The Great House Price Crash 2005?

[Numani]

Well to hold out for lower, as an investor would have just been plain greedy, and risky IMO.

<{POST_SNAPBACK}>

exactly.

I know there were deflationary fears about in the market for about 10 weeks in the summer of 2003. The BANK cut rates to 3.5% and then reversed them to 3.75%...why they knew there was inflation creeping up and deflation fears were overblown and that was when the fix rate should have been put on. He was running a nice net profit and could have locked it in for five years and got on worrying about upkeep and rental growth.

$0.02

[Michael]

Many reputable economists were talking about a deflationary period at that time. Picking  the bottom of the interest rate cycle is as hard to forecast the top of the house price cycle.

<{POST_SNAPBACK}>

yes, that's true but 5% fixed for 10 years plus was exceptionally low.....

and i'd have bitten their hand off right then if i'd been in a position to buy or been an existing mortgagee........That was in 2003!......10 year rates now are presumably much higher

[Michael]

To be fair to the bloke - he figures the first flat would be his pension - and, as New Labour have robbed us of our pensions, you can't blame people looking for an alternative.

But, and the big but for me was, what a bloody risk! How much were his joint mortgages - £340k - it was some massive figure. He's only going to need a few months void in his flat, or a little bit more on interest rates and he is in a mess. What does he own at the moment? Two properties he paid £380k for that could easily now only be worth what he owes on his mortgage. A bit more of a fall and he's in negative equity territory.

What a wonderful, wonderful program. I even took to that bloke presenting it, who drives me nuts with his attempts to present Match of the Day.

What did you think dogbox?

<{POST_SNAPBACK}>

you mean Adrian Chiles!

He's definitely a sound bloke and IMO he's even ok on Sunday's Match of the Day ....and knowing what I do of him i would imagine plenty of the stuff he came out with in the HP programme was off his own bat.

[Walton Goggins]

....and knowing what I do of him i would imagine plenty of the stuff he came out with in the HP programme was off his own bat.

BBC have allowed / encouraged Adrian and the Money Programme team to put together a strong argument for house price crash, I too was waiting for the uplifting happy ending which never came, Roger Bootle having the last word was a telling editorial judgement, particulary bearing in mind his closing statement.

Labour will be keen to postpone economic bad news until after the election, post-Hutton the BBC will be equally determined to highlight the awful truth, thereby damaging the government, and I will be surprised if this kind of programming is not increased in frequency, strength and scheduling for maximum impact.

Along with the Money Programme that researched Lie-To-Buy mortgages - this show was much appreciated.

[THE SAGE]

C'mon guys a couple of people that make an admittedly bad property decision

does not constitute a crash?

[Michael]

C'mon guys a couple of people that make an admittedly bad property decision

does not constitute a crash?

<{POST_SNAPBACK}>

Quite right, but it's crashing anyway!

Haven't you noticed BBB, TTRTR and the gang have melted away into background like a here-today-gone-tomorrow pop idols...............

[Boxman]

Thanks for your honesty.

Why and how did they apprich you?

Did they ever mention this website?

Hi

I too was on the programme last night briefly as one of the featured STRers near the end. I got onto the programme by responding to a BBC website advert of sending them details about my 2004 prop experience back in December last year.

It was good fun, a lot of filming for a 20sec comments.

At least the message I was hoping the programme would put across was made.

This will make anyone in a chain think twice this morning about what they are doing if they are trading up!!

BTW we never discussed this website back in Jan when the filming was done but then again I only knew about it myself after then.

[Derek]

OK, here are a few answers to your geberal comments -

Crazy88, I was approached by the BBC as an example of a BTL investor, I am pretty active on the Housemouse site commenting on property conditions (the 2nd or 3rd most active member). They wanted examples of someone who had been hit by the interest rate rises - and I was a good example. I am pretty sure that the BBC researchers looked at lots of websites and contacted many people, but many of them wouldn't have been iterested in divulging their financil pain.

Crazy88, I don't believe that I am depriving FTB from buying a home. Often, FTBs are so burdened with government debt (and by that I mean student loans etc), and other debt like car loans, that even if house prices were to drop 20% or so, they still wouldn't be able to affford them.

Crazy 88, I also don't believe that I am depriving families from buying a home. Many of my properties are 2 beds, and the 2nd bedroom is very small, only suitable for a child up to the age of 5 or 6. I do have some larger 2 bed properrties with 2 double bedrooms and a few 3 bed properties. I have 5 Housing Benefit tenants (all single mums with 1 child, or 2 partners and a child). These tenants would never be able to afford to buy, my rents are reasonable and the properties are on a private housing estate in Derby, so they are getting a good deal. I also 'nicked' one HB tenant from the clutches of a landlord who would not maintain the property, and they were pretty gratefull I can tell you.

KOTC, I operate as a LTD company, there aren't many mortgage products available for LTD companies - so I had to take what I could get. A fixed mortgage was not an option for me in 2003, also I am tied to Mortgage Express (with redemtion penalties) until April 2006.

Muttley, Most landlords have less than 5 properties. A lot of people (and I mean a LOT), jumped on the get quick rich bandwagon too late and are now getting their fingers burnt. Thats just hard luck. I buy properties with my 'eyes open', and I know interest rates can rise. I have always budgeted for a 2% rise over my initial offer value (looks like that might not be enough now). Lets face it though if rates go up by another 1% I will have to wait in the que ue to jump of a high building as there will be so many people in front of me.

Muttley, certainly to by knowledge, there are a number of landlords selling up - this will put people on the streets, in particular HB tenants.

[Guest Charlie The Tramp]

KOTC, I operate as a LTD company, there aren't many mortgage products available for LTD companies - so I had to take what I could get. A fixed mortgage was not an option for me in 2003, also I am tied to Mortgage Express (with redemtion penalties) until April 2006.

<{POST_SNAPBACK}>

Are your mortgages IO, and what was the rate you borrowed at?

[King of the castle]

Are your mortgages IO, and what was the rate you borrowed at?

<{POST_SNAPBACK}>

Hi Charlie, you've quoted Derek but highlighted my name, are you 'speaking' to me or Derek?

[Derek]

Charlie, yes, all my mortgages are Interest Only.

I am currently paying an average of 6.6%, so when they were taken out they would have been around 5.25%.

Remember, LTD company mortgages are usually 0.25% to 0.5% above non-LTD BTL mortgages.

I also have 3 non-LTD company properties which ARE on a fixed rate of 5%

[Guest Charlie The Tramp]

Hi Charlie, you've quoted Derek but highlighted my name, are you 'speaking' to me or Derek?

<{POST_SNAPBACK}>

Hi KOTC, sorry for confusion I was asking Derek, but would be interested to know if Pro LLs use IO mortgages in general to add to their portfolios like your goodself.

[Guest The dude]

OK, here are a few answers to your geberal comments -

Crazy88, I was approached by the BBC as an example of a BTL investor, I am pretty active on the Housemouse site commenting on property conditions (the 2nd or 3rd most active member). They wanted examples of someone who had been hit by the interest rate rises - and I was a good example. I am pretty sure that the BBC researchers looked at lots of websites and contacted many people, but many of them wouldn't have been iterested in divulging their financil pain.

Crazy88, I don't believe that I am depriving FTB from buying a home. Often, FTBs are so burdened with government debt (and by that I mean student loans etc), and other debt like car loans, that even if house prices were to drop 20% or so, they still wouldn't be able to affford them.

Crazy 88, I also don't believe that I am depriving families from buying a home. Many of my properties are 2 beds, and the 2nd bedroom is very small, only suitable for a child up to the age of 5 or 6. I do have some larger 2 bed properrties with 2 double bedrooms and a few 3 bed properties. I have 5 Housing Benefit tenants (all single mums with 1 child, or 2 partners and a child). These tenants would never be able to afford to buy, my rents are reasonable and the properties are on a private housing estate in Derby, so they are getting a good deal. I also 'nicked' one HB tenant from the clutches of a landlord who would not maintain the property, and they were pretty gratefull I can tell you.

KOTC, I operate as a LTD company, there aren't many mortgage products available for LTD companies - so I had to take what I could get. A fixed mortgage was not an option for me in 2003, also I am tied to Mortgage Express (with redemtion penalties) until April 2006.

Muttley, Most landlords have less than 5 properties. A lot of people (and I mean a LOT), jumped on the get quick rich bandwagon too late and are now getting their fingers burnt. Thats just hard luck. I buy properties with my 'eyes open', and I know interest rates can rise. I have always budgeted for a 2% rise over my initial offer value (looks like that might not be enough now). Lets face it though if rates go up by another 1% I will have to wait in the que ue to jump of a high building as there will be so many people in front of me.

Muttley, certainly to by knowledge, there are a number of landlords selling up - this will put people on the streets, in particular HB tenants.

<{POST_SNAPBACK}>

"Crazy88, I don't believe that I am depriving FTB from buying a home. Often, FTBs are so burdened with government debt (and by that I mean student loans etc), and other debt like car loans, that even if house prices were to drop 20% or so, they still wouldn't be able to affford them"

I'm a potenetial ftb, with very manageable debts....so please don't be so presumptious of the plight of ftb's......I can assure you when prices do drop 20% or so, then I'll definately be in the market again.

[King of the castle]

Hi KOTC, sorry for confusion I was asking Derek, but would be interested to know if Pro LLs use IO mortgages in general to add to their portfolios like your goodself.

<{POST_SNAPBACK}>

Hi again Charlie,

Yes I use IO on my investment properties.

[Derek]

Dude, no presumptions made, obviously comments like mine on this forum can only be general in nature. As you well know everybody's circumstances are different. I am just commenting on the circle of people that I know and work with.

In general then, over the past few years, things have been made difficult for FTBs (and 'upgraders') by governments of all colours -

Abolition of married couples allowance, meaning you pay more tax.

Abolition of MIRAS, this caused a lot of debt to arise

Stamp duty static for 10 years, this caused extra burden of cost in buying a property

Abolition of re-claim of dividends by pension funds, meant people had to put more money into pension, and less available for mortgage.

Student loans debt.

Endowments scandal - this actually frightened people off from buying a property, as well as getting them into debt.

and so on

[Guest The dude]

Yes a well made prog, well done all those involved.

Hope there is a follow up later in the year.

<{POST_SNAPBACK}>

Hope there is a repeat - I missed it (drat and double drat!) Having said that, I thank everyone here for highlighting the most salient parts of the programme for me. The BBC needs a pat on the back too - there is a part of me, y'know, that thinks this is some kind of 'softening up' process, for all of us made in collusion with Government. They know what's going to happen. They're just preparing us for it. Personally, I just can't wait 'til we get this general election over and done with...I think we'll see some real fireworks then. Enjoy the show!

[brainclamp]

Hi Charlie, you've quoted Derek but highlighted my name, are you 'speaking' to me or Derek?

<{POST_SNAPBACK}>

Lot of the usual bear backslapping and jubilation here.

Was there anything in the program that explained

(1) The effects of massive immigration to the UK, comprable in measure to the mass immigration into America during the peak 1880-1920 period, on stock over the next 2-3 years? http://www.ellisisland.org/immexp/wseix_5_3.asp?

(2) The total lack of new capacity to match it?

(3) The mathematical certainty of a renter-rich landowner society, within 4 years.

Although interest rates will rise, the capital gains will carry on after a stagnate pause.

[war]

It was a good well balanced programme, I thought. They included whatever could be done for the half hour. It appears that the BTL editors in the Beebs are losing their control.

However, we need more programmes like this to make the public aware of the real state of the property market and the dangers of continuing to take huge debts. It will take some effort to wipe out the happy memories of those years of property boom programmes at prime times in all the channels. The first step should be to boot out Kirstie and phil from the channel 4. I am also seeing the million pound property experimenters running riot in certain channels. Channel 4 and 5 have not yet come to their senses.

[Derek]

The effects if massive immigration to the uk ?

Well actually in property terms it doesn't cause as much problems as you might think. Nearly as may Brits leave the UK, permanently (emmigration, retiremenr etc) as people settle here.

I have notice a LARGE influx of Eastern european immigrants coming into Derby, but they are entitled to come here (as I was entitled to work in Germany for 10 years)

What we want is productive people coming to the UK, not necessarility with money, but with skills and the willingness to work. We dont want people coming here who dont want to work.

[Van]

I just can't resist putting my comments here -

Yes its your 'very own' Derek. (the BTL guy with the 13 property portfolio)

I too thought the program was very well presented, I certainly don't agree that prices will drop 20% though, and even if they did it wouldn't really affect me as I HAVE NO PLANS to sell any properties.

Would I buy any in the current climate, no I wouldn't.

Also, although I have been affected by interest rates,  I wasn't moaning about the fact I was making a loss, I factually told it 'as it was' - I am now running at (or was running at) a loss. Since the program was filmed in January, I have upped my rents a little (not extortionate by any means), and I am still losing, but not by much.

I have, and probably will have to for the next year or so, subsidise the running costs of my property from other income streams. I can afford to do this, I have faith in the long term soundness of investing in property.

<{POST_SNAPBACK}>

I did not watch the programme, but it sounds like fair play to you Derek. A serious question: how will your position change if rates go up to 5% (inevitable), and 5.25% (very probable) later this year?

Can you give us some more details on your BTL portfolio wrt what area you own properties in?

Cheers.

[Van]

brainclamp, we are building MORE houses than ever before, and at a GREATER rate than immigration can take slack up. Persimmons, Barrett, Bovis and the 20 or so other builders are building tens of thousands of new houses a year. Residential property has never experienced such a boom in newbuilds.

I look forward to the inevitable period in 4-5 years time when all the McJobs in Britains have run out and there is net emmigration, you will be say "what is there to stop house prices from falling now that everyone is leaving Britain"!! LOL.

Lot of the usual bear backslapping and jubilation here.

Was there anything in the program that explained

(1) The effects of massive immigration to the UK, comprable  in measure to the mass immigration into America during the peak 1880-1920 period, on stock over the next 2-3 years? http://www.ellisisland.org/immexp/wseix_5_3.asp?

(2) The total lack of new capacity to match it?

(3) The mathematical certainty of a renter-rich landowner society, within 4 years.

Although interest rates will rise, the capital gains will carry on after a stagnate pause.

<{POST_SNAPBACK}>

[Mr_commonsense]

I missed the bloody program, my video recorder failed me!!

anyone care to post me a copy?

[The Masked Tulip]

It probably will be repeated sometime this week. Have a scan through the TV listings.

[Mr_commonsense]

It probably will be repeated sometime this week. Have a scan through the TV listings.

<{POST_SNAPBACK}>

Im not so sure Tulip, I think the Beeb would only dare to show the program once..

[JustYield]

Hey Derek, glad to see you're back!

There's some chatter about you over on usenet in uk.finance:

http://groups-beta.google.com/group/uk.fin...354b6f80f086aa8

"What I did find interesting was the buy to let guy who says that he is now

losing money on his investments.  Surely he is in the minority, he can't

represent the majority or the crash would be happening.  Maybe the BBC just

found someone to offer an alternative perspective, shame they didn't find

another buy to lettor who is still making money to balance the argument.

What I did find funny about the buy to lettor was that he appeared to have

bought all of his property on the same street.  Need we say anymore. "

Suggest you go over there and correct her assumptions.

I thought you came out of it alright, you were running "what-if" scenarios and have factored in a period of negative cash flow although it was not made clear how you could afford to do so. I don't think the average BTL newcomers do such detailed cash flow analysis and many are in denial that the cash-flow will go negative, if it is not already.

Stick around mate.