Buying a property - am I stupid not too?

OldNelly

UK_Landlord wrote:

i give you that right now there is nothing to be made on rent, but when property prices have doubled again you have a fat profitQUOTE]

You think this is going to happen in our lifetime?

What I dont understand right now is whats in it for the BTL investors.

Property values cannot rise at the rates they have done for the last few years, higher guaranteed intrest rates can now be had in savings accounts.

If I had a BTL property now I would be selling up and putting any equity into a high interest account.

Is it likely that they will be doing this? it would bring more property onto the market and hopefully go some way to returning prices to a more sensible level, accessable to FTB'ers like myself, also 24 and living with parents!

meanmachine_2

Isn't it the Halifax which is predicting no more HPI for the next 20 years?

I take these predictions with a bucketload of salt, but what they're saying is that price property rises above inflation aren't going to happen any longer - and why? Because wage inflation isn't much above 2% these days.

So you're either looking at flat prices -in real terms - for the next 20 years, or you "do the dip" and have a drop followed by a rise.

Take your pick. I know which one I'd prefer.

Tassotti

meanmachine wrote:

I think UK Landlord has been at the dizzy water.

Property goes up in line with wage inflation.

Currently that's at 2.8%.

If that was true, then surely houses would still be 'affordable'. Think it may be you mm who has been on the dizzy water.

Think you are confused..property over past few years has gone up by 2.8% per month!! not per annum.

meanmachine_2

Tassotti wrote:

If that was true, then surely houses would still be 'affordable'. Think it may be you mm who has been on the dizzy water.

Think you are confused..property over past few years has gone up by 2.8% per month!! not per annum.

Oh forgive me. Buying property is entirely unrelated to how much the majority earn and can afford.

...According to Tassotti.

If you actually bother to do the slightest bit of research in a market which you have heavily invested in, you'll find that, traditionally, wages have gone up by 8%. Property, per annum, has gone up by...wait for it...8%.

In this new low wage inflation economy wages are going up by 2.8%. Now that asset prices have adjusted to lower interest rates, can you gues by how much they'll be going up in the future?

The clue's in the question...

Tassotti

Over what time scale are you basing this 8%. From 1991 to 2001, properties in the area I invest in increased over 300%. That seems like about 30% per annum to me.

My point is that if everyones salaries had increased by 30% per annum everything would be equal. They are not, so to say house prices rise at the same rate as salaries is nonsense.

UK_Landlord_2

You think this is going to happen in our lifetime. YES a couple of times actually!

you seem to be confusing recent events with about a hundred odd years of property inflation history, as for people who are going to buy these houses, have you noticed all the short little people that go to place called schools, they grow up you know, and some of them even buy houses....

stoneyman

THe Economist has called the world property scene "The Biggest Bubble in History". see http://www.economist.com/finance/displayStory.cfm?story_id=4079027. There are so many TV progammes about buying property and it creates a panic situation about "getting on the proprty ladder" Good investment decisions mean avoiding the herd instinct. I think the best investment decision is to rent.

roswell

Well now we have the great crash debate out the way back to the OP,

If you dont NEED to buy and you already have accomodation at a lower price than it would cost you to buy the same standered keep saving till you have the biggest deposit you can get and get a morgage of the lowest wage multiples you need when you do buy.

To the house price rise / crash gang i know a number of people who are selling there properties because they bought in 2004 and are struggleing to keep up repayments due to no wage inflation ... end of the day 90 % of the population who owned a property mid 1990`s wont be able to afford the same property now at "Estate agents estimated value"


Just some food for thought.

meanmachine_2

UK_Landlord wrote:

you seem to be confusing recent events with about a hundred odd years of property inflation history,

OK, now I'm really confused.

Tassotti seems to think that house prices have increased by 30%pa for the last ten years.

Over history property has gone up exactly in line with wage inflation. In the shorter term property has risen above wage inflation then crashed and then risen below it to compensate.

The fact is that, in the shorter term, property is all over the place, but it always always always follows wages in the LONGER term.

And will do so again - which either means a 20 year stagnation (according to the Halifax) or a short term correction.

Right I'm out of here. This thread is being taken way off beam. Apols to the OP.

lynzpower

Just a 2p to the original poster.

No, IMHO you are not stupid, or missing out in any way by not getting on the property ladder now. You are living rent free ( ish) . on a 75k IO morgage, that is just under 400 a month THATS JUST THE INTEREST TO THE BANK EVERY SINGLE MONTH. So this is renting effectively. If I had a repayment mortgage on mine ( will be changing in December) is would have cost just under 700 a month ( plus cos Im in shared ownership a further 400 rent/service charge) So on a repayment, I would be looking at somewhere in the region of 1k a month for a 200k flat. Is it worth it? No, not really. Do I really think my falt will gain much value? I guesstimate that estate agents would value is around 260 if not more. So possibly the flat *could* have gained 60k worth of value in 2 years. But its only worth what the buyer will pay for it, so all this is pure conjecture really. Most propeties W/o gardens of comparable size are going for 280 on my road. I just dont think this can continue, and who is paying that? To my mind its thoroughly obscene. BTL investors probably that hope to god thier properties appreciate. they might, but I think they are the top for this area - but they might not. Discussions abound on this!

PLus you never know when your circumstances will change. Ive met my partner now and thus we can get a mortgage between us for a) something smaller, b) something cheaper, pay less a month on a repayment than I do now, all being well.

If i were you, and i do have regrets, sit tight, save your money, and wait for the market to start falling. UNless you see your dream home TO LIVE IN then carry on where you are is what id do.