopped doing anything, quit my current job etc.

Have prices crashed there? Yes, of course they did (at some point, my flat was worth 60k). Did it affect me? No. Why not? Because I didn't need to sell it. On paper, it could be worth 10k now - as long as I don't need to sell it and I just settle for collecting rent, its official value is largely irrelevant. I can afford to wait for 20-30-40 years before selling it - that is, if I ever decide to sell it.

I can buy one such flat every couple of years (cash, no mortgages). Do the math. 

It's the same thing here, in the UK, it's just that the amounts are different (prices are 4 times higher, but so are rents). 

Most people doing this BTL thing here already have one or more properties (fully paid for) and are getting more in rents than they need to pay the bank each month. Worse case scenario, they'll have lower profits for a while. As long as people live in their area and need to rent a place, they will have basically bought a place for 25% of its value - with the rest of it (75% + interest) paid for by the tenants. They're only screwed if the area they bought in takes a hit (think Stoke on Trent, Hull, that kind of irrelevant shithole). That's it.

If you STILL don't understand why BTL does work and why it's better than a pension, I can't help you. In my opinion, you need to take a step back and take a long, objective look at the whole picture. Give up on seeing this in "sides", it's turning you into a fanatic and you're the only one who's going to lose. 

 

All these 'different views' allowed on forum, back in April.

Landlords can ride it out (basically) if there is any downturn/change.  No HPC.  BTL works!!!

I read the forum and regularly notice how many members are so sweet on HPI/BTL.

Seems to me those who claim the forum doens't allow different views are often those who just want to oil-up and sing sweet BTL all the time, without any pushback from renter-savers/anti housing financialiastion members.

There are sides and plenty of people on the BTLers/HPI side.  They want to take over the forum without pushback.   Even the guy claiming 'congregation' a few posts up was a landlord.  Can bump the post easily enough.  And many others.

[flb]

1 minute ago, Venger said:

Maybe they are starting out on those wages, and want to make something of themselves.

 

Just starting? As in, 18-22 y/o? Then that's fine - they don't NEED a house now. In 5 years they might not even want to be there anymore or in the UK at all.

But if they've been "starting out" for 5-10 years and are still there, then they're making a mistake and it's only natural they should pay for it.

3 minutes ago, Venger said:

Why should they go take their 3-5 year savings and put it down on a terrace in Preston or wherever.

 

If it buys them a better life, why not?

3 minutes ago, Venger said:

You have a property somewhere outside the UK that you are landlord of and rent out.

Did you get around the extra SDLT thing in the end?

Of course. I wasn't about to throw close to 10k out the window. 

[flb]

45 minutes ago, Venger said:

All these 'different views' allowed on forum, back in April.

Landlords can ride it out (basically) if there is any downturn/change.  No HPC.  BTL works!!!

I read the forum and regularly notice how many members are so sweet on HPI/BTL.

Seems to me those who claim the forum doens't allow different views are often those who just want to oil-up and sing sweet BTL all the time, without any pushback from renter-savers/anti housing financialiastion members.

There are sides and plenty of people on the BTLers/HPI side.  They want to take over the forum without pushback.   Even the guy claiming 'congregation' a few posts up was a landlord.  Can bump the post easily enough.  And many others.

I'm not sure I understand what your point is. 

How are my views different from anything I've said or done?

I said that, in my opinion, BTL works and is better than a pension. And I bought since then. What's "different" now?

Wait, I think I got it. Are you saying that I said that different views aren't allowed? Because I really don't remember saying THAT. 

Edited June 21, 2017 by flb