Tuesday, September 9, 2014

Looks like house prices are about to go down

Why J Sainsbury plc Is A Better Investment Than Bricks And Mortar Right Now

I suspect (and to be frank, hope) that house prices have finally peaked. Property already takes up too much of our time and money, which could be put to more productive use elsewhere. More buyers are pulling out of home purchases as banks tighten mortgage standards following the Mortgage Market Review, the recent regulatory overhaul, and borrowers fear the price rally is coming to an end. And a slew of recent data suggests house price growth is grinding to a halt, especially in London, where homeowners are taking their profits and be investing them in the Home Counties.

Posted by mark @ 10:08 AM (2696 views)
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9 thoughts on “Looks like house prices are about to go down

  • Sainsbury’s could well be a better investment for those who already own their own house. However, for those who rent, the marginal costs of paying an increasing level of rent vs a reducing amount of re-payment mortgage payments makes houses the best first investment. Once you no longer have to pay rent, the marginal benefits of owning stocks can make stocks a better investment than housing. Its a portfolio thing. These writers do not provide individual investment advice and are speaking as traders who probably owned their house outright many ages ago. Probably they inherited their house. Most people are not traders and need a roof over their head.

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  • Hahahah I was thinking – Libby should see this!

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  • @1 : Did you read the article? It looks like you didn’t…

    It looks at two purchases: 1) “illiquid and highly leveraged” investment, aka house vs 2) Sainsburys stock.

    Now you may think that the house prices will only go up up up , but why not say the same for Sainsburys?

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  • Yes Libby, buying does get you exempt from the privately collected tax of ever increasing rents. However, prices are so high that the vast majority of people can’t get anywhere suitable anywhere near their source of income, making a move to a cheap area impossible unless you spend enormous amounts of time and/or money on commuting. My top 5% family income just barely got us into a flat, there’s no hope for the other 95%. If you’ve got to rent for the rest of your life, you’d do well to find some sort of investment…

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  • Streamingfreedom says:

    @3 exactly the problem. I’d be happy to risk 10 years of negative equity to get out of the rent trap if only I could get somewhere suitable to put my family for that 10 years.

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  • Maybe prices are high, but I have found a house larger than my rental property with lower mortgage repayments, half of which repay the principal. Rather than throwing it all away, I now pay off £6k a year, every year, for 25yrs, and get capital gains tax free.

    I am waiting for the Scottish vote before exchanging however.

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  • “I am waiting for the Scottish vote before exchanging however”

    I thought you had actually purchased a property some months back ? and now you’ve yet to exchange ! all very odd and inconsistent with previous posts.

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  • @5 Borrow 300 000£ (or whatever the house you like costs), invest them in Sainburys and pay the rent with the dividents 🙂

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  • Streamingfreedom says:

    @6 and if the scots vote yes would you pull out? I would like to wait until after the next general election if i can. Weve hardly begun to feel the effect of the mortgage review yet but that’s surely just around the corner?

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