10 yrs on will u be envious of all those 'muppets' that got into B2L now?

mp2

chucky wrote: »

you're thinking one-dimensionally here and only taking in information from one source that suits your agenda.

have a read of this.

http://en.wikipedia.org/wiki/Secondary_banking_crisis

it's not also a coincidence that all of the graphs that are posted never include any data or information pre-1975 when a similar situation to today arose.

shortly after 1975 there was HPI - why would it be any different now?

shortly after 1975 theres was houe price inflation, proportional to overall inflation. no one is sayng house prices will never rise again.

but the thing youre missing is what reference point are you using as your base of 100.

if youre using years 2003-2007 then prices will continue to fall relative to these prices becuase it was so overinflated.
for example if prices fall to 2000-2001 levels, (i.e consider 2001 prices as a "real value" reference point), then we see normal house price inflation from then on then thats perfectly feasible.

if the downturn is protracted it could even undershoot to below 1999 levels, after all markets do tend to go to the extremes at wither end during booms and busts.

chucky

mp2 wrote: »

but the thing youre missing is what reference point are you using as your base of 100.

i'm not saying anything when they're going to start or what's the starting point - that's you telling us that everyone is bankrupt; banks are insolvent and nobody is lending.

i'm giving you some facts that have happened in the past to prove that there was HPI after a banking crisis.

i'm dealing in facts here not if's and but's or what could happen, that's your job

mp2

chucky wrote: »

i'm not saying anything when they're going to start or what's the starting point - that's you telling us that everyone is bankrupt; banks are insolvent and nobody is lending.

i'm giving you some facts that have happened in the past to prove that there was HPI after a banking crisis.

i'm dealing in facts here not if's and but's or what could happen, that's your job

ok well what im saying is that if we strip out the 2002-2007 years of reckless lending you can probably take 2001 as a fairly neutral year where house prices were not cheap or expensive.
so the only way hpi can happen is if lending is looser than 2001 levels.

if we are at around 2004-2005 prices at present, the only way we will see hpi is if lending occurs at 2006 levels.

it wont happen because 2006 levels of lending was still "bubble" levels of lending, if that makes sense.

in any case todays level of lending is probabaly closer to 1991 levels never mind 2001.

silvercar

in any case todays level of lending is probabaly closer to 1991 levels never mind 2001.

In 1991 salary multiples were much tighter - 2.5 x joint or 3 possibly 3.25 x single. LTV size was higher, 97% mortgages were freely available. Valuations were less cautious than today.

Euphoria1z

1."house prices only go up" is an illusion. house prices seemingly going up over the long term is a fact (up and till now but only because the future hasnt happened yet). For those who are holding onto their properties forever, actual prices going up is an added bonus when it actually does go up in value for real.

2.people seem to think you make money on property, even tho this is true for those business minded that are in the property business, you dont really make money in property, you make money by investing in an overall appreciating asset, i.e property. (those who buy and sell/buy and flip etc make money, but compared to holding onto your property forwever, wot they make after taxes and expenses and stuff can be viewed as "chump change" compared to those who hold onto it forerver (for life).

3.bricks and mortar have a hell of a long life, but there not going to last forever, but certainly more than several hundred years (and well past our coming generations), its the actual land that is valuable and as land becomes more valuable, then so does the property thats on the land. for those BTL'ers, having a tenant paying your mortgage is a bonus.

4.inflation helps those with huge debt, makes the debt look smaller in the future as long as you can service the debt till that time has arrived i.e when your property has doubled in value..(so did the property actually double in value or did the pound/currency drop in value over time...or both?...=an overall illusion of your property just going up in value?)

5.interest rates- just part of any business where lending is concerned, it goes up, it goes down, it goes up, it stays up, it goes down, it stays down, as long as you can factor this in, in your business plan and are aware of the consequnces of it going up past your comfort point.

6.It is true that with strict lending, prices will not start to shoot up any time soon, but then do property prices actually shoot up? or is the market (again when the time comes) merely correcting itself ? or will it be inflation (effects of QE)? or both?

This is a phase. This phase will pass. like it has previously. things will sort themselves out, its just a shame that THIS TIME its gonna take a hell of a long time!!! In my case the interest rates alone will kill all my investments! But if i can hold on to them, then yes, at my dinner party i may boast (tho im a modest person) that i kept my properties and that there now worth £XXXX!!! but i personlly dont think it will be as soon as 2019 tho buy that time things will be alot easier to manage (in terms of my properties). Assuming i have a job...i will have paid off all of my non mortgage related loans off, and hopefully, the rent will cover my mortgage expenses.

if not then pah, atleast i tried.

the above is just my general view on the matter.
knowledge+sound (business type) investment is reqd for you to be a winner in the long term.

also to those who say BTLs pushed up the prices, what about prices going up when there was no BTL? why/how were the prices higher in the 80's than it was in the 70's? and then how were they higher in the 70's compared to the 60's? etc?

IveSeenTheLight

mp2 wrote: »

ok well what im saying is that if we strip out the 2002-2007 years of reckless lending you can probably take 2001 as a fairly neutral year where house prices were not cheap or expensive.
so the only way hpi can happen is if lending is looser than 2001 levels.

if we are at around 2004-2005 prices at present, the only way we will see hpi is if lending occurs at 2006 levels.

it wont happen because 2006 levels of lending was still "bubble" levels of lending, if that makes sense.

in any case todays level of lending is probabaly closer to 1991 levels never mind 2001.

You believe 2001 levels were neutral, are you considering inflation in those last 8 years?

If you look at the Long Term Trend Graph in the Nationwide graph (page 3)
http://www.nationwide.co.uk/hpi/historical/apr_2009.pdf

You can see that in 2002, house prices crossed the long term growth line.
surely this would indicate that the long term growth line is a reasonable assumption of where house prices should be now.
As you can see house prices are at that point.

The only thing to resolve now is availability of funds and consumer confidence

mewbie_2

IveSeenTheLight wrote: »

The only thing to resolve now is availability of funds and consumer confidence

Oh and the unwinding of the biggest house price bubble in history. It's certainly in my memory when you could buy a house on a credit card, because property was so unloved. And on what utility basis does a house in the states become worth a dollar?

Of course it depends whether you think we have just been through a bubble, or a slight over pricing of a few %.

mewbie_2

chucky wrote: »

really Mewbie - you must come back with some numbers with this rubbuish that you keep on spouting about BTL being gigantic bubble because you won't be finding any except for in one year (2007), but you wouldn't care about that.

you should really get your facts right before continually spouting the same old tosh.

they're good soundbites though and makes you popular. i guess that's what you're after. fair play.

Surely everything you can research about BTL tells you it is an unsustainable bubble? How else did two bedroomed flats go for figures like 300k and above at the height? Why else would idiots (and I am being generous) buy such things on BTL mortgages and not even rent them out! How about yields that a proper old time landlord would be horrified by?

It's not all rubbish Chucky. But it's only a view point and of course you are entitled to yours. I say - biggest bubble in history, a disaster for all concerned, mugs now stranded with huge unsustainable mortgages, property finished for a generation as an 'investment'. And you say what? It's a mere blip, a hiccup, soon to return to never ending price rises?

Populist rubbish v. fantasy Chucky. It all makes for a forum though.

mr.broderick

mewbie wrote: »

What fact is that then? BTL was a gigantic bubble, fuelled by speculative greed and easy credit. Once it's game over for a bubble it doesn't bounce, or recover. The game moves on to the next arena.

I'm not currently envious of those who thought they'd seen the bottom of the dot com boom, ostriches, antiques, classic cars, stamps, tulips, etc. I may be jealous of those who invest in lithium for example, but then who knows what the next madness will be?

Heard a whisper mewbs that the smart money is going into 26ft pocket cruisers, we'll have to wait and see :cool:

chucky

mewbie wrote: »

Surely everything you can research about BTL tells you it is an unsustainable bubble? How else did two bedroomed flats go for figures like 300k and above at the height? Why else would idiots (and I am being generous) buy such things on BTL mortgages and not even rent them out! How about yields that a proper old time landlord would be horrified by?

It's not all rubbish Chucky. But it's only a view point and of course you are entitled to yours. I say - biggest bubble in history, a disaster for all concerned, mugs now stranded with huge unsustainable mortgages, property finished for a generation as an 'investment'. And you say what? It's a mere blip, a hiccup, soon to return to never ending price rises?

Populist rubbish v. fantasy Chucky. It all makes for a forum though.

it's a factor but the biggest factor was people able to borrow and people wanting and willing to pay whatever it took to pay for a property.

going back to BTL - here's some facts not populist rubbish or even fantasy. i like to deal in facts not what is urban myth in this forum.

the blue line shows that Private Rentals (which the majority would have been BTL) have stayed basically flat with increases, not the massive increase that is regularly shouted about on here. the owner occupied (the Red line) is the biggest driver if you'd like to atach blame to anyone.

the graph only goes to mid-2005 but you cannot expect mid-2005 to peak 2007 to have been the drivers of the massive HPI.

i'll leave it with you to think about and maybe change your view on it


http://news.bbc.co.uk/1/shared/spl/hi/guides/456900/456991/html/default.stm