Jump to content
House Price Crash Forum
scottbell

My Story, Why I Am Getting Out Of Property

Recommended Posts

Ok, so I am not poor, and pull in about 120K a year salary from consultancy and other business interests.

I have however decided to get out of property, and am selling property around the 500K mark, and am now renting a 900K house for 2k a month in north london, which...if you do the sums, is interest only on 300K mortgage. So effectively, not a bad deal, certainly not dead money. Have 3 sitting rooms.

Why am I leaving?

Of course, i am leaving when all the pundits are saying the property market is great, never go down, times have changed, etc. I have studied bubbles and crashes, and it is wonderful (from an academic perspective) to see such economic physchology come to life.

being on 120K a year, puts me in a great position to see that 500K house + family, is actualy bearable, but not that easy. I look around..and i notice a few things.

1. everyone seems generally to get less money than me

2. i have about 200K in my house..as pure capital, not a bad sum. 300K mort.

3. every month..my salary comes in, and i have a few thousand left..for living, and saving. so. i know..it must be really hard for folks, dread the thought, that earn 40-50K (personally wouldn't get out of bed for)

We have a lovely bubble, a super textbook example of fantastic mob mentality that prices go up, fantastic new lending criteria...and an amazing wish for all new first time buyers to prop everyone else up by going to the hilt on what they can afford.

And there is the real deal. FTB. These guys prop up the market, take them away, and it falls.

FTB are the very very first people to decide NOT to buy when it looks expensive, etc. They'll rent very easily. So..just when things start looking tricky for the market, they'll hedge bets, and pull out.

What you'll see is already starting to happen, and it will tinker along. few FTB mortgages, more fixed prices, less turnover generally, as people can't move up the ladder.

Of course, behind all of this, is wage spread increasing. People like me, on 120K a year. there are a lot of people like me, and we'll buy out all the nice properties for years to come. The really badly hit properties will be flats, odd houses in less desirable areas. Ouch, it will be bad.

A lot of people on this board...are questioning what will make a buddle happen, and focus on affordability. Bubbles don't generally burst due to afforability, they brust due to mob mentality. people will stretch themselves on affordability for housing to the extent second jobs, etc, since they want somewhere to live.

The first time we see BBC run a story with house price crash..over a few weeks, and news reports, we'll see a momentous shift. All we need is 2-3 continous months of prices falls...ahh, it is so easy..and will happen soon, this year i suspect.

This bubble will burst quite simply, as FTBs will steer clear, and land prices go down, and tide will turn.

PS, any FTB considering buying, please dont. you have been warned. wait till end of 2007, and if house prices are still going up, i'll eat my socks.

Safe option is to rent, enjoy..and watch all your friends lose pretty much their life savings.

Share this post


Link to post
Share on other sites

But what is your opinion on the pin to burst the bubble. Something will have to happen to destroy sentiment.

I think it will be a worsening economic picture because of rising fixed costs such as fuel and interest rates.

We have started to see a large shift upwards in fixed rates, even in the last few weeks. . . .

Share this post


Link to post
Share on other sites

PS, any FTB considering buying, please dont. you have been warned. wait till end of 2007, and if house prices are still going up, i'll eat my socks.

I hope you do have more than one pair.

Socks are said to be very good with ketchup, but not when they are crunchy!

Share this post


Link to post
Share on other sites

If you were to get a standard 3.5x mortgage on your substantial earnings, it would buy you a 3 bed semi in a non descript shoebox estate. Bit of a bummer considering your wage isn't it? Shows how ridiculous things have become.

Share this post


Link to post
Share on other sites

dread the thought, that earn 40-50K (personally wouldn't get out of bed for)

Um er ----I know loads of people earning that-----NOT!

Share this post


Link to post
Share on other sites

Ok, so I am not poor, and pull in about 120K a year salary from consultancy and other business interests.

I have however decided to get out of property, and am selling property around the 500K mark, and am now renting a 900K house for 2k a month in north london, which...if you do the sums, is interest only on 300K mortgage. So effectively, not a bad deal, certainly not dead money. Have 3 sitting rooms.

Why am I leaving?

Of course, i am leaving when all the pundits are saying the property market is great, never go down, times have changed, etc. I have studied bubbles and crashes, and it is wonderful (from an academic perspective) to see such economic physchology come to life.

being on 120K a year, puts me in a great position to see that 500K house + family, is actualy bearable, but not that easy. I look around..and i notice a few things.

1. everyone seems generally to get less money than me

2. i have about 200K in my house..as pure capital, not a bad sum. 300K mort.

3. every month..my salary comes in, and i have a few thousand left..for living, and saving. so. i know..it must be really hard for folks, dread the thought, that earn 40-50K (personally wouldn't get out of bed for)

We have a lovely bubble, a super textbook example of fantastic mob mentality that prices go up, fantastic new lending criteria...and an amazing wish for all new first time buyers to prop everyone else up by going to the hilt on what they can afford.

And there is the real deal. FTB. These guys prop up the market, take them away, and it falls.

FTB are the very very first people to decide NOT to buy when it looks expensive, etc. They'll rent very easily. So..just when things start looking tricky for the market, they'll hedge bets, and pull out.

What you'll see is already starting to happen, and it will tinker along. few FTB mortgages, more fixed prices, less turnover generally, as people can't move up the ladder.

Of course, behind all of this, is wage spread increasing. People like me, on 120K a year. there are a lot of people like me, and we'll buy out all the nice properties for years to come. The really badly hit properties will be flats, odd houses in less desirable areas. Ouch, it will be bad.

A lot of people on this board...are questioning what will make a buddle happen, and focus on affordability. Bubbles don't generally burst due to afforability, they brust due to mob mentality. people will stretch themselves on affordability for housing to the extent second jobs, etc, since they want somewhere to live.

The first time we see BBC run a story with house price crash..over a few weeks, and news reports, we'll see a momentous shift. All we need is 2-3 continous months of prices falls...ahh, it is so easy..and will happen soon, this year i suspect.

This bubble will burst quite simply, as FTBs will steer clear, and land prices go down, and tide will turn.

PS, any FTB considering buying, please dont. you have been warned. wait till end of 2007, and if house prices are still going up, i'll eat my socks.

Safe option is to rent, enjoy..and watch all your friends lose pretty much their life savings.

scottbell?

Why not just call yourself chocolate?

It's not a bad post but is it really necessary to tell us 3 times that you earn £120k? I'm sure that's small fry to a great many people, even people on this site.

Your post would have read far better without it, and in case you were wondering, the £120k bit added nothing to your advice (good though it may have been).

Welcome.

NDL

Share this post


Link to post
Share on other sites

scottbell?

Why not just call yourself chocolate?

It's not a bad post but is it really necessary to tell us 3 times that you earn £120k? I'm sure that's small fry to a great many people, even people on this site.

Your post would have read far better without it, and in case you were wondering, the £120k bit added nothing to your advice (good though it may have been).

Welcome.

NDL

Sorry. Ok, went overboard. I earn 120K THIS Year. Who knows, i work in business, and frankly..can't say i am worth 120K to anyone but there you go.

Point was, i get a decent sum of money, and still see if disappear on a mortgage and family quickly. It must be hurting others so much more.

Sorry if the post offended anyone, i really wanted to be sure people understood...the issues.

40-50K is of course a good salary, lecturers get about 40k after 20 years of service, and a lot of good IT people stick around this number etc.

in fact accountants these days are about 50-60K.

so yes, i would get out of bed for 50K. At least if it was 50k for a weeks work ;-)

Share this post


Link to post
Share on other sites

When do you predict we'll see the 3 consec months? I suspect we'll have to wait until next year for a downturn to 'bed-in' I expect to see price rises for a while yet.

Edited by gruffydd

Share this post


Link to post
Share on other sites

Ok, so I am not poor, and pull in about 120K a year salary from consultancy and other business interests.

I have however decided to get out of property, and am selling property around the 500K mark, and am now renting a 900K house for 2k a month in north london, which...if you do the sums, is interest only on 300K mortgage. So effectively, not a bad deal, certainly not dead money. Have 3 sitting rooms.

Why am I leaving?

Of course, i am leaving when all the pundits are saying the property market is great, never go down, times have changed, etc. I have studied bubbles and crashes, and it is wonderful (from an academic perspective) to see such economic physchology come to life.

being on 120K a year, puts me in a great position to see that 500K house + family, is actualy bearable, but not that easy. I look around..and i notice a few things.

1. everyone seems generally to get less money than me

2. i have about 200K in my house..as pure capital, not a bad sum. 300K mort.

3. every month..my salary comes in, and i have a few thousand left..for living, and saving. so. i know..it must be really hard for folks, dread the thought, that earn 40-50K (personally wouldn't get out of bed for)

We have a lovely bubble, a super textbook example of fantastic mob mentality that prices go up, fantastic new lending criteria...and an amazing wish for all new first time buyers to prop everyone else up by going to the hilt on what they can afford.

And there is the real deal. FTB. These guys prop up the market, take them away, and it falls.

FTB are the very very first people to decide NOT to buy when it looks expensive, etc. They'll rent very easily. So..just when things start looking tricky for the market, they'll hedge bets, and pull out.

What you'll see is already starting to happen, and it will tinker along. few FTB mortgages, more fixed prices, less turnover generally, as people can't move up the ladder.

Of course, behind all of this, is wage spread increasing. People like me, on 120K a year. there are a lot of people like me, and we'll buy out all the nice properties for years to come. The really badly hit properties will be flats, odd houses in less desirable areas. Ouch, it will be bad.

A lot of people on this board...are questioning what will make a buddle happen, and focus on affordability. Bubbles don't generally burst due to afforability, they brust due to mob mentality. people will stretch themselves on affordability for housing to the extent second jobs, etc, since they want somewhere to live.

The first time we see BBC run a story with house price crash..over a few weeks, and news reports, we'll see a momentous shift. All we need is 2-3 continous months of prices falls...ahh, it is so easy..and will happen soon, this year i suspect.

This bubble will burst quite simply, as FTBs will steer clear, and land prices go down, and tide will turn.

PS, any FTB considering buying, please dont. you have been warned. wait till end of 2007, and if house prices are still going up, i'll eat my socks.

Safe option is to rent, enjoy..and watch all your friends lose pretty much their life savings.

I have said it many times on here, this market is being driven by nothing but sentiments. As long as we hear reports of house prices going up people will keep buying. Tbh this housing market is nothing as compared to the others I have seen. In many parts of India house prices have gone up by 100% in less than 2 years. The house I baught in last sept has gone up by 35% by now. So to pop this bubble we need nothing but a change in sentiments. 5% IRs will do it all. 40% correction at the least.

Share this post


Link to post
Share on other sites

Ok, so I am not poor, and pull in about 120K a year salary from consultancy and other business interests.

I have however decided to get out of property, and am selling property around the 500K mark, and am now renting a 900K house for 2k a month in north london, which...if you do the sums, is interest only on 300K mortgage. So effectively, not a bad deal, certainly not dead money. Have 3 sitting rooms.

Why am I leaving?

Of course, i am leaving when all the pundits are saying the property market is great, never go down, times have changed, etc. I have studied bubbles and crashes, and it is wonderful (from an academic perspective) to see such economic physchology come to life.

being on 120K a year, puts me in a great position to see that 500K house + family, is actualy bearable, but not that easy. I look around..and i notice a few things.

1. everyone seems generally to get less money than me

2. i have about 200K in my house..as pure capital, not a bad sum. 300K mort.

3. every month..my salary comes in, and i have a few thousand left..for living, and saving. so. i know..it must be really hard for folks, dread the thought, that earn 40-50K (personally wouldn't get out of bed for)

We have a lovely bubble, a super textbook example of fantastic mob mentality that prices go up, fantastic new lending criteria...and an amazing wish for all new first time buyers to prop everyone else up by going to the hilt on what they can afford.

And there is the real deal. FTB. These guys prop up the market, take them away, and it falls.

FTB are the very very first people to decide NOT to buy when it looks expensive, etc. They'll rent very easily. So..just when things start looking tricky for the market, they'll hedge bets, and pull out.

What you'll see is already starting to happen, and it will tinker along. few FTB mortgages, more fixed prices, less turnover generally, as people can't move up the ladder.

Of course, behind all of this, is wage spread increasing. People like me, on 120K a year. there are a lot of people like me, and we'll buy out all the nice properties for years to come. The really badly hit properties will be flats, odd houses in less desirable areas. Ouch, it will be bad.

A lot of people on this board...are questioning what will make a buddle happen, and focus on affordability. Bubbles don't generally burst due to afforability, they brust due to mob mentality. people will stretch themselves on affordability for housing to the extent second jobs, etc, since they want somewhere to live.

The first time we see BBC run a story with house price crash..over a few weeks, and news reports, we'll see a momentous shift. All we need is 2-3 continous months of prices falls...ahh, it is so easy..and will happen soon, this year i suspect.

This bubble will burst quite simply, as FTBs will steer clear, and land prices go down, and tide will turn.

PS, any FTB considering buying, please dont. you have been warned. wait till end of 2007, and if house prices are still going up, i'll eat my socks.

Safe option is to rent, enjoy..and watch all your friends lose pretty much their life savings.

Silly question...

Why are you renting if you haven't sold your house yet?

You are paying £2k a month rent and also a £300k mortgage.

Share this post


Link to post
Share on other sites

Silly question...

Why are you renting if you haven't sold your house yet?

You are paying £2k a month rent and also a £300k mortgage.

funny i'd thought that as well

but as i don't earn 120K a year i felt unqualified to ask :(

Share this post


Link to post
Share on other sites

Silly question...

Why are you renting if you haven't sold your house yet?

You are paying £2k a month rent and also a £300k mortgage.

Well, i wanted to take the stress out of it all. Get out of the house, and then sell it. Seemed more simple to me. Ok, i pay a couple of months rent, but i wanted to see how the new house worked out.

To answer someone else, i must admit, looking at the FTB figures, and land property prices.

This link will tell you all you need to know.

http://www.thisismoney.co.uk/mortgages/hou...2&in_page_id=57

lowest since 1980. plus all the buy to let folks..pulling out.

we are closer than many people think.

Share this post


Link to post
Share on other sites

To answer someone else, i must admit, looking at the FTB figures, and land property prices.

This link will tell you all you need to know.

http://www.thisismoney.co.uk/mortgages/hou...2&in_page_id=57

lowest since 1980. plus all the buy to let folks..pulling out.

we are closer than many people think.

so who's buying the houses now. No need to tell that transaction levels are much higher than they were last year this time.

Share this post


Link to post
Share on other sites

scottbell?

Why not just call yourself chocolate?

It's not a bad post but is it really necessary to tell us 3 times that you earn £120k? I'm sure that's small fry to a great many people, even people on this site.

Your post would have read far better without it, and in case you were wondering, the £120k bit added nothing to your advice (good though it may have been).

Welcome.

NDL

TTRTR will be well miffed.

Edited by geneer

Share this post


Link to post
Share on other sites

Of course, i am leaving when all the pundits are saying the property market is great, never go down, times have changed, etc. I have studied bubbles and crashes, and it is wonderful (from an academic perspective) to see such economic physchology come to life.

It's important to understand that confidence is a lagging indicator.

When all your mates and hairdresser are telling you property is a great investment, it's time to get out.

IMHO we passed this point over a year ago.

We now see the stupid money (Rosie Millard and co) realising that things aren't right.

We're living through an important piece of economic history, one that is likely to leave a blight on the world for years, if not decades.

Property investment will be vilified.

Enjoy the freedom and financial benefit of renting, and watch the madness from the outside.

Share this post


Link to post
Share on other sites

It's important to understand that confidence is a lagging indicator.

When all your mates and hairdresser are telling you property is a great investment, it's time to get out.

IMHO we passed this point over a year ago.

We now see the stupid money (Rosie Millard and co) realising that things aren't right.

We're living through an important piece of economic history, one that is likely to leave a blight on the world for years, if not decades.

Property investment will be vilified.

Enjoy the freedom and financial benefit of renting, and watch the madness from the outside.

Couln't agree more.

Edited by cupidstunt

Share this post


Link to post
Share on other sites
Im now renting a 900K house for 2k a month in north london, which...if you do the sums, is interest only on 300K mortgage. So effectively, not a bad deal, certainly not dead money. Have 3 sitting rooms.

I did the sums and £2k a month gets you about a £480k mortgage 25 yr (interest only)

But then I'm on my second beer already so I may have hit a wrong button on the calculator...

Edited by Without_a_Paddle

Share this post


Link to post
Share on other sites

I did the sums and £2k a month gets you about a £480k mortgage 25 yr (interest only)

But then I'm on my second beer already so I may have hit a wrong button on the calculator...

How is an IO mortgage "25 yr"? After 25 years paying your 2K a month at 5% IR, you still won't have paid back any of the principal. For a 25 year repayment mortgage on 480K to be 2K per month, you need the interest rate to be 1.8%.

Billy Shears

Share this post


Link to post
Share on other sites

I like your style Scott, although I too wondered about the 120k references. (Nice response Jason).

Lets just say you are new to this board, a board which can be a little bit sharp with new guests, and weary of new brightly coloured ants in the nest.

I think you are are right in every way, quite why other people dont see it is very amusing/baffling/entertaining/frustrating to me.

How can a bull answer the following question: What is the outcome of continual rises either above or in line with wage inflation?

If you are a landlord bull then your tennants wont be able to afford your rent (assuming you want a normal yield that say for crazy example repays the interest on your new mortgage)

If you are a stretched FTB bull you will never be able to move up the ladder.

If you are 'buying with a friend' bull (gotta love that quirky phrase!) then you will only ever get half the equity and fall further and further behind.

If you are a parent bull, your kids will never be able to buy, like you did, unless you help them by increasing your debts or contingent liabilities just when you are falling out your prime earning period.

If you are a "the buyers come from overseas" bull, explain to me why rises have been seen in all the major economic powers save Germany and Japan? Where is the money coming from externally for all the rises in the UK, US, Canada, AUstralia, Iceland, France, Spain, Dubai etc. Is it coming from Russia? Quite how many russian billionaires are there? 10? Enough to explain trillions of HP capital appreciation?

If you are a bull who assumes its from Immigration, then please read the points above. They can't all be coming here from the US, because who then is fueling the boom in the US? So then its immigrants from the Eastern Block that are buying all the houses?

So bulls, do you understand what you wish for? A complete implosion of your own best case scenario?

Share this post


Link to post
Share on other sites

How is an IO mortgage "25 yr"? After 25 years paying your 2K a month at 5% IR, you still won't have paid back any of the principal. For a 25 year repayment mortgage on 480K to be 2K per month, you need the interest rate to be 1.8%.

Billy Shears

I told you I had been on the beer.

I quoted the 25yr bit out of habit. I think you'll find the £2k/month gets you a £480k IO mortgage.

and yes, you don't pay off any capital on IO. I think we all understand that...

But despite that, IO loans DO have an agreed term. This could be 7 years or even 25 years. At the end of the term you have to pay up the original debt or refinance.

...burp...

Edited by Without_a_Paddle

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 337 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.