Jump to content
House Price Crash Forum
Panda

Hpc Is Here, But What For The Future?

Recommended Posts

We are now obviously in the midst of a HPC, but for the coming 10 to 20 years, what do you think the yields on commercial and private property will revert to?

Over the past ten years they seem to have dropped as low as 2%, and anything up to a maximum of say 7%, where next, what would you consider to be a yield where you would say, ok, lets get back in, beats the savings account.

I ask because i do not think we will see any capital appreciation for at least the next ten years, maybe longer, so yields will rise and values fall, and rents rise in line with inflation.

Share this post


Link to post
Share on other sites

for decades landlords worked on ten times income so they would pay 60k for a property that produced a income of 500 quid a month

after allowing for tax ,interest, repairs and fees it still took them 15 years to break even but these new smart investors :lol: now work on sums as low as 30 times income.

now thats what i call one hell of a long term investment.

I to beleive in the long term and the long term is saying to me to buy in places like Bulgeria and not in the UK

Share this post


Link to post
Share on other sites

Not that I'm looking but 10% yield on a decent prop would be an entry point.. Prices will need to drop and rents move to get naywhere near those numbers and I cant see this in the UK until maybe 2012.

Share this post


Link to post
Share on other sites
Not that I'm looking but 10% yield on a decent prop would be an entry point.. Prices will need to drop and rents move to get naywhere near those numbers and I cant see this in the UK until maybe 2012.

I agree 10 time income or 10% yield would be an entry point, anything less and the "hassle" cost makes property totally unattractive. But lets not remember, i do not think we will see any capital appreciation on property until at the earliest 2018 to 2020, so yield will have to rise otherwise property is a dead duck for the wise, obviously there are the smart ones who are happy to subsidise their investment, but i am not smart? ;)

Share this post


Link to post
Share on other sites
I agree 10 time income or 10% yield would be an entry point, anything less and the "hassle" cost makes property totally unattractive. But lets not remember, i do not think we will see any capital appreciation on property until at the earliest 2018 to 2020, so yield will have to rise otherwise property is a dead duck for the wise, obviously there are the smart ones who are happy to subsidise their investment, but i am not smart? ;)

Generally speaking if you buy in 2014 then that should be the start of the recovery phase according to the chart on this website 2020 being the next top. :P

Share this post


Link to post
Share on other sites
Generally speaking if you buy in 2014 then that should be the start of the recovery phase according to the chart on this website 2020 being the next top. :P

2020, next peak, way too early, this thing will not trough till 2018, peak alot later!

The thing which i would question, this relate's to you Bardon, the wage to loan ratio's in Perth and Brisbane, are higher than here in the UK, alot higher, the average Ozzy is struggling really struggling, interest rates are rising, cost inflation is rising faster than here, and wages are still cr@p. Negative gearing is rife, just for tax offsets, which makes it viable, landlords have been init for the longterm in Oz, yeh right ok, with no capital appreciation for at least the next ten years in Perth or Brisbane, where do the smart landlords go? I think there fall will make ours look "not to bad"? Mortgage stress, rising costs, all the cashed up Brits will no longer be able to afford to migrate, and if they do go, they will be home because it just ain't cheap in Oz any more, so less demand for rentals aswell, all add's up to a great big HPC in Oz? Bigger than here me thinks?

I await your response?

Edited by Panda

Share this post


Link to post
Share on other sites

If we are in the midst of a HPC, at what point will the average person be able to afford an average priced house? Or have we seen the end of affordable housing forever?

Share this post


Link to post
Share on other sites
Guest happy?
for decades landlords worked on ten times income so they would pay 60k for a property that produced a income of 500 quid a month....

And that assumes full occupancy too, I'd be looking at £600 * 10 months p/a as ten times income on £60k.

Property is so overpriced, and the economic outlook so poor that the only sensible commercial tenancies are those on a Job Centre or a County Court - neither of these will be going out of business any time soon.

Share this post


Link to post
Share on other sites

anyone care to take into account the effects of:

1) the retiring and dying baby boomers generations, also the associated pensions crisis, where effectively the still-working will have to subsidise the pensions and services for these top-heavy retired generations, and the proportion of working to non-working will fall and fall

2) stable or falling populations in the North, Wales and Scotland

Share this post


Link to post
Share on other sites
If we are in the midst of a HPC, at what point will the average person be able to afford an average priced house? Or have we seen the end of affordable housing forever?

You have a long wait, it took ten years to get here, it will take the same back down i am afraid. This will not happen over night, because you can bet as soon as many bears buy back in they will be looking for capital appreciation, this thing will seem like it will last forever and ever and ever? ;)

Share this post


Link to post
Share on other sites
You have a long wait, it took ten years to get here, it will take the same back down i am afraid. This will not happen over night, because you can bet as soon as many bears buy back in they will be looking for capital appreciation, this thing will seem like it will last forever and ever and ever? ;)

I think its impossible to tell at this point...are you able to predict interest rates for the next 10 years?

My guess, would be low in three years, stagnation (Buy), next peak 2022. I also think Liverpool will beat manu, but hell, who knows!

Share this post


Link to post
Share on other sites
for decades landlords worked on ten times income so they would pay 60k for a property that produced a income of 500 quid a month

after allowing for tax ,interest, repairs and fees it still took them 15 years to break even but these new smart investors :lol: now work on sums as low as 30 times income.

now thats what i call one hell of a long term investment.

I to beleive in the long term and the long term is saying to me to buy in places like Bulgeria and not in the UK

The long-term gross yield on UK property is around 9%. We've recently seen newbie BTL idiots buying propeties at 4% yields, and I've seen houses selling where the gross yields would be in the region of 3.5%, that is gross stupidity.

Share this post


Link to post
Share on other sites
2020, next peak, way too early, this thing will not trough till 2018, peak alot later!

The thing which i would question, this relate's to you Bardon, the wage to loan ratio's in Perth and Brisbane, are higher than here in the UK, alot higher, the average Ozzy is struggling really struggling, interest rates are rising, cost inflation is rising faster than here, and wages are still cr@p. Negative gearing is rife, just for tax offsets, which makes it viable, landlords have been init for the longterm in Oz, yeh right ok, with no capital appreciation for at least the next ten years in Perth or Brisbane, where do the smart landlords go? I think there fall will make ours look "not to bad"? Mortgage stress, rising costs, all the cashed up Brits will no longer be able to afford to migrate, and if they do go, they will be home because it just ain't cheap in Oz any more, so less demand for rentals aswell, all add's up to a great big HPC in Oz? Bigger than here me thinks?

I await your response?

Okay dont think that I am saying things are great over here or that house prices wont drop. I am big on the property cycles and put a lot of faith in them predicting the future thats where mu UK forecast came from. I also know very well about the affordability crisis. Not all wages are crap my circle of friends have good incomes and done very well for themselves and have fairly decent net worth many of them are Uk expats. They hold property and dont neccasirly loose sleep over IR increases if you know what I mean. The only people that dont have jobs here are surfers, druggies and pimps and there is no reason to see that changing and there are certainly no prospects of employment shocks on the horizon.

High IR's are hurting and that is exactly what they are supposed to do and they look like they are going to take the heat out of the economy and employment. The biggest problem right now is the bear market in ASX very large losses and margin calls there is some serious pressure as a result of this. 08 listings are up sales are down we know what that means property price will come back. If your house is for living in I wouldn't worry to much about the cycle as you are in it for lifestyle not investment and I dont think that growth will be flat for 10 years either rather I think history will repeat itself. First time buyers have to go to the outskirts to start its not ideal for them but thats the way it is. Inner city aprtaments with three bedrroms and two bathrooms are now in damnd from families that are priced out of house blocks.

Investment wise in Brisabne entry level houses yields are up to 5.5% + and I dont think that these houses will come back in price and they are the lowest risk. New build Houses on big blocks next to salt water in population growth areas that are having major infrastructure investment should still get growth in my view. This would cost you $100 a week holding cost after tax breaks.

Ozzie demographics are very different to the UK we will see continued population growth well into 2030 as well as solid GDP growth particularly in Perth and Brisbane. As you know most of the cities are also on differing cycles Brisbane and Perth being prime examples. Perth done nothing last year afetr a mammoth run, Brisbane had its first good year since 04 and went up 20% no one seen that coming and of course its unsustainable. I do my projections based on long term growth of 7% compounding which I dont think Brisbane will have any problem achieving.

Share this post


Link to post
Share on other sites

Yields were up to 17% in 1995.

I wouldn't bother getting involved until yields are about 14%, although if we got to 10% where there were major infrastructure improvement planned in outer London regions (Crossrail destinations), it might be worth a punt. Hugely unlikley to happen for at least 3-4 years however, unless we do start crashing at 15% per annum upwards

Share this post


Link to post
Share on other sites
If we are in the midst of a HPC, at what point will the average person be able to afford an average priced house? Or have we seen the end of affordable housing forever?

A quick ready reckoner on what the next twenty years holds.

2009 - Fear

2010 - Panic

2011 - Anger

2012 - Despair

2013 - Humiliation

2014 - Capitulation

2015 - Resignation (BUY HERE - AFFORDABLE AT 3-4x EARNINGS TILL 2020).

2016 - Acceptance

2017 - Pessimism

2018 - Caution

2019 - Optimism

2020 - Satisfaction

2021 - Happiness

2022 - Glowing (UNAFFORDABLE BY RATIONAL MEASURES TILL 2034).

2023 - Clever !?

2024 - Smugness

2025 - Arrogance

2026 - Euphoria - (STR HERE IF YOUR BRAVE ENOUGH).

2027 - Denial

2028 - Fear again.

So, between 2015 - 2020 then...and yes, houses will be affordable again, I wouldn't worry about that.

Happy? Good. Glad that's been cleared up.

GT.

Edited by Backseat Economist

Share this post


Link to post
Share on other sites

I think we all knew commercial had peaked last year when the barclays building was bought for 1 billion....was the yeild 3.9%?? lower than rpi...I remember saying to colleagues "that, my friend, is the greatest fool". Seriously though, these yeilds pushing out are a ****er fro developers...i remember valuing a development recently, whereby a 0.5% increase i yeild completely wiped out any profit...an increase in yeilds of 3% = disaster.

panda- im arsenal, so i NEED united to drop points. Cant see us doing Chelski though. Whatever happens....I love supa sundays.

Share this post


Link to post
Share on other sites
Yields were up to 17% in 1995.

I wouldn't bother getting involved until yields are about 14%, although if we got to 10% where there were major infrastructure improvement planned in outer London regions (Crossrail destinations), it might be worth a punt. Hugely unlikley to happen for at least 3-4 years however, unless we do start crashing at 15% per annum upwards

I had some dealings with a UK Investor when I was in the US and at the time he was buying 30% yields and he told me that he was getting better net returns from props in the UK that he bought around then in places like leicester. He was actually getting a better net return from a 17% UK prop than a 30% Us prop as the outgoings were far higher for the Us prop.

Share this post


Link to post
Share on other sites
A quick ready reckoner on what the next twenty years holds.

2009 - Fear

2010 - Panic

2011 - Anger

2012 - Despair

2013 - Humiliation

2014 - Capitulation

2015 - Resignation (BUY HERE - AFFORDABLE AT 3-4x EARNINGS TILL 2020).

2016 - Acceptance

2017 - Pessimism

2018 - Caution

2019 - Optimism

2020 - Satisfaction

2021 - Happiness

2022 - Glowing (UNAFFORDABLE BY RATIONAL MEASURES TILL 2034).

2023 - Clever !?

2024 - Smugness

2025 - Arrogance

2026 - Euphoria - (STR HERE IF YOUR BRAVE ENOUGH).

2027 - Denial

2028 - Fear again.

So, between 2015 - 2020 then...and yes, houses will be affordable again, I wouldn't worry about that.

Happy? Good. Glad that's been cleared up.

GT.

Nice. I think capitulation will occur a little quicker mind (or perhaps thats just convienient for me!).

Share this post


Link to post
Share on other sites
I had some dealings with a UK Investor when I was in the US and at the time he was buying 30% yields and he told me that he was getting better net returns from props in the UK that he bought around then in places like leicester. He was actually getting a better net return from a 17% UK prop than a 30% Us prop as the outgoings were far higher for the Us prop.

Out of interest, what would be his outgoings on a US property

I know as far as commercial property is concerned (in the UK) if you are fully let and manage the property yourself then outgoings are pretty much zero after entry cost (residential is slightly different as you still have insurance and upkeep costs)

Edited by BearNecessities

Share this post


Link to post
Share on other sites
panda- im arsenal, so i NEED united to drop points. Cant see us doing Chelski though. Whatever happens....I love supa sundays.

Yields are poor, but more importantly, hope you do the league, good luck, we will hopefully turn the mancs over for you!

Still not forgiven you for 89 though, but made a great film!

Share this post


Link to post
Share on other sites
Out of interest, what would be his outgoings on a US property

I know as far as commercial property is concerned (in the UK) if you are fully let and manage the property yourself then outgoings are pretty much zero after entry cost (residential is slightly different as you still have insurance and upkeep costs)

  • Property taxes are the big one which can be as much as 5% of the value ever year ie 2400 on a 50k prop

  • 10-15% Management

  • One month letting fee for new tenant and you would typically change at least once a year

  • Insurance-expensive and then theydont pay anyway

  • Interest

  • Lawns

  • Snow clearing

  • Water

  • Repairs & Mainteance- these houses were old and need a lot of it very high costs especially if you cant check up on them

    • cant remember them all but lots of fiddly things and hidden costs that just keep coming

    I wouldn't reccomend it. ;)

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.

  • 293 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.