Builders ‘drip-feed’ homes to halt price falls (The Times)

HAMISH_MCTAVISH

Really2 wrote: »

They are only build to order and when the contracts are signed.

In the current situation does that surprise people?

Surely it is a sensible business model for the current times.

Indeed. Why flood the market? Drip feeding keeps prices up, it's very good news.

Really2

HAMISH_MCTAVISH wrote: »

Indeed. Why flood the market? Drip feeding keeps prices up, it's very good news.

I won't say it is good news as it will not be for all.

But it is the sensible thing to do to keep the companies going.

PS some good news for bears halifax. -0.5%

HAMISH_MCTAVISH

Wookster wrote: »

And what areas are those?

In terms of rental yields, anything more than about 4.5% would result in rent being similar to the interest component of a mortgage. Anything above 5.5% would be similar to a repayment mortgage. And anything above 6.5% would mean rent is more expensive than a mortgage.

Rental yields in many parts of the country are above 5%. For example in the North East of Scotland, 6% to 8% is common. In the North of England also, 5% plus is common.

Of course in the South East, big cities, and for very expensive properties anywhere, it can be 3% or less. But the point is clear, it's all down to rental yields in your own local area, which vary wildly throughout the country.

skap7309

HAMISH_MCTAVISH wrote: »

Indeed. Why flood the market? Drip feeding keeps prices up, it's very good news.

There is only so many things to try out and falsify the market. It will eventually fall and find its own floor. You are 100% correct though. The longer VI's attempt to prop prices up artificially the longer i have to save up a bigger and better deposit, meaning a bigger and better house at the end of it when the inevitable happens. Bring it on.

I am certainly in no rush to buy..........

Wookster

HAMISH_MCTAVISH wrote: »

Of course in the South East, big cities, and for very expensive properties anywhere, it can be 3% or less. But the point is clear, it's all down to rental yields in your own local area, which vary wildly throughout the country.

I wouldn't know about outside the South East, but definitely in the South East, there are very very few properties where a BTL would be profitable at current property prices.

JayScottGreenspan

HAMISH_MCTAVISH wrote: »

Indeed. Why flood the market? Drip feeding keeps prices up, it's very good news.

Why do you think "high prices = good news"?????

Higher prices => money doesn't go as far => lower standard of living.

Next time RPI is throught the roof and people can't afford to feed their families I guess you'll be celebrating. _party_

HAMISH_MCTAVISH

Wookster wrote: »

I wouldn't know about outside the South East, but definitely in the South East, there are very very few properties where a BTL would be profitable at current property prices.

Fair enough.. But it's not like that everywhere by a long shot.

I would need to be paying around 7% interest for the interest component to cost the same as rent. I'm paying 1% at the moment..... I then use the difference to pay off the capital, gaining again in reduced interest later.

Furthermore, the mortgage I am on is better even when it reverts to SVR, than the best tracker deals available today.

There will be plenty of people in a similar situation, for whom buying pre-crash will actually end up making more financial sense than buying post crash.

chucky

Wookster wrote: »

I wouldn't know about outside the South East, but definitely in the South East, there are very very few properties where a BTL would be profitable at current property prices.

with lower prices in the South East - BTL is an even better investment as yields will be higher as the property price has dropped.

Thrugelmir

chucky wrote: »

with lower prices in the South East - BTL is an even better investment as yields will be higher as the property price has dropped.

Only as long as the rent holds up.

Once interest rates rise, rents will have to rise too.

As interest only BTL mortgages disappear. Where are BL'ers going to fund the capital repayment from ? As this needs to be paid from after tax income.

Rents will rise in the longer term making buying a more attractive proposition.

Wookster

Thrugelmir wrote: »

Only as long as the rent holds up.

Once interest rates rise, rents will have to rise too.

As interest only BTL mortgages disappear. Where are BL'ers going to fund the capital repayment from ? As this needs to be paid from after tax income.

Rents will rise in the longer term making buying a more attractive proposition.

I doubt that - rents have fallen by 10-15% in London, including some of the nicer areas.