Superb piece on Yahoo Money following on from -55% prediction

themanbearpig

Dan: wrote: »

Nothing is a 'given' when it comes to economics and predictions.

As far as I'm aware Securitisation isn't coming back anytime soon, so there isn't a chance of lending to return to a level sustaining anywhere near 2007 price levels. If prices continue to crash at 20% per year, for another year, confidence in the market will be gone.

Because of the huge number of the people with vested interests, powerful lobbist groups have formed, and we are still experiencing ramping of the market. Loads of ordinary dumb people that cant even understand basic maths, or property investors as they like to be called, got pulled into the ponzi scheme because it was an easy way to make easy money.
But now the madness is over.

MrDT

stevetodd wrote: »

That would mean that I get my 3 bed victorian houses in harringey for only £170k giving me a yield of about 8.4% I just don't think I will get that lucky. It may happen by including in all the new builds and giving ab average of 40% (I have no idea as to the effect of the new builds on the average).

So l would settle for paying 200k they were about 285k at the top so thats 30% off, I don't care (too much) if they fall further because I know I have got a good deal in the long run and that's what matters to me. They are currently about 220k=230k (asking price) but my problem is not only price but getting 3 double bedrooms, tenants don't like single bedrooms so I don't either.

You don't envisage any downward pressure on rents when houses are selling "two for the price of one"?

dopester

Hope you know what you're doing Steve.

£200,000 is to me, and I'd hope to any person with a mind not too badly diseased with HPI, a lot of money. The money is real, the debts are real, but values can change.

At the peak of a credit expansion or a bull market, assets have been valued upward, and all participants are wealthy - both the people who sold the assets and the people who hold the assets. The latter group is far larger than the former, because the total supply of money has been relatively stable while the total value of financial assets has ballooned.

When the market turns down, the dynamic goes into reverse. Only a very few owners of a collapsing financial asset trade it for money at 90 percent of peak value. Some others may get out at 80 percent, 50 percent or 30 percent of peak value. In each case, sellers are simply transforming the remaining future value losses to someone else.

themanbearpig

stevetodd wrote: »

That would mean that I get my 3 bed victorian houses in harringey for only £170k giving me a yield of about 8.4% I just don't think I will get that lucky. It may happen by including in all the new builds and giving ab average of 40% (I have no idea as to the effect of the new builds on the average).

So l would settle for paying 200k they were about 285k at the top so thats 30% off, I don't care (too much) if they fall further because I know I have got a good deal in the long run and that's what matters to me. They are currently about 220k=230k (asking price) but my problem is not only price but getting 3 double bedrooms, tenants don't like single bedrooms so I don't either.

If you've got 200k knocking about to invest, then thats a fine plan.
But if your plan is to get A loan to pay for the property, then you probably should consider that interest rates may shoot up anytime, and rental income may fall considerably. Not mentioning new rules governing BTL taxes.

stevetodd

dopester wrote: »

Hope you know what you're doing Steve.

£200,000 is to me, and I'd hope to any person with a mind not too badly diseased with HPI, a lot of money. The money is real, the debts are real, but values can change.

I am confident I know what I am doing (by the way its 600k) as I want 3, but may struggle to get 3 as I don't do houses with single bedrooms and I am looking in a very specific area. I know what I want and will not compromise

stevetodd

themanbearpig wrote: »

If you've got 200k knocking about to invest, then thats a fine plan.
But if your plan is to get A loan to pay for the property, then you probably should consider that interest rates may shoot up anytime, and rental income may fall considerably. Not mentioning new rules governing BTL taxes.

I have owned a few investment properties since 1991 and I am a chartered surveyor, so I know the game.

I do my calcs assuming a 6% base rate for the very reasons you state.

ps it's 600k (as I want to buy 3)

stevetodd

MrDT wrote: »

You don't envisage any downward pressure on rents when houses are selling "two for the price of one"?

2 for the price of 1? please keep things realistic no reason to insult people's intelligence here.

They may be some temporary downward pressure on rents, but well covered by my current mortgage rates falling to 1.5%

skap7309

stevetodd wrote: »

I have owned a few investment properties since 1991 and I am a chartered surveyor, so I know the game.

Well something has come good from this - someone like yourself with a bit of background saying a 35-40% peak to trough is very much a possibility.

stevetodd

skap7309 wrote: »

Well something has come good from this - someone like yourself with a bit of background saying a 35-40% peak to trough is very much a possibility.

Actually I first got that figure about a year ago from the spread betting market, where you can bet either way (up or down) so it's a very accurate approximation of where things might go.

Before anyone else says it, yes it's only a companies estimate but they are putting money where their mouth is.

I think you will find that 35% is a very average opinion on this subject

MrDT

stevetodd wrote: »

No doubt you are working out your finances to see how large a bet you want to place on my 6/4 offer on this thread, I am sure you are not just a big mouth, so let me know how much you want on?

I am going out to dinner straight after a bath so I am not guaranteed to get back to you tonight (in fact it's unlikley) so don't be dissapointed, we can bet on this (unless you were just mouthing of of course? with your 2 for 1 comment)

Half of peak value (what I meant by my 'two for the price of one' throwaway comment) isn't the same as 55% down from an already heavily reduced price Steve All this "place a bet with me and Martin can hold the deposits" posturing is pointless anyway, I very much doubt he'd want to get dragged into this rubbish. Neither would I, end of the day I'll only bet if there's a free bet available in return and I can both lay and back the same thing. I'm not a mug, and you can get mugged on a 'sure thing' even , so no thanks (for the record, I certainly don't class a 55% reduction from current prices as a sure bet)

One more thing - if you're gonna try throwing your weight around on the internet with these betting offers, do yourself a favour and at least define what index you're looking to compare against. Your offer is a bit limp when you leave the winning criteria so ambiguously defined.

Hope you had a lovely bath petal