Capital Economics expects a 35 per cent nominal fall and a 41 per cent decline in rea

Edale

Whilst I agree there are plenty of investors with money out there, I think they will only invest in property when the return looks good. Ask yourself the question would you invest in an illiquid asset currently depreciating at around 2% per month that gives you a return of around 5% with maintenance and hassle when you can stick the money in a bank and earn over 6%?

My view is that serious investors will only return when there is either good captial returns on the horizon (a long way off) or the yield is very favourable compared with other investments. This situation requires either rents to rise or prices to fall (or a mixture of the two) and we are miles away from what would be fair value at the moment.

justpurchased

Edale wrote: »

Whilst I agree there are plenty of investors with money out there, I think they will only invest in property when the return looks good. Ask yourself the question would you invest in an illiquid asset currently depreciating at around 2% per month that gives you a return of around 5% with maintenance and hassle when you can stick the money in a bank and earn over 6%?

My view is that serious investors will only return when there is either good captial returns on the horizon (a long way off) or the yield is very favourable compared with other investments. This situation requires either rents to rise or prices to fall (or a mixture of the two) and we are miles away from what would be fair value at the moment.

So the same time affordability is there for FTB's (Cheaper to buy than rent and, rising house prices).

WTF?_2

Also worth mentioning that the return to a situation where BTL makes economic sense for most investors (ie lower house prices) won't do a thing to help those already in the BTL game who bought at stupid prices.

justpurchased

!!!!!!? wrote: »

Also worth mentioning that the return to a situation where BTL makes economic sense for most investors (ie lower house prices) won't do a thing to help those already in the BTL game who bought at stupid prices.

Agreed, that is the difference between business and greed.

Edale

!!!!!!? wrote: »

Also worth mentioning that the return to a situation where BTL makes economic sense for most investors (ie lower house prices) won't do a thing to help those already in the BTL game who bought at stupid prices.

Agreed, did anyone watch property ladder on more 4 last night? There were two sisters who had built a buy to let portfolio by mortgaging to the max. How many of these landlords exist and how many distressed properties will be dumped on the market because of it? This will only exert downward pressure on prices.

I think we need sharp reductions in interest rates and quickly, the downside to the economy presents a much greater threat than inflation IMO.

HammersFan

Edale wrote: »

Whilst I agree there are plenty of investors with money out there, I think they will only invest in property when the return looks good. Ask yourself the question would you invest in an illiquid asset currently depreciating at around 2% per month that gives you a return of around 5% with maintenance and hassle when you can stick the money in a bank and earn over 6%?

My view is that serious investors will only return when there is either good captial returns on the horizon (a long way off) or the yield is very favourable compared with other investments. This situation requires either rents to rise or prices to fall (or a mixture of the two) and we are miles away from what would be fair value at the moment.

That's the thing - there are plenty of areas that aren't depreciating by anywhere near that. Also, you ignore sensible gearing as a factor in long-term returns. My view is that when BTL finance hits the low 5% on a fix-rated there will be lots returning (even at prices near where they are now).

HammersFan

!!!!!!? wrote: »

Also worth mentioning that the return to a situation where BTL makes economic sense for most investors (ie lower house prices) won't do a thing to help those already in the BTL game who bought at stupid prices.

But...what if interest rates drop and / or a good proportion of these people weather the storm....this isn't unlikely. What then?

WTF?_2

HammersFan wrote: »

But...what if interest rates drop and / or a good proportion of these people weather the storm....this isn't unlikely. What then?

Bully for them. But don't expect me to agree to seeing my savings or income eroded to bail them out.

HammersFan

!!!!!!? wrote: »

Bully for them. But don't expect me to agree to seeing my savings or income eroded to bail them out.

If the BoE cuts rates, the main driver will be to stave off recession. That is good news for you (and the rest of us) surely. In any case mortage rates are coming down without a cut in BoE rates (the disconnect between LIBOR and BoE rate seems to work downwards as well as upwards then).

tr3mor

HammersFan wrote: »

My view is that when BTL finance hits the low 5% on a fix-rated there will be lots returning (even at prices near where they are now).

Glad you agree with me that they won't be back any time soon!

:money: