Current Home Owners - Would You Str?

[uncle_monty]

So does anyone consider it possible to sell up just as HPI is stalling? For example, if Sept 07 is YoY +3% and I have a property worth, say £500k. If I sold at this point at £450k do you think there would be any takers? Bearing in mind we're talking about prime London.

[Willy Weasel]

Fair enough (and I do remember you saying that there's a little Tuffers on the way)

But wouldn't renting your place out while moving somewhere bigger have been a safer option?

That would have meant having two mortgages though which would have been impossible

EDIT - Sorry you mean rent out mine and rent a bigger one. I could have done that I suppose but decided that I was better off crystallising the equity and putting it in the bank. I also didn't want the hassle of managing a rental property.

Edited February 15, 2007 by Tuffers

[Guest The_Oldie]

So does anyone consider it possible to sell up just as HPI is stalling? For example, if Sept 07 is YoY +3% and I have a property worth, say £500k. If I sold at this point at £450k do you think there would be any takers? Bearing in mind we're talking about prime London.

It depends on sentiment at the time. You could be lucky, but it's a risk.

[Europa]

That would have meant having two mortgages though which would have been impossible

EDIT - Sorry you mean rent out mine and rent a bigger one. I could have done that I suppose but decided that I was better off crystallising the equity and putting it in the bank. I also didn't want the hassle of managing a rental property.

Fair enough - dare say you've come out of it with a nice wedge of cash for the little 'un's trust fund

[uncle_monty]

It depends on sentiment at the time. You could be lucky, but it's a risk.

No more of a risk than selling now or any time in the past 3 years? I guess its a balance of liquidity (i.e. actually making the sale and realising cash) versus proceeds (i.e. maximising the capital gain).

[Guest The_Oldie]

No more of a risk than selling now or any time in the past 3 years? I guess its a balance of liquidity (i.e. actually making the sale and realising cash) versus proceeds (i.e. maximising the capital gain).

Yes, but your question was..

So does anyone consider it possible to sell up just as HPI is stalling? For example, if Sept 07 is YoY +3%

You are talking about timing it to perfection and that's the difficult bit. I always follow the old Rothschild adage "Leave the last 10% to the market".

[Willy Weasel]

Fair enough - dare say you've come out of it with a nice wedge of cash for the little 'un's trust fund

Yes. The trouble is it's so hard resisting spending it.

[adibrown]

No more of a risk than selling now or any time in the past 3 years? I guess its a balance of liquidity (i.e. actually making the sale and realising cash) versus proceeds (i.e. maximising the capital gain).

No I dont think you get it. If you sold now there is obviously still a few mugs knocking around and the media is still pushing "houses to only ever go up" mantra. So at this stage you may sell within a few months and only 10% say below asking price.

Now if sentiment turns (when the last express employee sells up) then you could find yourself in trouble.

You see sentiment is key. You could put your house up for 20% less and still somebody will think "Christ take a look at this house it has gone down by 20% in 6 months, the market really is crashing...it will be even lower in 3 months." Nobody will touch houses in a dropping market especially if the media hypes up any crash. Imagine the effect a headline in the Express stating "House Price Meltdown - Prices may drop back to 1999 levels" will have on buyers sentiment.

It will happen.

[AteMoose]

no... Im riding this one out im expecting 20k of neg equity, but the extra income from renting rooms should more than cover that by the time we reach the trough

[iamnumerate]

I wouldn't because I hate moving, and hate buying houses.

If I go into negative equity (which would take one hell of a crash), I don't care as long as I can still meet my repayments. So, no I don't think I would ever STR personally.

If there was a crash of that magnitude, I would have to seriously consider getting a BTL over here though, even if it is rent out to my parents or something

My thoughts exactly. Moving is not fun.

[It is different this time]

Hang on, RB's statement was that since end of 2004 the market outside London has peaked. Since that date interest rates have only gone up 0.5% so, no, I don't class that as soaring interest rates. They are still over 1% lower than when I first bought (end of 1996).

It doesn't work like that does it? This mentality is one of the reasons why UK Plc is bankrupt. How can you compare interest rate of 1996 with 2007? 96 you would probably pay £50K-£60 for a house which is now £200K. I don't know about you but me thinks there is a very big difference between £60K & £200K mortgage @ 6%

[dunnsdale]

I agreed my sale in October at 10k over asking price.Leaves me with 400k to bank,I am due to exchange next week and so am franticly looking for quality rentals at the moment.It is quite a stressful experience but hopefully will pay dividends over the next couple of years.

[Harry Sacks]

Uncle monty,

I was just wondering if you've been to Sleddale Hall, (Monty's cottage).

[English Rose]

Logically / economically, I'm sure that I should STR, but I can't face the hassle of possibly having to move every 6 months when I'm both the mum and the main earner. I'm hedging my bets atm by staying in a small house and saving like mad. If we had to move for my work (which is a possibility) then I would look to rent rather than buy.

Rachel

[headmelter]

I currently own and if it wasn't for the arrival of a couple of little wrinklies in the last 15 months I would definately STR. But you can't have it all your own way......

Well that'swhat her indoors is saying at the minute.

[Guest Charlie The Tramp]

The top outside London was end of 2004.

In my area the very edge of Greater London 2004 was indeed the top as we saw all those IR hikes that year. Come 2005 selling became difficult unless you dropped your price by £20k. After the cut in August 2005 prices remained stagnant until summer 2006 when they returned to their 2004 levels. IMHO my area is seriously underpriced in comparison with prices asked in the s**t areas of Inner London. Peace and tranquility are more valuable than living in an area crime ridden and paying premium prices for the privilege. Islington is one example which comes to mind, at least not far to use the Eurostar in the future.

London is going downhill YOY and within 5 years will show signs of a serious Exodus.

[DTMark]

The top outside London was end of 2004.

2005 ended slightly negative I bleive, 2006 was up about 3.7% for my area which was negative if you take inflation into account and could have made more in other investments.

2007--the year Gordon's miracle ends.

About 10% down on 2004's prices round here at the moment, the same property that was for sale in 2004, on this estate, is mostly still for sale now, or withdrawn altogether.

Anyway - I'm not sure I'd ever bother STR for the purpose of financial gain just because history has always proven it is impossible to time the direction of the housing market with any accuracy - it's a big upheaval and hardly without risk.

But: if moving (say, for work) to a very different area, I wouldn't consider anything other than STR for at least 6 months to make sure the job is right, the area is right, and to do a bit more research: then, and only then, would I consider buying.

The Kirsty woman is keen that people "don't throw their money away on rent" when moving around: I'd hate to throw it away moving somewhere, finding I hate the job, getting the chance of my old job back or another job somewhere else, and losing a small fortune in fees.

[uncle_monty]

Yes, but your question was..

You are talking about timing it to perfection and that's the difficult bit. I always follow the old Rothschild adage "Leave the last 10% to the market".

Wise words.

However, if the discount required to shift the house once HPI has reach YoY +3% is, say 13% (a hefty discount), then you're effectively paying 3% for a hedged position in property. It makes voluntarily STRing seem like even more of a gamble.

[uncle_monty]

No I dont think you get it. If you sold now there is obviously still a few mugs knocking around and the media is still pushing "houses to only ever go up" mantra. So at this stage you may sell within a few months and only 10% say below asking price.

Now if sentiment turns (when the last express employee sells up) then you could find yourself in trouble.

You see sentiment is key. You could put your house up for 20% less and still somebody will think "Christ take a look at this house it has gone down by 20% in 6 months, the market really is crashing...it will be even lower in 3 months." Nobody will touch houses in a dropping market especially if the media hypes up any crash. Imagine the effect a headline in the Express stating "House Price Meltdown - Prices may drop back to 1999 levels" will have on buyers sentiment.

It will happen.

Given current employment conditions, if interest rates force HPI to move to YoY +3%, I believe that there will be sufficient demand to shift good housing stock at a modest discount. I'm happy with this as an exit strategy (bearing in mind I'm in prime central London, with reasonable equity (bought in Dec 05)).

Doomsday scenario you allude to (high unemployment, significantly higher rates, financial market meltdown, etc.) is a different matter and calls for a different strategy. However, you discount the possibility of reaching this scenario via the HPI at +3% YoY staging post.

[uncle_monty]

Uncle monty,

I was just wondering if you've been to Sleddale Hall, (Monty's cottage).

Boy, my dear boy..........so you're a thespian too!

I recall many happy times there. One or two "sensitive crimes" included!

[Harry Sacks]

Boy, my dear boy..........so you're a thespian too!

I recall many happy times there. One or two "sensitive crimes" included!

I actually made enquiries into buying the place from NWW. Needs a bit of work mind.

[uncle_monty]

Logically / economically, I'm sure that I should STR, but I can't face the hassle of possibly having to move every 6 months when I'm both the mum and the main earner. I'm hedging my bets atm by staying in a small house and saving like mad. If we had to move for my work (which is a possibility) then I would look to rent rather than buy.

Rachel

I think we are in similar positions. Stay put, stockpile cash and watch the local/national market like a hawk. At the first sustained sign of trouble, consider selling, whilst knowingly taking modest discount. The stock bear/STR opinion is that no one can escape or call the top of their particular market. I think its possible for the committed few with intimate local knowledge.

[uncle_monty]

I actually made enquiries into buying the place from NWW. Needs a bit of work mind.

A lot of work. But it would also be the ultimate country retreat. Does it have a cellar?

[Michael]

In my area the very edge of Greater London 2004 was indeed the top as we saw all those IR hikes that year. Come 2005 selling became difficult unless you dropped your price by £20k. After the cut in August 2005 prices remained stagnant until summer 2006 when they returned to their 2004 levels. IMHO my area is seriously underpriced in comparison with prices asked in the s**t areas of Inner London. Peace and tranquility are more valuable than living in an area crime ridden and paying premium prices for the privilege. Islington is one example which comes to mind, at least not far to use the Eurostar in the future.

London is going downhill YOY and within 5 years will show signs of a serious Exodus.

But in modern times grotty areas like Hackney and Islington have always commanded higher prices than nice safe clean outlying areas like Bromley....Many London types like the squalor and edginess of the inner city..All people who own in places like Brixton and Hackney could afford to live in a tranquil and clean area a bit further out but CHOOSE the squalor .........It's so much cooler than living in Orpington........

[Orbital]

I wouldnt STR, its gambling on the market tbh. In the interest of chasing security Id rather invest my time in improving myself and my earning potential, working hard and spreading my investment across many assets.

Life's too short tbh.