Times Newspaper Report Advises To Buy Property Now!

Max_Headroom_3

HammersFan wrote: »

If we don't get a recession and sellers hold out for their prices, and we start getting rate cuts (very possible given the news on the economy) there is every chance that buyers will return quite quickly. It only takes a quick read of these boards to see the pent up demand.

I can't see rate cuts helping. Banks have leant very imprudently and are paying the price. Most buyers can't buy unless either the banks go back to lending imprudently, or house prices drop to a level where they can afford to buy if the banks lend to them prudently.

HammersFan

brit1234 wrote: »

I fully agree. However you have to use common sense. The bottom is far off, so buying now is stupid. I'm sure Buffet takes a educated guess when he predicts the bottom and aims off when the figures are still right.

I'll laugh when you investor friends get burnt. A house is a place to live, speculators affecting the lives of decent people are the scum of the world.

Isn't it a bit rich having a go at the ethics of people who bought BTLs - compare that with the ethics of business that hold your savings, or those you invest in through the stockmarket or ISAs. What about gold? That is one pretty amoral trade. I aslo assume that people who are currently renting are renting from someone - perhaps that someone has the property a) as part of a pension so they won't be a burden on the state when they retire or b) has bought the house so their kids can have an affordable place in the future. Hardly the scum of the world - your remarks are ill-informed and rude.

Lotus-eater

HammersFan wrote: »

Isn't it a bit rich having a go at the ethics of people who bought BTLs - compare that with the ethics of business that hold your savings, or those you invest in through the stockmarket or ISAs. What about gold? That is one pretty amoral trade. I aslo assume that people who are currently renting are renting from someone - perhaps that someone has the property a) as part of a pension so they won't be a burden on the state when they retire or b) has bought the house so their kids can have an affordable place in the future. Hardly the scum of the world - your remarks are ill-informed and rude.

I was trying to write something along those lines.

HammersFan

Max_Headroom wrote: »

I can't see rate cuts helping. Banks have leant very imprudently and are paying the price. Most buyers can't buy unless either the banks go back to lending imprudently, or house prices drop to a level where they can afford to buy if the banks lend to them prudently.

There's rates of about 5.5 percent around already. That's pretty low (and they seem to be creeping down). I look at it a bit differently - if I can get the house paid for in 10-15 years that's affordable to me: it means a lot of saved rent in the future and good collatoral should I ever need it. In my experience stretching mortgage payments have seemed pretty affordable 1-2 years in.

Lotus-eater

HammersFan wrote: »

In my experience stretching mortgage payments have seemed pretty affordable 1-2 years in.

Maybe at one time, but not I think atm. Low wage inflation, rising costs everywhere else.

Dithering_Dad

Max_Headroom wrote: »

Lets take your "stockbroker" example into context shall we?

Lets say that all shares have reached an unimaginable high, out of all context to what's sensible or affordable, and that much of that is spurred on by the bubble effect of people buying just because they're going up "supply and demand you know, share prices can only go one way". And lets say that this bubble is spurred on by the banks lending huge amounts to people in order for them to buy shares with very little concern for their ability to repay, or even making any checks on that ability, choosing to trust their word.

Then lets just imagine that the banks get their fingers burned as a lot of people don't pay back. They withdraw their lending at such astronomical levels, and share prices, held up by little other than sentiment (only go up) and imprudent lending, go into decline.

Six months later and your stockbroker hasn't sold a single share. He gets paid purely on commission and he's going to go bust if he doesn't sell someone something soon.

He calls you up and he says "Shares are falling, but in two years time it is possible that they may recover and go up again, now I need you to buy £150,000 worth from me in order to take advantage of this fantastic possibility".

Do you thank:-

a) Yeah rightio matey, do I look like I was born yesterday?

b) This man is an expert in his field, I must immediately take out a huge 25 year loan on a depreciating asset and do what he suggests.

Which is it DD?

I'd actually think that just like the housing market, you don't invest in the whole market but in individual properties, you don't invest in the stockmarket as a whole, but in individual shares.

I'd therefore think that even though the stockmarket index may be falling (these are generally made up of 100 or 250 of the top companies), that there must be some shares that are really good value (i.e. they have already bottomed out and are primed for a rise)

The same can be said with the housing market, while there may be a general slowdown/crash in the whole market, there will always be pockets where houses are static or have bottomed out already and on the verge of increasing. Or even individual properties where the owners have died, been reposessed, are emigrating or are simply desperate to sell for one reason or another.

So to revisit your point, if a stockbroker saw opportunities in a falling share market, I'd do a bit of research on the companies he advised and if I felt it was right, I'd buy.

By the same token, the property experts are probably seeing some areas where prices have come down to reasonable levels and some bargains are to be had. If I was interested in buying a property (not that I am) I wouldn't just dismiss them out of hand, but would do a bit of research in the area I wanted to live to see if they were right.

Remember, the best time to buy is when the news is full of doom and gloom and the seller is worried. The worst time to buy is when the news is full of talk about green shoots and possible uplifts and the seller is feeling more optimistic. Right now, everyone is talking doom and so sellers are desperate. You could offer a lower price now than if you waited 2 years when the worst of the crash is over.

Max_Headroom_3

HammersFan wrote: »

There's rates of about 5.5 percent around already. That's pretty low (and they seem to be creeping down).

I'm not talking about rates, I'm talking about the sheer amount they will lend.

If they won't lend people as much, those people can't afford to spend as much, irrespective of rates.

Then either prices come down to a level that matches peoles "spend", or banks go back to lending huge amounts (which, given the result last time, is unlikely in the forseeable future).

The only other way values will get as high is wage inflation, in which case everything goes up so houses miight have the same price numbers, but that money is "worth" less (ie won't buy as nice a car or holiday or hifi as the cost of everything has gone up).

Lotus-eater

Dithering_Dad wrote: »

Remember, the best time to buy is when the news is full of doom and gloom and the seller is worried. The worst time to buy is when the news is full of talk about green shoots and possible uplifts. Right now, everyone is talking doom and so sellers are desperate. You could offer a lower price now than if you waited 2 years when the worst of the crash is over.

That's exactly what I was saying, although probably in better English.

Microstar_2

I have a very strong vested interest in property prices rising (I own a fair number of properties and WAS planning to sell and retire abroad next year). However I also have a brain and a couple of decades of property experience. Both tell me that now is NOT by any stretch of the imagination a good time to buy.
EA's, 'property finders' and 'mortgage advisers' are NOT 'professionals' :rotfl:. They are mostly nothing more than glorified horse-traders with access to a PC and a database of one from or another. Take what they say with a very large pinch of salt. I guess they are all currently preoccupied with how they're going to pay their own mortgages and put food on the table.

Demand for property has always exceeded supply and always will. What is important is how many people who want to buy a property can raise the money to do so. If the new lending paradigm is 25% dep + 3.5x earnings (for example) then that massively cuts 'real' demand because the pool of genuine buyers who can raise the finance will be small. For non-pro landlords (and even for the pro's in much of the country) yield on a BTL is barely worth the bother at the moment so demand from that market is almost non-existent. I can't see the position improving unless/until (a) prices drop significantly so that the tighter lending criteria of 3.5x (or whatever) average wage is sufficient for the traditional FTB to get the finance or (b) lenders loosen up on lending criteria. Most likely it will be a combination of both, but it won't be for a while.
The current economic weakness is also like to 'snowball' resulting weaker demand, i.e. the falling profits and redundancies result in reduced demand which results in further falling profits and more redundancies, and so on.

I wouldn't worry about 'missing the boat' on the next upswing either. My experience of the last couple of properly 'corrections' is that the decline is swift and steep, but then things bounce along 'the bottom' for quite a while until confidence slowly picks back up and prices start to rise. The graph is a flat-bottomed 'U', its not a 'V'.

brit1234

Dithering_Dad wrote: »

Remember, the best time to buy is when the news is full of doom and gloom and the seller is worried. The worst time to buy is when the news is full of talk about green shoots and possible uplifts. Right now, everyone is talking doom and so sellers are desperate. You could offer a lower price now than if you waited 2 years when the worst of the crash is over.

Not necessarily especially when we have years of doom and gloom to come. Sorry but you argument is simplistic and does not take into count the turmoil in the banking industry with its fall out only just starting.

You either buy when the market is right down or just starting to rise. If you can't afford to buy when the market has just started rising then you shouldn't be buying at all.:rolleyes: