Friday, January 9, 2009

Some nice quotes

Why we’re plunging into a falling property market

“I had a big deposit, got my mortgage easily and fixed the rate for two years. If I then want to move again, the prices of other properties will have fallen just as much so it will make no difference in the end. You're not losing real money.”

Posted by daddy pig @ 03:36 PM (1326 views)
Please complete the required fields.



8 thoughts on “Some nice quotes

  • So we have a couple of inheritance buyers, a Swedish saleswoman, a city trader, a city solicitor, a financial PR executive and a consultant in the lucrative oil and gas field, who have been used to prove that asking prices of over 300K and above for a two bed in Ealing, Fulham and Chelsea are now good value and should be snapped up before “everyone else piles in next April, May or June, or whenever.” I still struggle to see how these prices are affordable to anyone on an average wage, even in the hallowed streets of old London Town (average wage – 30K: 10% deposit minimum 30K leaves 270K to be financed and on 30K/year you would need to be able to secure a mortgage of 9x salary). This is not an indication of a sea-change of popular opinion, but just another opportunity for those who have to shove it in the faces of those who haven’t, and don’t try to justify their position by saying they chose those jobs and therefore deserve their opportunities. There are many, many people who scrape by doing meaningful jobs, which actually give something back to society and these are the ones who will never, ever be able to buy a two bed for 300K, even though they are the ones who should. Prices NEED to come down much further.

    Reply
    Please complete the required fields.



  • These people must be good at what they do to be able to afford these places. However, it just amazes me every time how peoples IQ drops 50 points when it comes to buying property.

    Reply
    Please complete the required fields.



  • japanese uncle says:

    Fools and their money will soon be parted.

    Reply
    Please complete the required fields.



  • Do these people actually exist ?

    Reply
    Please complete the required fields.



  • Alex Daly and her sister were looking to invest around £400,000 to £600,000 that they have pooled from savings. “I’ve always believed in bricks and mortar, something you can touch,” she says. “And with prices where they are at the moment, I hope a property will yield better than a bank.”

    “A lot of friends say wait’, but just as you don’t know when you’re at the top of the market, you also don’t know when you’re at the bottom. We’ve had an offer accepted on a flat because we didn’t want to be up against lots of competition when everyone else piles in next April, May or June, or whenever. Also, we’re looking at it for the long term, as we both have young children, so it doesn’t matter so much if prices fall a bit further before recovering later.”

    Such brainless platitudes. I think it’s fairly obviously prices will be lower a year from now, possibly significantly if unemployment really kicks in.

    That said it looks like they’ve done their rental research and are nearly cash buyers, so will probably turn a blind eye to falling values.

    Reply
    Please complete the required fields.



  • I don’t comment very often on this forum, although enjoy going throught the comments often. But here I couldn’r resist. Unbelievable spin stories! Who on earth is silly enough to buy in this market? The most tragi-comic story here is the one from Ms Prakash from the frozen northern land of Sweden. She bought not one but TWO flats in 2007 for £ 415K. In her own words (or the interviewer’s) she obviously felt good that she was able to negotiate recently a SIMILAR flat’s price down a pidly 2.57% from £ 350K to £341K. that means that she has lost 18% in 1 or 2 years on the first 2 flats (surprise!). Irrespective of whether she can rent that new flat at all, or of what happens to prices going forward, she already has generated a negative return of of almost MINUS 10% a year on the full capital value of the previous 2 flats! Worse: on the assumption that she leveraged herself 75% to buy these flats, she has lost almost all her equity! It is unbelievable how irrational people are about real estate! Numbers such as those don’t even deter her from buying this further flat in an obviously crashing market. How on earth can she expect to make the math work??? Of course she could also have invested in a Madoff fund, which would have been slighly worse than what she has done here. With economic actors like these, this housing crash has a long way to run my friends…

    Reply
    Please complete the required fields.



  • Unbelievable spin stories! Who on earth is stupid enough to buy in this market? The tragi-comic story here is the one from Ms Prakash from the frozen northern land of Sweden. She bought not one but TWO flats in 2007 for £ 415K. In her own words (or the interviewer’s) she obviously felt good that she was able to negotiate recently a SIMILAR flat’s price down a pidly 2.57% from £ 350K to £341K. that means that irrespective of whether she can rent that new flat at all, or of what happens to prices going forward, she already has generated a negative return of of almost MINUS 10% a year on the full capital value of the previous 2 flats! Worse: on the assumption that she leveraged herself 75% to buy these flats, she has lost almost all her equity! It is unbelievable how irrational people are about real estate! Numbers such as those don’t even deter her from buying this further flat in an obviously crashing market. How on earth can she expect to make the math work??? Of course she could also have invested in a Madoff fund, which would have been slighly worse than what she has done here. With economic actos like these, this housing crash has a long way to run my friends…

    Reply
    Please complete the required fields.



  • It would be interesting to look at how expensive London property was in relation to, say, property in the Midlands in the 1970s, or even before. I suspect it has always been more expensive in London, but I doubt it was triple or quadruple the price. Recent searches on Rightmove have thrown up small 1950s 3 bed semis (with a fourth in the garage) at over 600k in the ‘nicer’ areas. A house like that in one of the best parts of my large town in the East Midlands might be worth 180k if you’d put in a new kitchen, new bathroom, conservatory, extension etc. Otherwise it might be 150k. So it’s not unreasonable to state that prices in London might be between 3 and 4 times that of other large population centres in the same country.
    If the profile of UK business is signifcantly changed by this downturn (e.g. with the financial sector dwindling and manufacturing growing), you could see areas like Derby (Rolls Royce – possibly set to weather the storm better than most – see this week’s Economist), odd though this might seem, offering higher salaries and greater number of jobs than, say, the M4 corridor, or even parts of London. Imagine more new jobs being formed in industrial areas like the West Midlands than in London. This might be a bit over the top, but still one can imagine a London where property was 50% more expensive than the Midlands, rather than 300% more expensive as it is at the moment.

    My thoughts therefore are that London property is an exeptional case, and could see dramatic falls in the next decade, with devualations of two thirds or more. It may even become a case study of the property bubble phenomenon in years to come, as an example of one of the biggest property collapses in the West in modern times.

    You might think I’m writing nonsense here, and you might be right – I’m just another Jo Public mouthing off about the housing market. But there’s no way on earth I would be investing in London property right now. And the idea of buying whilst the market is still falling to beat the mad rush of investors later this year when things pick up again is completely out of touch with the wider context of what is happening in the economy right now. We’ll see…

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>