Is it a good time to buy a property?

[den1]

House prices will drop another 25%~35% in the next 2 years, in real terms.

 

[jagman]

That is why I said the right time to buy is when you have 40% deposit and not need to move for next 5 years. The bank own the house until you paid it off completely, but if you are paying rent you get nothing back. Nothing...

 

 

a 40% deposit may not be easy for a lot of people to muster,between 1996 and 2007 the average house rose from just over 70 k to just under 200k nearly 3x ,but wages did far from go up by three saving 40 % would have been mission impossible

 

renting you dont end up owing , yes you have spent to be housed ,but you dont end up having no house and still owing money or trapped in a house with a mortgage whilst the house is dropping in value -

 

The Raven pointed out how wages have risen with the £100 story - but in 1970 a single income could buy a house , then it took 2 incomes , then 2 incomes plus a lot of overtime , then simply get drowned in debt mums no longer can stay at home and look after kids if they wish to , everyone works stupid long hours or weekends / bank holidays , - so what next ? send the kids out to work ?

[China Man]

So I repeat, the right time to buy is when you have 40% deposit I never said it was easy or everyone can do it. With 40% deposit you benefit from having the best possible rate available.

 

You only lose money if you are force to sell and selling when the market is bad, therefore the don't need to move in the next 5 years part in my post.

 

Real loser in the market are those who can't afford the repayment and those who get a mortgage without thinking if their income are secure enough to take the risk. So what if the house market drop by another 20% if you can afford the mortgage repayment the house prices are irrelevant just like paying rent. The only difference is that if you can't keep out the rent you get kick out without any debts.

[Abz]

don't know whats the market rate for rent at St John Woods but if rent is 1000 per month then in 6 years time the rent will cover the loss anyway. Plus the flat will defo worth more than 270k in 6 years time.

 

Rent is like paying someone else mortgage

 

In that terms yes you are right but the problem is this.

 

In 6 years time when they want to move to a bigger place, they would have only covered their losses & still owe the bank the £200k odd they still own. So when the house prices do go up so will of the property of the new place they are looking at.

[The Raven]

I still dont see all this doom and gloom. If the house prices crash, more people that already buy to let will buy more and then rent to local DSS if need be. We are never going to see normal 3 bed semis going for 70k again.

 

Why, the people that brought them for 130k wont sell. I know i wouldnt i would stay put rather than lose that money. The only movement on the house market would be from first time buyers trying to get on the ladder.

 

However with people refusing to accept the loss where do these people live?

 

If the crash is going happen again, due to houses being so overpriced then it should have happened by now.

 

 

I will be bumping this thread every now and again be interesting to see how it all works out.

[jagman]

I still dont see all this doom and gloom. If the house prices crash, more people that already buy to let will buy more and then rent to local DSS if need be. We are never going to see normal 3 bed semis going for 70k again.

 

Why, the people that brought them for 130k wont sell. I know i wouldnt i would stay put rather than lose that money. The only movement on the house market would be from first time buyers trying to get on the ladder.

 

However with people refusing to accept the loss where do these people live?

 

If the crash is going happen again, due to houses being so overpriced then it should have happened by now.

 

 

I will be bumping this thread every now and again be interesting to see how it all works out.

 

The people that are in buy to let rolled over debt from the original house they owned to buy a second third etc -the ones late into the market are in deep shit they could easily lose the lot -the returns on rental were never that good it was the increase in prices that made it viable and the very lax bank lending - the banks needed a bail out because of the lending they made -lots of which will/have gone sour-they will no longer throw maoney at people and companies -the effect of this can be seen in the last 2 years

The local dss -is infact govt money and the whole country is also mired in debt - they will be taxing ever more and cutting (things like the dss) it IS ahuge problem

Staying put is fine provided you can afford to do so , but a huge amount of people are on the edge financially ,increase in interest coupled with job cuts and reduced bonuses or overtime or jobs becoming part time all will play a big part - the total savings in UK is a minus figure so this time during a downturn /recession/depression whatever you call it there are NO savings to fall back on until the next upturn -this has never happened before

Its not a case of people refusing to take a loss - Banks repossess and force it to happen -the Govt has worked overtime to try to prevent this with measures and Quantative Easing (printing money) and driving down interst rates -but there is a limit to how long and how much they can do -

The crash in prices has yet to really bite , low interst rates mean savers do not get returns ,the Stockmarket has been limp at best and supported by the printing of money again - so people bought houses ,overseas buyers etc, and of course the speculators -all looking for a bargain

 

It really is different this time , thats why the next Govt elected has to be real smart - trouble is even the top economists dont know what to do , is one reason Gold has shot up and continue to do so - Can you ever remember ads on tele before , or shopping malls with gold bought stalls or machines that sell gold -its symptomatic -you cant print gold!

[Lbm]

Some detailed posts here. Very good.

 

Although I wish one or two of you would invest in the 'quote' button option

 

My view is similar to Jamie P's.

 

I'd rather buy than rent (and I guess most people would) but certainly my house would be my house.

 

The concept of paying £120,000 in rent over ten years seems absurd, £240,000 over 20 years would be absurdererer--- and even if my bought house drops in value, I still own it.

 

It's where I live and if I profit from in years to come then great

 

Simplistic yes, but it works for me

 

So if I was told my house is worth £1 tomorrow - it would be annoying. It would be a shock. But - it would still be the same in every way and I'd still live there.

[China Man]

Some detailed posts here. Very good.

 

Although I wish one or two of you would invest in the 'quote' button option

 

My view is similar to Jamie P's.

 

I'd rather buy than rent (and I guess most people would) but certainly my house would be my house.

 

The concept of paying £120,000 in rent over ten years seems absurd, £240,000 over 20 years would be absurdererer--- and even if my bought house drops in value, I still own it.

 

It's where I live and if I profit from in years to come then great

 

Simplistic yes, but it works for me

 

So if I was told my house is worth £1 tomorrow - it would be annoying. It would be a shock. But - it would still be the same in every way and I'd still live there.

 

Agree 100%

 

I remember when I was in uni and I rented a flat with my gf (now wife) for a few years. when we move in he was driving a fiat hatchback banger, 3 years on he come and collect rent in his 911 turbo and demanded a rent increase.

[Scooter]

Picking through all the mixed views is it fair to say that in Imi's situation the path with less risk is the straight current apartment sale and new house purchase?.............the option of buying/keeping the two, with the higher borrowing that will entail and twice the risk of all the negatives that 'may' happen looks far more risky........

 

1st case more equity in the house, mortgage repayments lower than option 2 and perhaps not much higher than currently so comfortable and only interest rate rises to really worry about (mirrors LBM and others view)

 

2nd case is effectively moving into the buy to let market at what many think is the wrong time...........worse case rent doesn't cover mortgage on the apartment, poor tenants/void periods property repairs needed interest rates up etc, prices drop so no means of cutting losses, meanwhile your house/home has a comparatively larger mortgage and you may feel many of the same negative effects on this too......

 

seems a lot to risk...............with lots of people predicting price drops hard times then perhaps you could stick with one property and pickup a buy to let when things do drop? worse case they don't and you don't make as much?

[imi]

Sound advice there Scooter.

 

I have access to enough funds to cover the 2nd situation, however will investigate situation 1.

 

Perhaps its time to look into the stock market in a serious way.

[Abz]

Sound advice there Scooter.

 

I have access to enough funds to cover the 2nd situation, however will investigate situation 1.

 

Perhaps its time to look into the stock market in a serious way.

 

I won't recommend the stock market now if you are new to it. If you are an old hand then you will know what to do but companies are very fragile at the moment. I'd research & follow it for the next 6 months. I have plans to put some money aside into the stock market but have been advised to hold out for a little bit (Roughly 6 months).

[tbourner]

I'd just like to know where interest rates are likely to go over the next 5 years or so! I hope they don't go too far North or I'm screwed.

[ilicos]

I won't recommend the stock market now if you are new to it. If you are an old hand then you will know what to do but companies are very fragile at the moment. I'd research & follow it for the next 6 months. I have plans to put some money aside into the stock market but have been advised to hold out for a little bit (Roughly 6 months).

 

Blue chip(esp Banks) are good choices. RBS will be the next big riser as Barclays slows down slightly.

 

Stock market will become 'safer' in next 2-3 years but right now is the time to invest if you want to make money.

[Whitesupraboy2]

Im hoping to put in an offer in tonight.

 

End of the day im going to lvie in it and its not an investment, so if i pay what im happy with and can afford to live in it then thats good enough for me

 

Obviously to make some money would be nice but not the be all to it as it will be my home.

[supra_aero]

I personally don't see this crash happening.

 

Jobs are becoming more secure. The market in the city is picking up again. Big bonuses are back (love it or hate it they are). I know many in my office are simply waiting for banks to start offering DECENT interest rates again, with low deposits (as soon as the banks annual profits are high enough this WILL happen), and they'll start buying up again.

 

I see no reason for house prices to fall unless something shocks the economy again and there are more job losses etc.

 

Which I personally think that is very unlikely. I can't see 25% falls happening, especially in London. Why would it? Or am I missing something obvious.

 

Interest rates won't go up massively as it'll cripple 80% of us. It'd look very bad if the new goverment puts rates up.

I just can't see it happening.

[den1]

Only because of the Tax payers bailout....The 2nd shoe hasn't dropped yet!

[jagman]

The current situation is similar in many ways to the crash of 1929, but a lot lot worse.....

The warning signs are everywhere ,this is not and easy thing to explain in a quick read ....

The Euro is coming under huge pressure,in fact all fiat currencies will come under huge pressure - look at Ireland and what is happening there , look at the house prices compared with 2 years ago , the whole NAMA farce ,,,its not finished yet !!!!

 

52% of the working population is employed by the govt- the public sector is larger than the private sector ,just how does that work?

The UK is mired in debt and having based too much of the economy in the largest Ponzi scheme ever -the financial sector,the hedge funds ,the derivatives markets,et al

Jobs are becoming more secure?-where ,Cadburys:rolleyes:

 

For economys to grow they need energy -OIL, see link

http://www.countercurrents.org/arguimbau230410.htm

 

This is only one( a biggie though) of the issues at large I could post up dozens upon dozens of other issues from derivatives to debt to faced very soon ,house prices are but a tiny part of the picture

 

But I would love to hear 20 or 10 or 5 reasons that they will rise again ,even better how exactly will they be paid for , unfortunately I dont accept "I think that"... as a reasoned position unless its coupled with why

London - I will try and find some of the forcasts for London Planning and post up

[jagman]

http://business.timesonline.co.uk/tol/business/economics/article7104244.ece

 

Jobs? -- Over 8.1 MILLION - inactive?

[jagman]

http://finance.yahoo.com/tech-ticker/%22punishingly-high%22-interest-rates-coming-in-second-wave-of-financial-crisis-bianco-says-471254.html;_ylt=AklGPcyl1g0_ReKBVRBYefS7YWsA;_ylu=X3oDMTE2MDRnNWt2BHBvcwMxMQRzZWMDdG9wU3RvcmllcwR

 

Interest rates?? - Greece is now paying 12% !!!UK is not that far beyond the PIIGS countries -all it takes is time

[stevie_b]

The Derivatives Market

 

GONE!

What do you mean by that den1? Do you mean volumes of derivatives trades?

 

 

52% of the working population is employed by the govt- the public sector is larger than the private sector

If true, that's a shocking statistic for a free market economy!

[supra_aero]

Jagman I agree with a lot of your points. But the sources you are using to justify them are based on the same media who forecasts nonsensical opinions to make a good story. The sources are not empirically based.

 

If I wanted to, I am sure I too could dig around media websites which state house prices will increase.

 

http://news.google.co.uk/news/search?pz=1&um=1&cf=all&ned=uk&hl=en&q=house+prices+to+increase+uk

 

As per my example above. If you were to truly investigate this thing you need to do an extensive studies and analysis into correlations between unemployement, interest rates, house prices to model your hypothesis against mine.

 

Comparing where we are now to the previous boom/bust cycles of the uk would make your data wholely inadequate, as the reasons for this crash compared to the previous ones are very very different. Which is why I believe your justifications are not plausible in my opinion at least.

 

Am not sure what bearing oil has to the uk economy either in relation to the short term economic recovery (next 15 years). The uk economy has long been and probably will for a very long time been heavily dependant on the financial services industry. This is more prudent now than ever before. Which leads to my next point, the backbone of the financial and economic crisis was caused by the banks.

 

Lack of lending.

 

The banks are now profitable again. Therefore, it makes sense by definition that as they become more profitable, the products they offer will not only increase but also become more competitive.

 

This knock on effect will lead to businesses and consumers alike obtaining favourable interest rates and lending. Which I believe was the primary reason of what has caused many businesses to fail in this recession, inevitably causing higher unemployment.

 

The simple reason why house prices are not rising as quickly as before is the lack of competitive products caused by banks not having enough cash to lend. I know alot of people with deposits ready in their bank accounts, but won't put them down due to the silly rates/deposit ratios banks are offering. As I said before, as they become more favourable, lending will increase and house prices will as well. And likewise as unemployment falls, consumer confidence will increase again etc. etc.

 

 

That's my very basic synopsis without number crunching.

 

The only point you made which does worry me and I can't answer for is the huge debt mountain the UK consumers have built up. I am very curious how this will be eradicated. I can only hope its made up of mortgage borrowing which given house prices levels makes sense. However without knowing enough about it I won't say more than that.

 

In any event you may be right, time will tell who is indeed correct.

[tbourner]

The only point you made which does worry me and I can't answer for is the huge debt mountain the UK consumers have built up. I am very curious how this will be eradicated. I can only hope its made up of mortgage borrowing which given house prices levels makes sense. However without knowing enough about it I won't say more than that.

 

I hope it is mortgages, cos people have been doing that for ages and it means the picture isn't as bleak as it looks. If the debt is all unsecured debts then that means we're in BIG trouble!

[Terminator]

Property investment, it a long term investment. Some areas suffered terribly, due to greedy short term investors pumping up prices. National statics should be read with caution, as they smooth out the difference between areas. Pick the right investment in the right area at the right price and sit it out and you will make money. I have always aimed for doubling my investment every 8 years which is pretty much the average rate of growth in the property market over 50 years. I follow the activity of the big investors, their buyers have been absent from auctions until very recently. One investor I know who got burned badly and had to sell 30 properties at 50% 2007 value in 2008/9, is buying again.

 

I know my experience is limited to a particular property location and market, but there will be lots of areas like this that are not tied into the ups and downs of the London market. I in the last month, despite the "crash", sold two properties and got my ten year target growth figure within six years of buying. It took me five hours to sell them and one phone call. It is not all doom and gloom out there, investors I know have dusted off their cheque books.

[SteveR]

I have always aimed for doubling my investment every 8 years which is pretty much the average rate of growth in the property market over 50 years.

Erm.... no, massively no. It's more like 3% in real terms! (you can't ignore inflation, as some in this thread have done)

 

edit - seems I was too generous - here are the last 50 years for you:

The average UK house price has increased by 273% since 1959 in real terms (i.e. after allowing for retail price inflation), at an average annual rate of 2.7%.

 

Stats from the Halifax, presented in this article.

[colsoop]

Where i live i have seen signs of recovery. Developers starting to build again. land that was long since sold actually having foundations laid.

 

I don't see the houses falling anymore but staying at a fairly even level for a while. Although adding on inflation it would count as a slight drop over a given period.

 

I think it is a reasonable time to get a property, prices on the whole are at a low and there are plenty of repo properties to be bought.

 

With interest rates on savings being so low bricks and mortar isn't a bad place to leave your money. I guess it depends on what sort of return you want to get from said property.

 

The real issue now is what happens after polling day and what sort of government we have - a hung parliamernt may have a negative effect on things. Especially if they can't decide on how to repay our massive debt, the last thing we need is the £ to be devalued !