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eric pebble

The Vi's Spin Spin Spin - But Houses Are Unaffordable To Most.

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I don't care what the VI's say or do - I stick by my guns. The madness may continue - although I see no sign accross much of the SW and SE UK - I see instead LOADS of unsold properties - ESPECIALLY the "new builds" - knocked up in a flash to take the money and run - but thousands of them sitting half built largely unsold.

- All you "First Time Buyers" out there - DO NOT NOT NOT NOT buy into this market: Do not sign your lives away. STAY OUT - THEY WANT YOU TO MAKE THAT FATAL MOVE TO BUY!!! THEN THEY'VE GOT YOU FOR EVER!!!! -- STAY OUT!!!!!!! The "Housing Market" is the Biggest Ever Pyramid Selling Scam -- it is a MASSIVE SCAM. Whatever you do, - just do not buy - i.e. join and THEREFORE HELP keep the whole Pyramid scam going!!!!

http://www.housepricecrash.co.uk/forum/ind...47entry152647

See all my posts - PLEASE please please do not make the mistake of buying into the World's Biggest Ever Pyramid Selling Scam.... the UK "Housing Market".

http://www.housepricecrash.co.uk/forum/ind...sult_type=posts

Edited by eric pebble

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I don't care what the VI's say or do - I stick by my guns. The madness may continue - although I see no sign accross much of the SW and SE UK - I see instead LOADS of unsold properties - ESPECIALLY the "new builds" - knocked up in a flash to take the money and run - but thoudands of them sitting half built largely unsold.

- All you "First Time Buyers" out there - DO NOT NOT NOT NOT buy into this market: Do not sign your lives away. STAY OUT - STAY OUT!!!!!!! The "Housing Market" is the Biggest Ever Pyramid Selling Scam -- it is a MASSIVE SCAM. Whatever you do, - just do not buy - i.e. join and THEREFORE HELP keep the whole Pyramid scam going!!!!

http://www.housepricecrash.co.uk/forum/ind...47entry152647

See all my posts - PLEASE please please do not make the mistake of buying into the World's Biggest Ever Pyramid Selling Scam.... the UK "Housing Market".

http://www.housepricecrash.co.uk/forum/ind...sult_type=posts

And I say so again!

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And I say so again!

During the great boom of the late 1920's many dodgy corporations were set up to take advantage.

In some cases their business models consisted of nothing more than buying their own shares, and using gearing to do so.

Prices went up.

People accepted these new "business" ideas because they made money.

When the bubble burst spectacularly in 1929 , the crowd turned against the "experts" who'd orchestrated the mess.

As usual while the party continued no-one cared about the abuses of the system.

Once the party stopped the witch hunt began.

It will happen again...

Edited by BandWagon

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There's no need to lie to get a mortgage Eric...

The Nationwide will now lend 4.25 x joint income.

http://www.thisismoney.co.uk/mortgages/mor...8&in_page_id=58

If a couple each earn £23k and have a £15k deposit they can borrow £195k and buy a house for over £200k.

The UK average house price is around £160k. (Nationwide)

If they borrow £160k and have no deposit they can buy the UK average house using a long term fixed rate loan.

A 25 year loan on £160k will be around £905pm. (4.7% IR)

Their takehome pay after tax will be around £2800pm which means their monthly mortgage repayments hit the 30% of take home pay target for affordability. Most couples will have a deposit which makes things easier.

A single person with a £15k deposit and £25k salary can borrow £106k and buy a small two bed terrace (UK typical) for £120k. Monthly repayments £600pm. Takehome pay £1600pm. Mortgage = 37.5% of salary.

They would be wise to go for a long term fixed rate loan (4.7%).

Affordability is OK at present. It's going to take a recession and much higher interest rates to start off a correction that causes nominal falls in prices. More likely, there will be small nominal falls and a more significant fall in prices when inflation adjusted.

This will be some years away. Probably the other side of the next general election.

In the future 2006 may well be seen as a 'reasonable' year to buy property because of the availability of long term (low) fixed rate mortgage deals.

Edited by Without_a_Paddle

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- All you "First Time Buyers" out there - DO NOT NOT NOT NOT buy into this market: Do not sign your lives away. STAY OUT - THEY WANT YOU TO MAKE THAT FATAL MOVE TO BUY!!! THEN THEY'VE GOT YOU FOR EVER!!!! -- STAY OUT!!!!!!! The "Housing Market" is the Biggest Ever Pyramid Selling Scam -- it is a MASSIVE SCAM. Whatever you do, - just do not buy - i.e. join and THEREFORE HELP keep the whole Pyramid scam going!!!!

See all my posts - PLEASE please please do not make the mistake of buying into the World's Biggest Ever Pyramid Selling Scam.... the UK "Housing Market".

But it's not a pyramid selling scam, is it eric?

At the end of the 25years you own the house assuming you are of the majority that opt for a repayment loan.

In a pyramid scam you put money in and it goes to those near the top of the pyramid and those at the bottom end up with NOTHING after 25yrs.

That type of scam sounds more like long term renting.

Add up the cost of 25 years of rent and 25 years of mortgage.

After 25 years see who owns a house (mortgage payer or renter) and see which one ends up with all their belongings stuffed into boxes and bin liners in the street at the end of the tenancy.

Edited by Without_a_Paddle

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But it's not a pyramid selling scam, is it eric?

At the end of the 25years you own the house assuming you are of the majority that opt for a repayment loan.

In a pyramid scam you put money in and it goes to those near the top of the pyramid and those at the bottom end up with NOTHING after 25yrs.

That type of scam sounds more like long term renting.

Add up the cost of 25 years of rent and 25 years of mortgage.

After 25 years see who owns a house (mortgage payer or renter) and see which one ends up with all their belongings stuffed into bin liners in the street at the end of the tenancy.

Buying a house to live in for the long term is a wise choice.

The issue is when is a good time to buy and when is it a bad time to buy?

After a run up in HPI of the order of 250% (according to recent Halifax news releases) it may be wise to consider if buying now would be getting in at the top of the market. If, as many believe, a correction always follows a sharp run-up in prices, it makes sense to buy after the market has fallen. That way you buy at a lower price and borrow less.

For the investor, it is a little simpler. You buy low and sell high. At this point in the cycle people who buy now are buying high.

I am renting a house for 750 a month in the West Midlands. I sold my house at the end of 2003 and deposited most of the proceeds into savings accounts and the world stock markets. According to the recent RICS report, house prices are still softening in the West Midlands. As a STM (sold to move) I have income from my sale proceeds that more than covers the rent and I am watching houses fall in price at the rate of at least 1000 pounds per month. For me, renting makes a lot of sense and it probably makes sense for nearly everyone. Even if houses in the West Midlands rose by 3% this year the income from investments will outpace this amount by at least 300% and my rent is cheaper than a commensurate mortgage.

Bottom line: weigh both sides of the issue. If owning your own house is emotionally important and you can afford to weather a sharp downturn in prices for a few years go ahead and buy. If you do not mind renting and would prefer to borrow less by waiting then wait.

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But it's not a pyramid selling scam, is it eric?

To be fair I think there are elements of a pyramid in parts of the market. A pyramid scheme usually involves selling worthless or hugely overvalued products, that no-one wants for their own sake, only for resale, at ever-increasing prices.

In the case of normal property (ie houses, decent flats) this clearly isn't the case. Fair enough they are overpriced, but they have a value that will persist over time, and most people here want to own one sooner or later. I think that even though many here sing the praises of renting for as long as their rent costs less than the interest on a mortgage, most would have to acknowledge that the purpose of doing that is to save a bigger deposit towards buying later. Maybe a flawed strategy, maybe not, but the aim is mostly to own in the end.

When it comes to the new-build craze I think you could argue differently. There are such huge numbers being bought as BTLs, or opportunities for flipping. They are being bought and traded not as homes, but as chips in an investment game. Would people really want these for their own sake? The value is inflated way beyond any sensible valuation, even against the rest of the market. Yes they will still have some value if that collapses, but I think there's a danger of a severe correction in the urban new-build market.

Bottom line: weigh both sides of the issue. If owning your own house is emotionally important and you can afford to weather a sharp downturn in prices for a few years go ahead and buy. If you do not mind renting and would prefer to borrow less by waiting then wait.

And there's some good advice making a similar point - for those who are renting now, it is a strategic move and may be a good one if prices fall far enough, and fast enough. That's the gamble. I'm gambling the other way, but either gamble might pay off.

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Their takehome pay after tax will be around £2800pm which means their monthly mortgage repayments hit the 30% of take home pay target for affordability. Most couples will have a deposit which makes things easier.

A single person with a £15k deposit and £25k salary can borrow £106k and buy a small two bed terrace (UK typical) for £120k. Monthly repayments £600pm. Takehome pay £1600pm. Mortgage = 37.5% of salary.

They would be wise to go for a long term fixed rate loan (4.7%).

Affordability is OK at present.

Once again, "affordability" is figured by considering only mortgage repayment. What about all the other costs of home ownership: taxes (rates), insurance, and upkeep? The couple in your example will be paying much more than 30% of their take home pay for housing.

Here's a quick explanation of these additional costs, from an article entitled "The Money Pit: The True Cost of Home Ownership." (http://www.thinkglink.com/True_Cost_of_Homeownership.htm)

When you purchase your first home, you’ll be responsible for mortgage payments of principal and interest, paid monthly, or bi-monthly, if you have a loan that requires you to make payments every other week; real estate taxes, paid annually or in two installments, or paid monthly with the mortgage, if you escrow your insurance and taxes; homeowner's insurance, paid monthly with the mortgage, if you escrow your insurance and taxes, but sometimes paid separately from the mortgage in an annual or semiannual premium; and, homeowner’s assessments or co-op monthly assessments.

Those are the big expenses that most first-time buyers expect. But don’t forget utility payments, including electricity, gas, cable, satellite, internet access, and perhaps Tivo; trash and garbage collection, including recycling as required by your local municipality; water and sewage; repairs and maintenance of the interior and exterior of the home (which includes everything from washing windows to replacing the roof, to painting the interior and exterior); landscaping and grounds maintenance (including driveway resurfacing, as needed, plus all the regular stuff); and snow removal (for those living in colder climates).

How do you plan for these costs? You’ll know how much your mortgage payment, homeowner’s insurance premium and taxes will be from the get-go. If your new house is about the same size as your old one, you can assume your utility bills will be similar. If the house is bigger, start multiplying.

But it’s the maintenance costs that are hard to estimate. A new roof can cost $3,000 or $30,000. If you have to put in a new sewage line, it can run $15,000. Fixing the washing machine can cost $100 for the visit or up to $1,300 to replace the machine if it’s unfixable.

The best way to be ready for the cost of owning and maintaining your home is to plan for it.

Depending on the size of your house, you’ll probably spend between $2,000 to $6,000 each year maintaining it. Some years, the total you spend will be less, perhaps because you don’t have any major expenses. And then in other years, when you have to repaint the interior or replace the carpet, you might spend more.

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Buying a house to live in for the long term is a wise choice.

The issue is when is a good time to buy and when is it a bad time to buy?

I am renting a house for 750 a month in the West Midlands. I sold my house at the end of 2003 and deposited most of the proceeds into savings accounts and the world stock markets. According to the recent RICS report, house prices are still softening in the West Midlands. As a STM (sold to move) I have income from my sale proceeds that more than covers the rent and I am watching houses fall in price at the rate of at least 1000 pounds per month. For me, renting makes a lot of sense and it probably makes sense for nearly everyone. Even if houses in the West Midlands rose by 3% this year the income from investments will outpace this amount by at least 300% and my rent is cheaper than a commensurate mortgage.

Well, since 2003 UK house prices have risen by around 25%. So a house sold for £200k in 2003 will now be £250k.

That's a £50k loss to a STR. Add three years (cheap?) rent at £750pm and thats another £27k lost.

However, if you get your crash in 5 years and you get a corresponding fall then the £50k loss gets wiped clean as you can buy again for the same price.

But you have to factor in another 5 years of future rent. =£50k typ?

Add in buying/selling/moving costs (including two tenancy moves) and you can kiss goodbye to another £15k (don't forget stamp duty is in this figure)

So you would have to make that £200k grow to 200+27+50+15= £292k in 8 years.

Far from impossible on the stock market but certainly impossible if you just stuck it in the bank.

If you split this between the two options then you could at least hope to break even. However, I doubt this approach could be recommended to the average person in the street.

If house prices correct in real (inflation corrected) terms instead of nominal terms then you may struggle to break even in 5 years.

You have done well so far, can you keep it up for another 5 years? What if you lost £30k on the SM in a stock market downturn? This can happen overnight...

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There's no need to lie to get a mortgage Eric...

The Nationwide will now lend 4.25 x joint income.

http://www.thisismoney.co.uk/mortgages/mor...8&in_page_id=58

If a couple each earn £23k and have a £15k deposit they can borrow £195k and buy a house for over £200k.

The UK average house price is around £160k. (Nationwide)

If they borrow £160k and have no deposit they can buy the UK average house using a long term fixed rate loan.

A 25 year loan on £160k will be around £905pm. (4.7% IR)

Their takehome pay after tax will be around £2800pm which means their monthly mortgage repayments hit the 30% of take home pay target for affordability. Most couples will have a deposit which makes things easier.

A single person with a £15k deposit and £25k salary can borrow £106k and buy a small two bed terrace (UK typical) for £120k. Monthly repayments £600pm. Takehome pay £1600pm. Mortgage = 37.5% of salary.

They would be wise to go for a long term fixed rate loan (4.7%).

Affordability is OK at present. It's going to take a recession and much higher interest rates to start off a correction that causes nominal falls in prices. More likely, there will be small nominal falls and a more significant fall in prices when inflation adjusted.

This will be some years away. Probably the other side of the next general election.

In the future 2006 may well be seen as a 'reasonable' year to buy property because of the availability of long term (low) fixed rate mortgage deals.

:lol::lol:

So there's no need to lie to get a 4.25x mortgage.

Please Think what you are saying.

Interest rates go to 6% salary decreases. How do you P A Y the mortgage?

And these fixed rate deals, I know 3 people all having trouble obtaining these.

You say nationwide will offer 4.25x for 10years? 25years? at 4.7% I will enquire (thank you if you are right)

There was good reasons why there was a MAXIMUM 3.5X salary mortgage.

Why do you think that was?

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Once again, "affordability" is figured by considering only mortgage repayment. What about all the other costs of home ownership: taxes (rates), insurance, and upkeep? The couple in your example will be paying much more than 30% of their take home pay for housing.

Here's a quick explanation of these additional costs, from an article entitled "The Money Pit: The True Cost of Home Ownership." (http://www.thinkglink.com/True_Cost_of_Homeownership.htm)

When you purchase your first home, you’ll be responsible for mortgage payments of principal and interest, paid monthly, or bi-monthly, if you have a loan that requires you to make payments every other week; real estate taxes, paid annually or in two installments, or paid monthly with the mortgage, if you escrow your insurance and taxes; homeowner's insurance, paid monthly with the mortgage, if you escrow your insurance and taxes, but sometimes paid separately from the mortgage in an annual or semiannual premium; and, homeowner’s assessments or co-op monthly assessments.

Those are the big expenses that most first-time buyers expect. But don’t forget utility payments, including electricity, gas, cable, satellite, internet access, and perhaps Tivo; trash and garbage collection, including recycling as required by your local municipality; water and sewage; repairs and maintenance of the interior and exterior of the home (which includes everything from washing windows to replacing the roof, to painting the interior and exterior); landscaping and grounds maintenance (including driveway resurfacing, as needed, plus all the regular stuff); and snow removal (for those living in colder climates).

How do you plan for these costs? You’ll know how much your mortgage payment, homeowner’s insurance premium and taxes will be from the get-go. If your new house is about the same size as your old one, you can assume your utility bills will be similar. If the house is bigger, start multiplying.

But it’s the maintenance costs that are hard to estimate. A new roof can cost $3,000 or $30,000. If you have to put in a new sewage line, it can run $15,000. Fixing the washing machine can cost $100 for the visit or up to $1,300 to replace the machine if it’s unfixable.

The best way to be ready for the cost of owning and maintaining your home is to plan for it.

Depending on the size of your house, you’ll probably spend between $2,000 to $6,000 each year maintaining it. Some years, the total you spend will be less, perhaps because you don’t have any major expenses. And then in other years, when you have to repaint the interior or replace the carpet, you might spend more.

you forgot to paste this bit...

The easiest way to build your house maintenance fund is to set aside the cash each month when you get paid. Putting $200 each month into a special savings account means that when your house needs work, you’ll already have the cash on hand.

$200 is around £120 a month.

So for the couple taking home £2800pm who bought without a deposit, it means another £120pm is needed for a rainy day fund.

Big deal.

My house is in good shape and it has been easy to maintain because I chose wisely when I bought it. I have done nearly all maintenance/decorating myself for the cost of materials. Peanuts.

The only things I don't touch are heating/plumbing. I get professionals in for that. Only needed the plumber once in 11yrs. The gas man needed maybe 5 times for appliance checks/repairs. I paid someone to put a new kitchen floor in a few years back.

Any sewage repairs are shared across all property owners in the street regardless of where the fault lies.

Had to pay £5 (a fiver) once to pay for a sewage inspection using a camera probe gizmo down the street drainage system. (everyone paid £5)

You really are boring WAP

Don't knock it! I made you laugh didn't I?

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Well, since 2003 UK house prices have risen by around 25%. So a house sold for £200k in 2003 will now be £250k.

That's a £50k loss to a STR. Add three years (cheap?) rent at £750pm and thats another £27k lost.

However, if you get your crash in 5 years and you get a corresponding fall then the £50k loss gets wiped clean as you can buy again for the same price.

But you have to factor in another 5 years of future rent. =£50k typ?

Add in buying/selling/moving costs (including two tenancy moves) and you can kiss goodbye to another £15k (don't forget stamp duty is in this figure)

So you would have to make that £200k grow to 200+27+50+15= £292k in 8 years.

Far from impossible on the stock market but certainly impossible if you just stuck it in the bank.

If you split this between the two options then you could at least hope to break even. However, I doubt this approach could be recommended to the average person in the street.

If house prices correct in real (inflation corrected) terms instead of nominal terms then you may struggle to break even in 5 years.

You have done well so far, can you keep it up for another 5 years? What if you lost £30k on the SM in a stock market downturn? This can happen overnight...

Yeah but, no but, shut up! :lol:

You have to remember that I moved to the West Midlands where house prices have done virtually nothing since mid 2004 and actually fell in 2005 and are still going down.

If you take a decent 350k detached house in late 2003 it may have hit 375 at the peak in early 2004. Rolling back slightly in 2005 by about 5% to 356k and another 7% in 2006 (at the very least--down 5% so far this year around here) you are down to 331k. Or about 20k better than where we were when I sold (I moved from overseas so its hypotheitical). IN the meantime my STR funds have risen by about 30k which, together with the 20k drop in prices gives me 50k or enough to have covered 66 month's rent!

But the real prize comes when the house prices gain momentum to the downside. A modest drop of 7% this year in the Midlands will net 2k a month (7% on a 350k house) plus my STM funds bringing in about 2k a month gives me positive cash flow of 4k a month. If owned the house I am renting my mortgage would probably be quite small due to the equity I would have at around 500 pounds a month. I am paying 250 more in rent but the income from the proceeds of my sale are outpacing that by around 800%.

So for many STRs and STMs renting can be a nice earner. It only works if the market is falling or your proceeds are making more than the rate of housing inflation which is not hard to do these days.

I plan to start looking for a house a couple of years into the crash when the 350k house has corrected by around 40% down to 210k. 33% more to go over the course of the next couple of years.

End result is a decent detached house for around 210k. After buying for cash there is 100k of former proceeds still in bank plus accumulated income from renting (1250 a month after deducting 750 rent) which should be another 45k over the course of 3 years. About 150k better off overall. Just the cost of moving into a house when I buy but then I would have done that anyway so its not a loss.

Add into the equation the intense satisfaction of actually making money as the market falls and having the security of a tidy income from the proceeds as you enjoy a nice rental for a low rent (our house has a current MV of around 300k--we got a very good deal rent-wise).

STR/STM can make a lot of sense.

Also.....

While renting for 3-5 years you have ZERO maintenance costs and minimal contents insurance.

What are the chances of some brisk falls in HPI in the West Midlands? :

http://news.ft.com/cms/s/ab32a49c-ce77-11d...00779e2340.html

"Northern England, the Midlands and Wales, in particular, had seen a marked rise in new instructions to sell property. These regions had suffered the largest rises in unemployment over the past year, said RICS."
Edited by Realistbear

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:lol::lol:

So there's no need to lie to get a 4.25x mortgage.

Please Think what you are saying.

Interest rates go to 6% salary decreases. How do you P A Y the mortgage?

And these fixed rate deals, I know 3 people all having trouble obtaining these.

You say nationwide will offer 4.25x for 10years? 25years? at 4.7% I will enquire (thank you if you are right)

There was good reasons why there was a MAXIMUM 3.5X salary mortgage.

Why do you think that was?

probably because this rule was dreamt up when IRs were higher and were very volatile due to a different monetary policy employed by the treasury.

Look at UK rates over the 1970s and 1980s and you will see a rollercoaster. After 1996 rates are much more stable. (since the Treasury started targetting inflation)

Yes you have a point about 10yr fixed rate loans. You probably need at least a 5% deposit.

eg

Woolwich (Barclays): 10 years fixed at 4.67%

Arrangement fee: £495

Redemption charges:Yes. 4% of balance until the end of the fixed rate term

Overpayment facility:Yes. 5% per year

Flexibility: Yes, payment holidays available.

Portable: Yes

Loan to value amount (LTV): 95%

Woolwich Building Society

Still not a bad deal...

here's another..

Costs: £449 arrangement fee, valuation fee (max £525) is refunded on completion, customer receives free legals on a reportage, HLC is free up to 90%, charged at 9% above this (up to 95%)

Early redemption: Yes. 6% of amount repaid until 31/03/12, 5% until 31/03/13, 4% until 31/3/14, 3% until 31/03/15, 2% until 31/03/16 plus interest to the end of the month

Overpayment facility:Yes. Up to 10% per year.

Flexible: Yes. Overpay and underpay facility and payment holidays can be taken.

Portable: Yes

Loan to value amount: 95% LTV

West Bromwich Building Society

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Yeah but, no but, shut up! :lol:

You have to remember that I moved to the West Midlands where house prices have done virtually nothing since mid 2004 and actually fell in 2005 and are still going down.

If you take a decent 350k detached house in late 2003 it may have hit 375 at the peak in early 2004. Rolling back slightly in 2005 by about 5% to 356k and another 7% in 2006 (at the very least--down 5% so far this year around here) you are down to 331k. Or about 20k better than where we were when I sold (I moved from overseas so its hypotheitical). IN the meantime my STR funds have risen by about 30k which, together with the 20k drop in prices gives me 50k or enough to have covered 66 month's rent!

But the real prize comes when the house prices gain momentum to the downside. A modest drop of 7% this year in the Midlands will net 2k a month (7% on a 350k house) plus my STM funds bringing in about 2k a month gives me positive cash flow of 4k a month. If owned the house I am renting my mortgage would probably be quite small due to the equity I would have at around 500 pounds a month. I am paying 250 more in rent but the income from the proceeds of my sale are outpacing that by around 800%.

So for many STRs and STMs renting can be a nice earner. It only works if the market is falling or your proceeds are making more than the rate of housing inflation which is not hard to do these days.

I plan to start looking for a house a couple of years into the crash when the 350k house has corrected by around 40% down to 210k. 33% more to go over the course of the next couple of years.

End result is a decent detached house for around 210k. After buying for cash there is 100k of former proceeds still in bank plus accumulated income from renting (1250 a month after deducting 750 rent) which should be another 45k over the course of 3 years. About 150k better off overall. Just the cost of moving into a house when I buy but then I would have done that anyway so its not a loss.

Add into the equation the intense satisfaction of actually making money as the market falls and having the security of a tidy income from the proceeds as you enjoy a nice rental for a low rent (our house has a current MV of around 300k--we got a very good deal rent-wise).

STR/STM can make a lot of sense.

Also.....

While renting for 3-5 years you have ZERO maintenance costs and minimal contents insurance.

What are the chances of some brisk falls in HPI in the West Midlands? :

http://news.ft.com/cms/s/ab32a49c-ce77-11d...00779e2340.html

"Northern England, the Midlands and Wales, in particular, had seen a marked rise in new instructions to sell property. These regions had suffered the largest rises in unemployment over the past year, said RICS."

So let's get this straight.

You are saying that a £350k house in the Midlands (Stratford?) is going to fall to £210k in the next few years.

You say in the next 2 years. I assume £350k gets a nice 4 bed detached for that with double garage etc.

This will take quite a hike in IRs and a huge increase in unemployment.

I would assume a typ 3 bed semi would fall from £180k to £108k.

So, to get similar affordability compared to today, the mortgage rates would have to go up to something like 11%

This doesn't even allow for the real falls in prices due to 2 years of wage inflation.

You are in a dream world RB if you think mortgage rates are going to hit 11% and wage inflation is going to stay flat AND house prices are going to fall 40% nominally in the next few years.

However, it's a nice dream, I would profit from it immensely as I have no debt and could buy the £210k 4 bed detached house for cash and keep my current (OO) house to rent out. I'd spend the rest of my cash on deposits for more property.

So for many STRs and STMs renting can be a nice earner. It only works if the market is falling or your proceeds are making more than the rate of housing inflation which is not hard to do these days.

If I STR my current house (paid for) I would also have to make enough returns to pay for my rent, the selling and buying fees, stamp duty, moving fees etc etc.

If I had done this in 2003 and banked the cash I would be losing heavily after the interest was taxed. I'm a 40% taxpayer and I would guess you are too.

Edited by Without_a_Paddle

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So let's get this straight.

You are saying that a £350k house in the Midlands (Stratford?) is going to fall to £210k in the next few years.

You say in the next 2 years. I assume £350k gets a nice 4 bed detached for that with double garage etc.

This will take quite a hike in IRs and a huge increase in unemployment.

I would assume a typ 3 bed semi would fall from £180k to £108k.

So, to get similar affordability compared to today, the mortgage rates would have to go up to something like 11%

This doesn't even allow for the real falls in prices due to 2 years of wage inflation.

You are in a dream world RB if you think mortgage rates are going to hit 11% and wage inflation is going to stay flat AND house prices are going to fall 40% nominally in the next few years.

However, it's a nice dream, I would profit from it immensely as I have no debt and could buy the £210k 4 bed detached house for cash and keep my current (OO) house to rent out. I'd spend the rest of my cash on deposits for more property.

If I STR my current house (paid for) I would also have to make enough returns to pay for my rent, the selling and buying fees, stamp duty, moving fees etc etc.

If I had done this in 2003 and banked the cash I would be losing heavily after the interest was taxed. I'm a 40% taxpayer and I would guess you are too.

You would not need a 200% increase in mortgage rates to see a deepening crash in the West Midlands. The level of debt already incurred by buyers going in over their heads and the fact that many have taken out cheap intro levels means that a small increase will cause some heavy selling. With the BoJ increases starting to filter through and more hikes on the way I think a 2% increase is likely within 6 months to a year. With many on the knife edge and barely affording council tax/fuel another blow from IR hikes will be enough to cause some distress selling. In fact, I would not be surprised if the reposession rates are not already headed up in the UK by at least 20% over 2005.

But its not just IR. Unemployment is rising rapidly in the Midlands and the closure of Peugeot will start to take an effect very soon as people sell in anticipation of redundancy. The demise of Rover is still working its way through also and there is not much doubt that we are at the beginning of the down cycle for employment.

For the Midlands, STR is a very smart move. Buying now makes no sense at all.

You would not need a 200% increase in mortgage rates to see a deepening crash in the West Midlands. The level of debt already incurred by buyers going in over their heads and the fact that many have taken out cheap intro levels means that a small increase will cause some heavy selling. With the BoJ increases starting to filter through and more hikes on the way I think a 2% increase is likely within 6 months to a year. With many on the knife edge and barely affording council tax/fuel another blow from IR hikes will be enough to cause some distress selling. In fact, I would not be surprised if the reposession rates are not already headed up in the UK by at least 20% over 2005.

But its not just IR. Unemployment is rising rapidly in the Midlands and the closure of Peugeot will start to take an effect very soon as people sell in anticipation of redundancy. The demise of Rover is still working its way through also and there is not much doubt that we are at the beginning of the down cycle for employment.

For the Midlands, STR is a very smart move. Buying now makes no sense at all.

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Not sure where this goes on the thread but one of the people interviewed at the Peugeot factory said she'd recently bought a new house and that she would be putting it on the market tomorrow.

She sounded like a STR. Probably be joining this site sometime soon.

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you forgot to paste this bit...

$200 is around £120 a month.

So for the couple taking home £2800pm who bought without a deposit, it means another £120pm is needed for a rainy day fund.

Big deal.

My house is in good shape and it has been easy to maintain because I chose wisely when I bought it. I have done nearly all maintenance/decorating myself for the cost of materials. Peanuts.

The only things I don't touch are heating/plumbing. I get professionals in for that. Only needed the plumber once in 11yrs. The gas man needed maybe 5 times for appliance checks/repairs. I paid someone to put a new kitchen floor in a few years back.

Any sewage repairs are shared across all property owners in the street regardless of where the fault lies.

Had to pay £5 (a fiver) once to pay for a sewage inspection using a camera probe gizmo down the street drainage system. (everyone paid £5)

Don't knock it! I made you laugh didn't I?

That 120-pounds-a-month would be what the homeowners would have to spend on maintenance in a good year. I've always heard (and my experience has borne this out) that home owners should annually expect to spend about 1% of the current value of their home on home repairs and maintenance. So, on a 200,000-pound house, that would be 2,000 pounds per year. Some years it would be a bit more, some years a bit less. And that doesn't include rising property taxes, insurance costs, etc.

One of the reasons friends of mine buy condos is so they don't have to pay these expenses. But then you have always-rising monthly condo fees (used to pay maintenance costs, taxes, etc.), and you can be suddenly and unexpectedly assessed a huge amount should the condo building require major repairs, like an elevator upgrade or new roof.

If you don't make home repairs, or do them on the cheap, when you come to sell your home, the price will reflect your neglect. WAP: You may have "bought well," but the price you paid for your property reflected the good upkeep done by the previous owners.

As I have said many times before, most people only consider mortgage payments when they buy their homes. This is a huge mistake.

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The issue is when is a good time to buy and when is it a bad time to buy?

Ah, the quintessential bear error.

The only issue is when is a "bad time" to sell. That's the only point at which anyone really cares about a "crash", real or perceived, and is affected by it. Short-term speculators are potentially exposed to this. Long-term owner occupiers (the vast majority of property owners) are not.

Edited by Seamaster

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Eric, as for your initial post, what utter BS.

If a Bullish poster wrote a post phrased like that, the Awooga's would be howling and the post would be moved. You do your argument no favours.

As for the "You must be telling porkies to afford it" No mate. I was honest when I bought my new house (been in it 3 weeks now) and AFFORDABILITY is fine. Same story for 99% of homeowners and those "Trading up" to bigger homes.

Seriously, have a word with yourself fella. :rolleyes:

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I don't care what the VI's say or do - I stick by my guns. The madness may continue - although I see no sign accross much of the SW and SE UK - I see instead LOADS of unsold properties - ESPECIALLY the "new builds" - knocked up in a flash to take the money and run - but thousands of them sitting half built largely unsold.

- All you "First Time Buyers" out there - DO NOT NOT NOT NOT buy into this market: Do not sign your lives away. STAY OUT - THEY WANT YOU TO MAKE THAT FATAL MOVE TO BUY!!! THEN THEY'VE GOT YOU FOR EVER!!!! -- STAY OUT!!!!!!! The "Housing Market" is the Biggest Ever Pyramid Selling Scam -- it is a MASSIVE SCAM. Whatever you do, - just do not buy - i.e. join and THEREFORE HELP keep the whole Pyramid scam going!!!!

http://www.housepricecrash.co.uk/forum/ind...47entry152647

See all my posts - PLEASE please please do not make the mistake of buying into the World's Biggest Ever Pyramid Selling Scam.... the UK "Housing Market".

http://www.housepricecrash.co.uk/forum/ind...sult_type=posts

Nonsense there will be no crash so get on the ladder now.

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Nonsense there will be no crash so get on the ladder now.

..says Estate Agent

havent you got anything better to do, like tying up all those deals that have been 'flying off the shelves'??

Edited by jp1

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Ah, the quintessential bear error.

The only issue is when is a "bad time" to sell. That's the only point at which anyone really cares about a "crash", real or perceived, and is affected by it. Short-term speculators are potentially exposed to this. Long-term owner occupiers (the vast majority of property owners) are not.

Not at all.

After the last crash property prices took 11 years to get back to their previous levels. A lot can happen in 11 years, a job relocation, extra child or children, a sick or elderly parent needing looking after, etc etc etc, those who bought in 1989 and were subsequently in negative equity would have had great difficulty if they needed to relocate or upsize for any reason (of which these are just a few examples).

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After the last crash property prices took 11 years to get back to their previous levels.

A collapse in prices now for those buying at the top would mean negative equity for a lot longer, IMHO.

Most probably they will be chained to their houses until the mortgage is paid off in 30 years. And in 30 years - I don't feel I want to be in this country.

The Government will probably be chav-controlled by then.

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That 120-pounds-a-month would be what the homeowners would have to spend on maintenance in a good year. I've always heard (and my experience has borne this out) that home owners should annually expect to spend about 1% of the current value of their home on home repairs and maintenance. So, on a 200,000-pound house, that would be 2,000 pounds per year. Some years it would be a bit more, some years a bit less. And that doesn't include rising property taxes, insurance costs, etc.

So basically, you are saying maintenance costs have more than tripled along with house prices since I bought this place?

I don't think so...

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  • 302 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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