Maynard Posted December 27, 2004 Share Posted December 27, 2004 As a young man looking to get onto the property ladder in a couple of years (don't quite earn enough yet to get anything decent). I have been hoping for falls in HPs. However, my parents bought a plot of land in June (also bought the house next to it) and have planning for a two bed luxury bungalow (in Kent). We will be building to bungalow ourselves (father and I are both in construction) and the value in the current climate for a bungalow like this would be around £210,000. For this purpose I would hope house prices would rise a little or stagnate! Land say £100,000 Build say £50,000 Sell £210,00 Profit £60,000 My head is telling me we are in for falls, my heart is hoping prices will hold out for 2005/06 and then drop significantly after that to allow me to jump on board! Haven't posted much on the forum, but I am pretty addicted to reading it, keep up the good work guys! Quote Link to comment Share on other sites More sharing options...
AteMoose Posted December 27, 2004 Share Posted December 27, 2004 Cant you get permission to build a 4/5 bed luxury house instead? Quote Link to comment Share on other sites More sharing options...
ours brun Posted December 27, 2004 Share Posted December 27, 2004 If you are building the bungalow to live in then go for it. Even if prices drop 30% you will still break even and you have your own place. However if you are doing this purely as an investment I would have thought that it is much more dodgy as there is the risk that you don't cover your building costs. Quote Link to comment Share on other sites More sharing options...
Maynard Posted December 27, 2004 Author Share Posted December 27, 2004 Unfortunately, the plot is not big enough. Also, in this area, bungalows are popular, we are aiming at the retired market. And for the price of a 2 bed bungalow, you could buy a three/four bed detached house. It is cheaper to build a bungalow. A house would also overshadow the garden of the house we live in. Quote Link to comment Share on other sites More sharing options...
Maynard Posted December 27, 2004 Author Share Posted December 27, 2004 If you are building the bungalow to live in then go for it. Even if prices drop 30% you will still break even and you have your own place. However if you are doing this purely as an investment I would have thought that it is much more dodgy as there is the risk that you don't cover your building costs.<{POST_SNAPBACK}> We are building it to sell, as I say we are in the industry and will be doing a lot of the work ourselves and using subbies we are friends with. It will be complete probabally in about a year's time. If we see falls in HPs, i cannot envisage them falling 30% in 1 year. The cost including the land is estimated at 150k, so we'd need to see an approx 30% fall in that time to lose on it. In which case we'd rent it out rather than sell at a loss. In all seriousness, by what percentage do people REALLY believe HPs will fall next year? Quote Link to comment Share on other sites More sharing options...
AteMoose Posted December 27, 2004 Share Posted December 27, 2004 http://www.housepricecrash.co.uk/forum/ind...?showtopic=3022 Quote Link to comment Share on other sites More sharing options...
Maynard Posted December 27, 2004 Author Share Posted December 27, 2004 Is it me, or are most people having a laugh on there or what? Sensible answers on a postcard please.... Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted December 27, 2004 Share Posted December 27, 2004 In all seriousness, building costs go over budget in almost all cases. 50K isn't a particularly high estimate either. Quote Link to comment Share on other sites More sharing options...
Maynard Posted December 27, 2004 Author Share Posted December 27, 2004 In all seriousness, building costs go over budget in almost all cases. 50K isn't a particularly high estimate either.<{POST_SNAPBACK}> True, but we have only estimated it as 45k, so 50k is the top banana! Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted December 27, 2004 Share Posted December 27, 2004 Good luck with it & get a fixed price contract. Quote Link to comment Share on other sites More sharing options...
Big Ears Posted December 27, 2004 Share Posted December 27, 2004 My head is telling me we are in for falls, my heart is hoping prices will hold out for 2005/06 and then drop significantly after that to allow me to jump on board!<{POST_SNAPBACK}> Prices have been falling for last 6 months.....go with your 'head'? Quote Link to comment Share on other sites More sharing options...
Maynard Posted December 27, 2004 Author Share Posted December 27, 2004 Good luck with it & get a fixed price contract.<{POST_SNAPBACK}> As I said, we will be doing the work ourselves and getting a few subbies in. Im a QS and the old man a brickie/construction manager, just finishing the extension on the existing house now! All the best, Maynard Quote Link to comment Share on other sites More sharing options...
Maynard Posted December 27, 2004 Author Share Posted December 27, 2004 Prices have been falling for last 6 months.....go with your 'head'?<{POST_SNAPBACK}> Yes, prices have been falling, but in my area, it seems that EAs are just taking the piss and putting HPs well above what they are worth. I have a friend (and his sister) who bought a 2 bed flat in June 2003 for 135k (it had prev been bought off-plan in Nov 2002 for 95k!) They now have had in on the market for 3months at 165k! I have told them they are having a laugh, but they will only listen to the EA. Personally, i think it's worth 140k max. Interest rates will come down and I think the market will stabilise. As I say, I was a bear! Quote Link to comment Share on other sites More sharing options...
zzg113 Posted December 27, 2004 Share Posted December 27, 2004 Interest rates will come down No they won't. To get the expected interest rate for Dec 2005, subtract the current price of the future (95.XX) from 100. http://futures.tradingcharts.com/chart.php...ket=SS&cterm=C5 Quote Link to comment Share on other sites More sharing options...
Big Ears Posted December 27, 2004 Share Posted December 27, 2004 Yes, prices have been falling, but in my area, it seems that EAs are just taking the piss and putting HPs well above what they are worth.I have a friend (and his sister) who bought a 2 bed flat in June 2003 for 135k (it had prev been bought off-plan in Nov 2002 for 95k!) They now have had in on the market for 3months at 165k! I have told them they are having a laugh, but they will only listen to the EA. Personally, i think it's worth 140k max. Interest rates will come down and I think the market will stabilise. As I say, I was a bear! <{POST_SNAPBACK}> EA's are only partly to blame....the vast majoity of them will go with what the vendor hopes to get for their property....the EA's are about now getting fed-up with unrealistic expectations of vendors - I think we'll see a big change in their approach in 2005. As regards IRs going down in the short term - that's neither here nor there...I will not get more then 3.5 multiple of my salary because I don't know what IRs will do over the long term.....the market has stalled not because IRs have gone to 4.75%, but because there are'nt enough idiotic buyers prepared to take on silly multiples. Quote Link to comment Share on other sites More sharing options...
Xurbia Posted December 27, 2004 Share Posted December 27, 2004 EA's are only partly to blame....the vast majoity of them will go with what the vendor hopes to get for their property....the EA's are about now getting fed-up with unrealistic expectations of vendors - I think we'll see a big change in their approach in 2005.As regards IRs going down in the short term - that's neither here nor there...I will not get more then 3.5 multiple of my salary because I don't know what IRs will do over the long term.....the market has stalled not because IRs have gone to 4.75%, but because there are'nt enough idiotic buyers prepared to take on silly multiples. <{POST_SNAPBACK}> If other people were as prudent as yourself we wouldn't be in this current mess. Houses have now reached a peak and so has employment. We will now glissade back down the golden mountain into a golden shower. Every peak has a trough. Gold, houses, stocks and shares (dotcoms - ouch!). Believing any different is folly. Quote Link to comment Share on other sites More sharing options...
Guest consa Posted December 27, 2004 Share Posted December 27, 2004 As a young man looking to get onto the property ladder in a couple of years (don't quite earn enough yet to get anything decent). I have been hoping for falls in HPs.However, my parents bought a plot of land in June (also bought the house next to it) and have planning for a two bed luxury bungalow (in Kent). We will be building to bungalow ourselves (father and I are both in construction) and the value in the current climate for a bungalow like this would be around £210,000. For this purpose I would hope house prices would rise a little or stagnate! Land say £100,000 Build say £50,000 Sell £210,00 Profit £60,000 My head is telling me we are in for falls, my heart is hoping prices will hold out for 2005/06 and then drop significantly after that to allow me to jump on board! Haven't posted much on the forum, but I am pretty addicted to reading it, keep up the good work guys! <{POST_SNAPBACK}> I Draw plans for a living for builder friends etc. without seeing the plans couln't guess your build costs. I would say you are better off selling the land with planning consent if you can, then rent somewhere for a couple of years yuo will only probably need to wait till summer to see what a great move you had made. Quote Link to comment Share on other sites More sharing options...
Van Posted December 27, 2004 Share Posted December 27, 2004 People were only prepared to borrow 5x or 6x salary multiples during the height of the bubble: their reasoning being that house prices only ever go up, and so the more leveraging I use, the more "money" I will make when the price goes up. A 20% increase on a 300k house is more £££ than 20% on a 200k house, after all. Now that house prices are falling, people will certainly *not* be willing to stretch themselves nearly as much. We've had 6 months of falling house prices. The end of denial is near - another 6-12 months and annual HPI will be negative, the myth that "house prices only ever go up" will be discredited, and the raging real estate bull market of 1996-2004 will be a dim and fading memory. Once the end of denial is reached, and it is accepted that there's no more "money" to be made simply by buying a house to live in, the incentive to overstretch disappears, and sellers then have to cut their prices further in order to meet buyers' expectations. Quote Link to comment Share on other sites More sharing options...
andrew_uk Posted December 28, 2004 Share Posted December 28, 2004 Hi Maynard, If by building it and selling it you make a £60k profit but the land is valued at £100k. Perhaps I'm missing something but why not just sell the land? Then spent the time you've saved on some other project. Quote Link to comment Share on other sites More sharing options...
Maynard Posted December 28, 2004 Author Share Posted December 28, 2004 We live in the house next to the land (it is currently our garden!). We only purchased the land because we agreed a good price for the land (with outline planning) and the house. The previous owner had lots of interest in the land but not the house, and wanted to sell them together. If we sold the land, there is the chance that someone would build a four bed house and move in with their noisey kids, that would not be in line with the surrounding area. The thread was started simply explaining my situation, where I am divided between the bulls and the bears. On one hand, I am looking to get on the property ladder soon (but not quite yet) and on the other, my parents are building a bungalow, which i would love to see them make lots of money on. As I said, the land is not mine, the bungalow will not be mine to sell. I will be simply assisting, as one day I would love to do a self-build myself. My dad has previously built our last two houses (when I was young), and I think the idea of living a a house built yourself, whether it be absolutely everything or design and project managment, is brilliant. All the best. Maynard Quote Link to comment Share on other sites More sharing options...
Wiseman Posted December 29, 2004 Share Posted December 29, 2004 IMHO you should just wait. If house prices go up you can build and make the profit in 2006. If house prices go down you can do nothing, or build using the unemployed tradesmen that will work for peanuts. What is the rush? Quote Link to comment Share on other sites More sharing options...
Marina Posted December 29, 2004 Share Posted December 29, 2004 Is it me, or are most people having a laugh on there or what?Sensible answers on a postcard please.... <{POST_SNAPBACK}> In the last two big crashes we did not have the internet and even as recently as 1989 the media was nowhere near as all-pervasive as it is now. In the same way that the media obsession with property has caused property prices to rise at the fastest rate ever - it seems logical the decline will be at the fastest rate ever. There cannot be many people in the country now who have not heard of an 'imminent house price crash.' Lots of people have heard of it but are in denial. But it doesn't need everyone to act in response to the 'impending' house price crash. It takes a relatively small number of would-be Buyers to get cold feet and the market stalls. This is happening now. As this scenario unfolds, by the Spring (bounce? what bounce?) the market will be on the edge of a precipice. I believe the descent will be rapid and because of the momentum I think it will be bigger than anything we have seen before. The momentum will be slowed by the fact that people take a long time to accept their property is actually worth less than it was but when serious sellers meet serious buyers - prices will be dramatically lower. Finally, as the house price crash becomes mainstream media fodder, the pound will fall. And we are at the top of a personal credit boom. Anyone who thinks interest rates are going to go down is wrong. They may stay the same until after the election - after that for interest rates (and taxes) the only way is up. Quote Link to comment Share on other sites More sharing options...
Guest consa Posted December 29, 2004 Share Posted December 29, 2004 In the last two big crashes we did not have the internet and even as recently as 1989 the media was nowhere near as all-pervasive as it is now.<{POST_SNAPBACK}> Well pointed out, I have always maintained it will be a swift decent, and deeper than any previous have been Quote Link to comment Share on other sites More sharing options...
Confiteor Posted December 29, 2004 Share Posted December 29, 2004 Well pointed out, I have always maintained it will be a swift decent, and deeper than any previous have been<{POST_SNAPBACK}> Hmm....Will that be a decent descent or a descent decent? Quote Link to comment Share on other sites More sharing options...
Guest consa Posted December 29, 2004 Share Posted December 29, 2004 Hmm....Will that be a decent descent or a descent decent?<{POST_SNAPBACK}> Take your pick it means the same here Quote Link to comment Share on other sites More sharing options...
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