Friday, December 7, 2007

To what extent does history repeat itself?

UK rental market 'wobbling'

May 2002: "People who have bought properties in the UK specifically to make money from renting them out - known as buy-to-let investors - have been urged to take a more cautious approach. Income from rental properties has fallen for the fifth quarter in a row, the Royal Institution of Chartered Surveyors (RICS) has said. There is a waiting list of landlords. Normally there is a waiting list of tenants Rental yields in the central London market have been under pressure for several months because a slump in corporate lettings has led to too many properties on the market."

Posted by confused76 @ 12:26 PM (868 views)
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5 thoughts on “To what extent does history repeat itself?

  • Some of the comments beneath the article are interesting: “The fact that 77% of Buy-to-let mortgages were taken out in the last year is alarming evidence of a bubble in it’s final throes. A lot of people are going to get seriously burnt by this speculation.
    Richard, Nottingham, UK ”

    “in its final throes” – That was 5 years ago!

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  • IMHO the buy to let was an invention of the lenders to keep growing their pyramid scheme business once FTBs were starting to be priced out.
    Since cost of borrowing steadily decreased since 2002 to 2006 (by way of base rate reductions but also by relaxing lending standards) BTL has prospered.
    But if there is no more demand to replace BTLs (who are at the end of the road since their profitability [email protected]) please tell me how they can keep going

    I do not believe the trash about Russians, Kazakstans, and All-the-Stans… foreigners aren t necessarily fool

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  • That was then this is now. Affordability is the issue, as we all know if there comes a time when things are just unaffordable on any measure then that must call for a period of stagnation or fall (people can afford the unaffordable for a time, but its borrowed time). Add to this outside factors and the only sustainable move is down until the yield makes more sense. Its easy to say all this in hindsight – obviously – but I dont believe that in 5 years time someone else will dig up current articles and be able to point to us in the way Cornishman has pointed to people like Richard. If BTL started in 1996 then 6 years on doesnt seem mature enough or actually big enough to say “final throes” now 11 years on with (final) exponential growth and around 900,000 to 1million mortgages in place…. every Tom Dick and Harry wanting to play the game and yeilds below cost… OUCH.

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  • I like the old articles too, but I think that we’re getting confused. What was written then, is for all intents and purposes, now. We are in the same situation as then, as until the credit crunch of August, effectively nothing has ‘happened’.

    This is because most people, I think, make assumptions about market behaviour concerning the last three to four years (the dot.com and 9/11 events were before this article). Not that many of us (except on this website) remember 10 or 20 years ago. For a start, most of us are too young. I wish I was. A failing of human memory is that we only remember the good times and underestimate risk accordingly.

    What I think we are seeing is actually the truth in these articles. A bust should have happened ages ago, but for ‘stability’ in the global and national economy. And I don’t mean the Brown version of stability. So, the thing has perpetuated itself to this point. You could say that these articles are ahead of their times.

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  • Renting And Praying says:

    Interesting to note that according to the graph on the HPC homepage, back in 2002, the long term trend line crossed the actual houseprice line. If this graph is accurate it does put the ‘experts’ comments back in 2002 into perspective. That said, like the ‘experts’ I was a bear back then. I didn’t sell to rent then, but I did about four months ago. Looks like I could have called the top of the market by chance.

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