Debate House Prices


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Comments

  • wotsthat
    wotsthat Posts: 11,325 Forumite
    Poshbird wrote: »
    Just wait a few years if the sellers do not drop the price they will not sell period. Hope hey can still afford the mortgage when payments go up.

    Wait another few years? Just who is advising this - landlords?

    If a normal person wants to buy a home then why would they want to wait for years on end paying someone else's mortgage when they could be paying their own.
  • Poshbird
    Poshbird Posts: 222 Forumite
    wotsthat wrote: »
    Wait another few years? Just who is advising this - landlords?

    If a normal person wants to buy a home then why would they want to wait for years on end paying someone else's mortgage when they could be paying their own.


    Someone who thinks prices will fall more than the rent they are paying now. Then they will buy back into property when its undervalued not while its still overvalued as it is now.

    Everything goes from over to undervalued. Its always happened and always will. Its called a valuatyion channel.

    For someone to suggest that house prices in the UK will never be undervalued again is stupid.
  • wotsthat
    wotsthat Posts: 11,325 Forumite
    Poshbird wrote: »
    Someone who thinks prices will fall more than the rent they are paying now. Then they will buy back into property when its undervalued not while its still overvalued as it is now.

    Everything goes from over to undervalued. Its always happened and always will. Its called a valuatyion channel.

    For someone to suggest that house prices in the UK will never be undervalued again is stupid.

    The problem with this strategy is obvious. For every year that house prices don't come down a bigger house price fall is needed to make up for that years rent. Short term I can see it possibly working but longer term it's going to fail especially if there's no 'stop-loss' position.

    It could lead to a lot of bitterness if it doesn't work out. Someone shells out a load of rent to a landlord only to see the landlord get his mortgage paid off and his house increase in value.
  • Poshbird
    Poshbird Posts: 222 Forumite
    wotsthat wrote: »
    The problem with this strategy is obvious. For every year that house prices don't come down a bigger house price fall is needed to make up for that years rent. Short term I can see it possibly working but longer term it's going to fail especially if there's no 'stop-loss' position.

    It could lead to a lot of bitterness if it doesn't work out. Someone shells out a load of rent to a landlord only to see the landlord get his mortgage paid off and his house increase in value.


    Depends how yoiu define long and short term. I think long term house prices will go up for sure, but the historical valuation channel will continue. Short term I think we are still in the overvalued part of that channel so I call short term the next year or 2 (maybe 3 if they can keep prices propped up that long) then I can see house prices being nearer to undervalued.
  • tara747
    tara747 Posts: 10,238 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    It will cost more.

    Yeees, and what happens then? :cool:
    wotsthat wrote: »
    The problem with this strategy is obvious. For every year that house prices don't come down a bigger house price fall is needed to make up for that years rent. Short term I can see it possibly working but longer term it's going to fail especially if there's no 'stop-loss' position.

    It could lead to a lot of bitterness if it doesn't work out. Someone shells out a load of rent to a landlord only to see the landlord get his mortgage paid off and his house increase in value.

    Nobody really needs a stop-loss position atm though, do they? :D

    The scenario to which you refer in your second paragraph is several years out of date.

    I live in NI, and house prices are falling by way more than our annual rent. So we absolutely made the right decision not to buy yet. The way things are going, we could be buying for cash or with a >5-year mortgage. :cool:
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  • wotsthat
    wotsthat Posts: 11,325 Forumite
    tara747 wrote: »
    Nobody really needs a stop-loss position atm though, do they? :D

    The scenario to which you refer in your second paragraph is several years out of date.

    I live in NI, and house prices are falling by way more than our annual rent. So we absolutely made the right decision not to buy yet. The way things are going, we could be buying for cash or with a >5-year mortgage. :cool:

    It's not a stop loss but if the strategy is not working AND you really want to buy a house then at some point you need a new strategy. From what I see on this forum there are some addicted to waiting seemingly able to call the bottom of the market.

    In NI prices are 42% off peak and you're still not buying. How long do you keep the strategy going.

    The landlord scenario isn't out of date. If a renter pays off a landlords mortgage for them then at the end of the term the landlord owns a house. They've got it for free - it might be worth more or less than now but so what.
  • Poshbird
    Poshbird Posts: 222 Forumite
    edited 19 May 2011 at 2:36PM
    wotsthat wrote: »
    It's not a stop loss but if the strategy is not working AND you really want to buy a house then at some point you need a new strategy. From what I see on this forum there are some addicted to waiting seemingly able to call the bottom of the market.

    In NI prices are 42% off peak and you're still not buying. How long do you keep the strategy going.

    The landlord scenario isn't out of date. If a renter pays off a landlords mortgage for them then at the end of the term the landlord owns a house. They've got it for free - it might be worth more or less than now but so what.


    The other way to look at it is, the LL has the risk of bad tenants and expences of upkeep etc. The tenant can wear out the LL depreciating house while waiting for the the bottom to buy for cash or 5 year tiny mortgage :) Also by not buying now you dont run the risk of mortgage payments going up a lot more than the rent can. I can see a lot of BTLers thinking rents will go up as much as the mortgage payments. The truth is the yield goes down as mortgage payments go up, if they put up the rent too much the tenant moves out then the real stress starts!
  • Conrad
    Conrad Posts: 33,137 Forumite
    10,000 Posts Combo Breaker
    Poshbird wrote: »
    Someone who thinks prices will fall more than the rent they are paying now. Then they will buy back into property when its undervalued not while its still overvalued as it is now.

    Everything goes from over to undervalued. Its always happened and always will. Its called a valuatyion channel.

    For someone to suggest that house prices in the UK will never be undervalued again is stupid.



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  • Conrad
    Conrad Posts: 33,137 Forumite
    10,000 Posts Combo Breaker
    Poshbird wrote: »

    The truth is the yield goes down as mortgage payments go up, if they put up the rent too much the tenant moves out then the real stress starts!


    Nope, mostt LL's simply happy to have someone pay thier mortgage off over 25 years. Income profit is icing on the cake, but not something to be relied upon indefinitely.

    In 20 years time the LL's of today will be considerbly richer than you once those 4 or 5 homes are mortgage free.
  • Conrad
    Conrad Posts: 33,137 Forumite
    10,000 Posts Combo Breaker
    tara747 wrote: »

    I live in NI, and house prices are falling by way more than our annual rent. So we absolutely made the right decision not to buy yet. The way things are going, we could be buying for cash or with a >5-year mortgage. :cool:


    Not relevant to the bulk of England right now.

    Look I always thought my Irish clients were incredible optimists and admired thier capacity for risk. With hindsight it seems all that peer group optimism went too far. I dealt with Ryan Air pilots who bought houses on a whim in a very casual manner which was quite different from my experience with the average non Irish investor.

    NI prices were just bound to take a massive hit. The economy was far too reliant on construction.
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