Friday, February 8, 2008

Have you been ‘gazundered’ or considering ‘gazundering’?

Hassled by housing?

The Truth About Property returns to BBC Two for the spring, and we would like to hear how your lives have been affected by the downturn in the property market.

Posted by doomwatch @ 02:03 PM (795 views)
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4 thoughts on “Have you been ‘gazundered’ or considering ‘gazundering’?

  • Urine Trouble says:

    Holy Moley, this article is talking as if property prices have been dropping for years, when really this 1% fall that nobody can agree on means nothing to the average ” own a house because I need one brigade ” as it also means nothing to the average FTB. I love the bit where it says interest rates are still relativly high, I rembember +10% and it was 6.5% about 10 years ago. In answer to thier question how does the downturn affect me? well red rag to a bull I am affraid ( no pun intended ) lets start with normal people in normal houses living within thier means. I was born in 1976 my Dad was the only worker in the house, we had a mortgate, we had one car, we ate good quality food, had good clothes and shoes, went out at weekends, and my Dad had a private pension and life assurance all on ONE INCOME. Now I am age 31 still living with Parents me and my girlfriend both work, I run my own business. We could afford a house if we had no cars, no telly licence or sky, ate tesco value sh1t, never bought any carpets or furniture or new clothes and managed to avoid council tax, no chance of a private pension. I say let house prices crash, hard!

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  • japanese uncle says:

    Gazundering? Don’t even think about it. Treat housing market as if it never exists for the next three years and let the market melt down by itself to the earth meanwhile. Then you will be able to handle it with much more comfort.

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  • Here is my suggestion for a story:

    I am a Doctor of Finance lecturing at Durham University Business School. I am currently living with my family in a rented house because the cheapest 2 1/2 bedroomed house in the area is five times my income (£36,000 vs. £180,000). Quite nice houses five minutes’ walk from DUBS are ten times my income (£350,000 – £400,000), though on the estate I walk through to work all the houses are more than 15 times my income (£600,000 – £700,000).

    My landlord is getting a gross rental yield of 2.7% (£675 a month on a house that he bought for £297,500). The house is an 18-month-old Barratt town house, and I have been told that Barratt offer BTL landlords 10% cashback in each of the first two years and a 3% mortgage fixed for two years. If he has such a mortgage, it is due to run out this year. He will then find himself paying around twice as much in interest alone as I am paying him in rent. I find the deal he has gone for incomprehensible. As far as I can see it is a sure-fire way to lose money. We have never met, but I think it would make good television to set up a meeting for him to explain to me how he thinks he could possibly make a profit on this.

    Any ideas as to what my landlord can possibly have been thinking of?

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  • crash bandicoot says:

    monty032 – in my mind there are two types of BTL strategy “investment” and “pension”. The investment regeime is as you have outlined above. In theory the rent covers the mortgage and gives a bit more on top as a profit. In this case an interest only mortgage is acceptable as long as the rent is high enough. In the pension regieme the theory goes like this; you have a repayment mortgage and the rent goes towards paying it. If the rent doesn’t cover the mortgage it is not the end of the world as the goal is to purchase the house for less than it is worth. Essentialy it is similar to a pension in that you put some money aside each month and at the end you end up with a fund at the end of it, although you have no control of exactly what it is worth in the end.

    The investment folks will be feeling the pinch at the moment as you point out. They will soon be contributing to the crash. The pension folks will be harder to shake out. Their problem is that they could make more money putting their money elsewhere. As I said this is only my theory, I would be interested to hear some views on this.

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