Another 50% to fall off property - Robin Griffiths (Expert Economist)

chucky

lostinrates wrote: »

I agree, graphs can prove most things if you hand pick the data . But still, we love graphs . What you can't graph is perosnal feeling. Alot of people prefer property becasue they feel they underdtand brocks and mortar. I would argue a good LL has a much deeper knowledge and responsibilty to others than that, a responsibility I don't feel the need for in my life. Far from condeming good LL I think they are valuable, I just don't think its the best route for everyone, financially or otherwise.

of course - i find it amusing that it's usually the better performing FTSE indexes that are used when comparing property investments.

Conrad

I'm wary of economists - I was one of the only people I knew from 2004 predicting the crash, so much so I sold my B2Ls. I recall few economists having this view.

AFFORDABILITY - currently it's the best it's been for 6 years according to the Halifax, what with low rates and reduced prices, although for 90% ltv borrowers I fail to see this.

lostinrates

chucky wrote: »

of course - i find it amusing that it's usually the better performing FTSE indexes that are used when comparing property investments.

I was going to dig out the graphs we used on our last review....but can't be bother TBH (feeling poorly today) and don't want to risk tying to remember what they are and getting it wrong. Had lots of help from MSE too in this.

Part of it is being balanced though. Our own property will be a substntial investment in property, and I think its better for us to balance that with a different sort of investment. The three ''Ps'' and all that.

dervish

Dan: wrote: »

You haven't posted for ages and then come up with this rubbish.:rotfl:

You had better change your signature very soon as it will cause you great embarrassment in the next few months.

no ned to be insulting to him is there?

I found it an interesting and well-considered article.

Oh - but it doesn't fit in with your skewed beliefs does it? :rolleyes:

Lunar_Eclipse

DH & I were discussing whether now is a good time for (LT) property market investing only yesterday. So I did some research on affordability and the cyclical nature of the market in terms of the bubbles experienced in the UK roughly every decade. There has always been a period of correction, following periods of significant price increases which has been the case since the 70's.

The UK long term house price: earnings ratio is around 3.5.

It was 4.1 for Q1 2009. In 2006 it was 6, with the peak in 2007 (don't have exact figure).

So it would appear that there are still price decreases to be expected. But no-where near 50% for a house price correction. If prices do fall by that level, it will be due to factors beyond the house price bubble IMO.

Q1 RPI adjusted (but NOT wage increase adjusted) average house prices (from Nationwide) fyi:

1975 71k
1980 75k
1985 76k
1990 104k
1995 73k
2000 97k
2005 170k
2009 150k

Thus a 50% fall would take us back to 1980 levels, not much higher than 1975 levels. Yet earnings have increased significantly during that time, hence my view that 50% is unlikely although with the global recession just getting going, it might just happen.

Whilst FTB etc might jump for joy at this prospect, it is very highly probable that you will be unemployed should this happen and thus not be able to buy a house. As the saying goes, be very careful what you wish for. If prices fall too far, the UK will be a very grim place to be, albeit possibly not any better than several other countries.

Dan:_4

FoxtonsRIP wrote: »

Hilarious. Desperate Dan yet again trots out his baseless view that house prices will never fall by more than x%.

So who would you rather believe - a respected economist with Phd's, Master degrees, etc. Or Desperate Dan with his GCSE in woodwork. :rotfl:

Desperate Dan will be happy to accept your apology next year while your still stuck in renting and dreaming of the joys of home ownership.

carolt

kennyboy66 wrote: »

Except they didn't triple nationally in 10 years did they ?

Er...yes, they did.

hoggums

Ant_Lyons wrote: »

I personally purchased a flat last month for £52,000 that is now being rented at £420 per month. This represents a yield of over 9.5%.

Am I happy to have a tenant in place that pays off my mortgage debt over time giving me a reasonable cashflow in the interim- Yes

You are not making sense here. Either you bought the flat for 52K cash and have no mortgage to pay - in which case I agree this is a good return on your money.

Or you put 52K down as a deposit and have a mortgage to pay (2nd paragraph) - in which case your figures are misleading because you need to subtract mortgage payments form this £420pm figure. Do that and it's not an attractive investment at all.

But let's face it 52K for a flat is an OK price in the south - but you show me a flat for that price that people would want to live in down here....

Hence the reason for further reductions in house prices.

Fella

carolt wrote: »

I just don't get why people think that hose prices can triple in a decade (when wages go up a tiny fraction of that) and yet think that prices falling 50% is impossible!

The vast majority of the people who "think" it's impossible are facing massive negative equity if it happens.

FoxtonsRIP

Dan: wrote: »

Desperate Dan will be happy to accept your apology next year while your still stuck in renting and dreaming of the joys of home ownership.

Dan, you're funny. Which part of your GCSE woodwork exam makes you think that we should all heed your opinion that house prices can only ever fall by x %? You'd think you were Warren Buffet or something, haha