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TOO MUCH MONEY ON THE SIDELINES


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Wrongmove, I am in a similar situation. I earn 45k pa (but I live in London) and have saved 35k up over the last five years.

The idea that people like me will suddenly throw all their hard earnt savings at the property market is complete and utter rubbish. It's taken me years and years of bloody hard saving to build up my deposit and the risk of losing it all and going into negative equity is far too great to make me jump in.

Renting is now cheaper than buying. I can add to my savings whilst doing nothing more imaginative with it than leaving it in the bank - where it's safe.

I'm sorry guys, there will be a few ill informed morons who will jump in after a few falls; but for me I've never been more reluctant to buy property.

So the bulls can try and convince themselves that the FTBs will save them, but they are living in a dreamworld....

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Guest wrongmove

That's fair enough - I guess small Nottingham houses are not of much interest to you ! For the record, prices here seem high but unstable.

The title of the thread is about money on the sidelines. How big a drop (in your area) would represent an unmissable opportunity to an investor, in you opinion ? I would have to see 20%+ here before I could rent for the same as an infinity mortgage. I would guess a BTL investor has similar criteria ? I know that your yeilds are respectable, but you have muliply occupied houses. That would be the only way of getting yield in Nottingham at the moment. But I (and many others) plan to live alone. Do you really think that BLTs will be happy with 4-5% gross yeilds for long ? The answer is very important to us FTBs - that would indeed be a new paradigm if the majority agreed with you, and very bad news for anyone under 30 who is British.

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Guest wrongmove

TW11, I agree. I have heard that booms can have a 'hanging phase' while the smartest money exits, but is balanced by the inflow of "greatest fools". You earn much more than the median wage, even for London, and are priced out. I think that most people on the sidelines are now quite well paid, and probably most astute than a year or two ago.

People on the sidelines: From what I have learnt here, savvy BTLs seek yield above all. The CA seekers will soon disappear when double digit gains go. No-one is predicting double digit gains for a while. The FTBs are all well paid people with deposits. Surely it was too much money on the sidelines that caused the boom ?

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It's all about sentiment, and sentiment is driven by how much value an assets is gaining or losing.

HI VAN

exactly!!! (your quote) now if we start seeing prices falling big style month on month, rather than ''piddly'' amounts in the ''off season'' i'll be forced to agree with you. until then your big crash assumptions are mere unfounded speculation. you cite the last crash as a comparable. there were far more sinister things at root then, than mere ''feelings''. besides my experience of that crash (with all its very real reasons) didnt leave me with no where near the 30-40% falls you guys predict. more like 10-12%.(nominal).........and remember that was with the full force of rescession/higher unemployment/higher int rates/end of mortgage interest relief at source (MIRAS) behind it. the sooner you guys realise a 30-40% fall just isnt going to happen the better.

regards BBB.

I am continually amazed that the Bulls never take account of the numbers of people either directly or indirectly employed by the housing bubble, now that we have reached a point that we all kind of agree that a bubble exists.

There is a huge workforce being underpinned by the housing market debt industry.

Unemployment has risen recently (suprisingly!) and I fully expect the next stats to reflect a further increase.

As the consumer belt gets tightened and the MEW pot runs out, expect more of the same.

Can anyone explain to me why counsumer debt appears to be counted as a positive against our GDP output?

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In my BTL portfolio. I save a large amount of money by carrying out a lot of the work myself. The benefit of this to me is much lower costs. In exchange for my attempts to save on those costs, I in turn have self-employment.

Believe me, self-employment is much nicer than having some twit tell you what to do week after week..

See this is where I struggle. For most people, property ownership is not a career. Their job is their career. When they come home from work, they're tired. They want to know their investments have been working for them: the last thing they want to do is start working on their investments. My time is money and for me, time spent working on investments must be costed and deducted from any capital gains. The reason people don't feel this way at the moment is because we are in a bubble.

Now you're making me laugh!

You're right, the cost is not the added value. But the reason you haven't got past this may be that you haven't recognise that the labour of the owner/investor etc is the added value

The fact is, the reason why people are currently more than willing to work long hours, spend huge amounts of cash on fixtures / fittings / chattels / extensions etc is because they feel they are making money from this ("it's an investment" by which they immediately think "profit"). The reason for this thinking lies in th eplethora of prop dev progs and the "get rich quick" message they spread. However, deveopment market-valuation-uplifts stems from two factors:

1. The rise in general market values during the period of development, irrespective of any work done.

2 . making the property "trendy". Not chic, not timeless, not forever more useful : trendy.

When they realise that 1. cannot go on ad infinitum and 2. will see their latest fitted kitchen look as fashionable as a mullet hairdoo (sorry SonOL) by the time they reach retirement, they'll understand what a waste of time and effort they have made. Only then will they understand why there were 99,781 vacant dwellings falling into dereliction as recently as 1 April 2003 in London alone ( http://www.emptyhomes.com/presspages/hip2004.htmVacant Homes Agency[/url] ) . Only then will they understand why the South-East has 80,690 such properties without a Carol Smiley or Lawrence Llewllyn Bowen (sp) in sight. The owners of these properties understand that, over the long term, renovation is just a waste of money. Here's the wake up call:

FACT: if you have a half decent job you'd be better off doing overtime rather than bodging DIY / paying bubble-inflated labour rates to sub-satndatrd contractors.

So why are so many people doing it? Must I really I regurgitate the depressing list of prop dev/diy progs here, hell bent on brain washing every man, woman and dog in Britain that the route to riches is the makeover?

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I sold my home this year as I had to relocate to a new job. I guess you could classify me as an accidental STR. My home was mortgage free and consequently I now find myself sitting on a lump sum (which I consider to have been acquired more by luck than judgement).

So, I'm also one of these lads with money on the sidelines. So, what do I do with it? Buy a house when eveyone is screaming "you can't lose with property!" but the yields quietly tell a very different story? I'm afraid the BTLers are deluding themselves. I just won't chuck money into a falling or stagnant market with yields as they are.

My conclusion? Carry on renting and continue investing in other asset classes where I consider the yields to be better and capital risk to be lower. I will buy again one day, but I'm fairly risk averse so the yields will have to change. If rents increase by 30/40% I will buy again, but I've yet to see any evidence of this and no one has been able to explain the mechanism whereby rents will inflate (in a low inflation environment) and break their link with earnings.

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See this is where I struggle. For most people, property ownership is not a career. Their job is their career. When they come home from work, they're tired. They want to know their investments have been working for them: the last thing they want to do is start working on their investments. My time is money and for me, time spent working on investments must be costed and deducted from any capital gains. The reason people don't feel this way at the moment is because we are in a bubble.

This is where I can point out again that we've been through a type of gold rush. When I started buying, the money to be made seemed certain. It turned out to be true and carried on.

It wasn't a job or career to start with, but took 5 years of working eves & weekends to build up. It gets to a point where your job and investments (of this type) are competing with each other. If you're making enough money at work & from your investments, the tax man is taking so much that quitting one of the two starts to become appealing. But I can always go back to work if rates went high enough.

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The title of the thread is about money on the sidelines. How big a drop (in your area) would represent an unmissable opportunity to an investor, in you opinion ? I would have to see 20%+ here before I could rent for the same as an infinity mortgage. I would guess a BTL investor has similar criteria ? I know that your yeilds are respectable, but you have muliply occupied houses. That would be the only way of getting yield in Nottingham at the moment. But I (and many others) plan to live alone. Do you really think that BLTs will be happy with 4-5% gross yeilds for long ? The answer is very important to us FTBs - that would indeed be a new paradigm if the majority agreed with you, and very bad news for anyone under 30 who is British.

Let me turn that around for a second. My money IS waiting on the sidelines. What I'd like to see to make me move is reliable rent rises again and rates stabilising with the chance of falls. This can and probably will happen within the next 12 months.

Those two things alone would make me pound the pavements until I found something that suited my own guideline's even if I'd seen recent price falls. I'd be happy knowing that rents were on the way up & and I'd use the recent falls to make sure I got a nice chunk off the asking price.

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Guest wrongmove

Time to raise the rents. Posted on Aug 30 2004, 01:32 PM

What I'd like to see to make me move is reliable rent rises again and rates stabilising with the chance of falls.

I agree, I hadn't considered that. Rising rents would also effect the FTB (unless they are living at home) and make me more likely to buy. They would have to rise by 25%+ though.

Time to raise the rents. Posted on Aug 30 2004, 01:32 PM

I'd be happy knowing that rents were on the way up & and I'd use the recent falls to make sure I got a nice chunk off the asking price.

But this seems like a circular argument - surely a big chunk off the asking price implies big price drops ? I want to know if buying WITHOUT big price drops is a good idea.

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I bought soon after 9/11 because I was satisfied the future would be OK. Vulture like, I used the bad news to help get a fat discount.

I bought again when tanks were rolling into Iraq. The market was mesmerised by the war and I had the choice of properties and agents falling over themselves to show me any place I wanted to see. Again, very nice discount.

So if the conditions are right again, I'll use them. A big chunk off the asking price would only imply that the seller expects prices to fall.

I want to know if buying WITHOUT big price drops is a good idea.

Only if it's your own home (IMO) and you couldn't see yourself living anywhere else.

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Sledge on the point of the stock market, and you having some sixth sense for an imminent fall in the markets (mid 2000), anyone outside the retail buyers buying a few British Airways shares knew it was coming (retail herd). I incidentally cleared out of stocks into property in Nov 99 and re-entered into the markets in Mar 2003. I still hold most of the property though as my current tenants don’t have any desperate desire to give notice and seem happy to sign long leases. Indecently your comment about gold, I didn’t get what your point was, gold currently stands fractionally below it highest point for probably 12 years having rocketed since 2000 and seems to be mainly fueled by uncertainty in the middle east which is easing and may mean a subsequent collapse in the price. Would be interested if you have some inside info on the future direction of the gold or Forex/commodity prices ;-)

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Sledge on the point of the stock market, and you having some sixth sense for an imminent fall in the markets (mid 2000), anyone outside the retail buyers buying a few British Airways shares knew it was coming (retail herd).

And who was telling it like it was?

Indecently your comment about gold,

...was there to highlight volatility in assets with supposed real worth.

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How you can compare the current state of the housing market with that of the stock market of 99/00 is inexcusable. ....i'm not on about bubble formation here, just how worthless can be pushed to priceless. the housing market by contrast is founded on real assets and will always have a sustained future.
GOLD... now i'm sure thats given you all the ammo you need to liken it to the HM (safe haven and all that......probaly a history of falls after high rises etc......but hey i'll shut up or you'll have nothing to reply with......

nuff said

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SLEDGEY

whats up son? did i use all your ammo within my reply (gold) aahhh now i see why you are trawling the historical files of this forum to hit me back with something.......happy trawling.....RAOTFLMAO. B)

Yeah, see in my book it' scalled exposing inconsistencies.

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I have posted on market related sites before but only to moderate views. There's a whol eload of guff on some sites (I haven't read lorian or much of what i son ADVFN so I'll assume his posts are fair and balanced). I don't believe anybody is that knowledgeable about specifics wrt individual companies and even if they are so much market movement is independent of fundamentals. It's easy to ramp small stocks, but is that any way to make money? Like I've said, we won't move markets by debating here. That I find comforting.

What do you trade Lorian?

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Sledge

Mainly AIM stocks, better for lowering CGT exposure since there is a nice little tax loophole that says if you hold an AIM stock for more than two years the attraction of CGT is lowered from 40% in my case to just 10%. Wish the same was true of houses :-(

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Sledge

What are you talking about, please enlighten me >> "Thats not trading though" I trade FTSE100, 350 and AIM what in your opinion is trading?. I hold million plus share holdings in muliple companies and like your first post you seem to have little clue what you are talking about. Please enlighten me on what you consider trading. I hope your approach to housing investment is better than your knowledge of FSTE/COMEX/FOREX

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What are you talking about, please enlighten me >> "Thats not trading though"

... this :

Mainly AIM stocks, better for lowering CGT exposure since there is a nice little tax loophole that says if you hold an AIM stock for more than two years

Need I say more?

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Sledge

I knew you wouldn't reply with anything reasonable since your full of crap, you know nothing about investment do you?, like your quip about Gold earlier, empty words, I ask again then what do you know about AIM investment, please don't reply with more hollow empty headed rhetoric like "Enough said!"

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  • 439 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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