50% drops by 2011

ad9898_3

IveSeenTheLight wrote: »

I guess your not looking at the right areas or your not looking at the figures correctly.

This month I see a 3 bed house rented out for £1,100 pcm in Aberdeen.
This was bought in May 2005 for £165,000 so would mean a Rental Yield at that price of 8%
Rough estimate of value now (200,000) would mean a Rental Yield of 6.6%
IF it was purchased for 50% of the estimated value now would mean a Rental Yield of 13.2%. Certainly the figures add up so you maintaining its not worth it at 50% in these times is simply wrong

Tee Hee, you think a house bought in May 2005 at 165k is now worth 200k :rotfl:, is Fergus Wilson a relative of yours by any chance.

The land of the cuckoo.

neverdespairgirl

IveSeenTheLight wrote: »

Good landlords may wish to hold on to good tenants therefore willing to leave the rent the same. I know I only put my rents up between tenants. Possibly after 5 years I'd look at the market figures, however......

The rents I'm looking at are for places which are back up for rent, so the same place, new tenants.

lostinrates

IveSeenTheLight wrote: »

If house prices are coming down and rents stay the same, Rental Yield goes up
Statistics are a funny old game

But that doesn't hold if you are reletting a property you bought at the top does it? Just buying new ones.....at the same mortgage rates as when borrowing was cheaper

stevetodd

ad9898 wrote: »

Tee Hee, you think a house bought in May 2005 at 165k is now worth 200k :rotfl:, is Fergus Wilson a relative of yours by any chance.

The land of the cuckoo.

I don't know about Aberdeen but I bought the house I live in Dorking in 2005, 2005 was a strange year because prices dropped for a short while. Although my example might not be common I bought for 360k, it then reached about 500k at the top of the market. I don't know what its worth now but I don't think it could have dropped by more than 13% from the top (In Dorking detached houses are usually in good demand). If we used that 13% and applied that to the Aberdeen example we would have:

165k x ((500k-13%)/360k)= 199,375

But I did get it at a very good price (in fact they accepted my first offer which really suprised me)

stevetodd

lostinrates wrote: »

But that doesn't hold if you are reletting a property you bought at the top does it? Just buying new ones.....at the same mortgage rates as when borrowing was cheaper

You are quite correct, it does not. But the gist of this thread is "will prices drop by 50% by 2011" and in that context increasing rental yields will be a contributing factor in dampeneing house price falls, eventually. I emphasise eventually because I think there is some way to go, as the amateurs have now had their fingers burnt and are unlikley to return to the BTL market.

chucky

neverdespairgirl wrote: »

Here in WC1, rents are the same in £ terms, or slightly less, than a year ago. So down in real terms.

yes you are right - they have slightly dropped, apparently about 2%.

i would say that somewhere less desirable it would be slightly more.

Yoshua

chucky wrote: »

yes you are right - they have slightly dropped, apparently about 2%.

i would say that somewhere less desirable it would be slightly more.

You would probably call where I live in London less desirable, because its got one of the biggest council estates - Burnt Oak.

As far as I can see most of it has been bought on a subsidy by the council tenants. If they had been renting for years they all bought their house off the council very cheap even in the peak years.

Also everyone who lives here is used to paying council rent also very cheap and expect a lot for their rent (repairs, maintenance etc).

So why would someone rent one of these ex council houses off someone privately unless its comparable to what council tenants are paying?

Its the same for all the council estates all over and its affecting rents and house price in surrounding areas as well (N,London) no doubt about it rents are in a downward trend. Maybe rents dropping will not be as drastic as house prices dropping for the reasons that all these repo`s familys will need somewhere to live, but thats what all these new Government housing associations are for.

novazombie

Its all guess work.Personally I think that a 50% drop from peak would be good.It would get the prices back to a more realistic level and most homes would still be worth more than double what they were worth 10 years ago even after a 50% drop.

Rents are slower to drop and will always be behind the falling house prices. But eventually rents will drop by the same amount along with everything else.

RDB

This thread is called 50% drops by 2011 so does this mean House price and rents?

brit1234

RDB wrote: »

This thread is called 50% drops by 2011 so does this mean House price and rents?

Oh , can't we change it to 50% drops by 2009. Please