Should i put my savings into bricks and mortar?

Jim_B_3

stphnstevey wrote:

Property prices are always rising.

That's a big fat lie. Sometimes they fall.

stphnstevey

Jim_B wrote:

That's a big fat lie. Sometimes they fall.

Over the past 25 yrs prices have on average increased, year on year. Sure there are fluctuations were they go up and down, but over the long term, which I am investing in, they have risen.

Hardly 'a big fat lie'!!!!!!! Thanks for your most intellectual input though:rotfl:

I thought it was just the newspapers that focused in on one minor detail and blew it out of proportion!

F_T_Buyer

stphnstevey wrote:

Hi Bob,

Property prices are always rising, so I meant relative to affordability. Just a year and a bit ago interest rates were extremely low, which meant cheap money and everyone had money to buy, pushing prices sky high above the average wage.

Prices have levelled out a bit now and salaries are catching back up.

Hence, prices are not as high as they have ever been.

Prices are not always rising.

Actually, looking at affordabliity measures there is only one which shows todays prices are not at records levels. And that measure is what percentage of your payments goes on the interest:

http://www.guardian.co.uk/uklatest/story/0,,-5960616,00.html

But there is two problems with this measure:

1. it ignores the capital debt. So, take the 90s as an example. Someone then could have paid off £50 a month (for example) and they would own the house at some point in the future.

If that were to happen today they would be paying that nominal amount off for far far far longer before they own the house.

2. It ignores other factors like what you can afford to spend on a mortgage, e.g. we have more stealth taxes now, pay rises are far far smaller (in % terms) etc

So, affordability isn't the worst it has ever been but it is dam close - and this is at historically low interest rates!

F_T_Buyer

stphnstevey wrote:

Over the past 25 yrs prices have on average increased, year on year. Sure there are fluctuations were they go up and down, but over the long term, which I am investing in, they have risen.

Hardly 'a big fat lie'!!!!!!! Thanks for your most intellectual input though:rotfl:

I thought it was just the newspapers that focused in on one minor detail and blew it out of proportion!

Property prices fell around 75% over 15 years in Japan. But i'm sure if you took the price of property 100 years ago, you could say prices always rise. :rotfl:

A Deflationary recession in the UK is a possibility (although probably not likely). That would be devastating for people in debt.

stphnstevey

F_T_Buyer wrote:

If I had borrowed money to invest (which I haven't) I would have had a massive return.

You didn't though.

F_T_Buyer wrote:

But the risks increase when you gear up like that. If you put down 10% deposit, and prices rise by 10%, sure you've made a 100% return on your initial deposit. But what if prices fell 10%, you would lose all your initial deposit. And with housing it could lead to you losing your primary residence.

In the first year yes. But I am not in it for one year. Over ten years my investment would have gone up enough to vastly outshadow any short term loss

F_T_Buyer wrote:

I've no doubt people have made money over the last ten years. But we're looking at today, or since 2004 as in my comment above.

I make money on my property since 2004, today and continue to do so at this very moment in time.

F_T_Buyer wrote:

If you look at the figures (Land Registry Q1-04 to Q1-06) prices have risen 15.83%. I have returned far more than 15.83% in commodities and equities.

Even if property has risen by 15%, thats 15% increased house price, not ROI. (eg. 100k property rises to 115K). If I have only invested 10K, I made 15K with a 90k mortgage.

Thats 150% ROI over two years or averaging 75% a year. Even if you had returned 30% a year (which would be a very good return for shares), I have returned more than double what you have. It therefore takes me HALF the amount of time it takes you to amass the same amount.

That also doesn't take into account the extra equity I can borrow on to invest further.

You really don't understand property do you:rotfl:

F_T_Buyer wrote:

I could have borrowed money to invest, but I wouldn't want to make myself bankrupt if only a mild correction (10%) happened.

LONG TERM LONG TERM LONG TERM LONG TERM - how many times!!! If property prices go down, I don't care, I am not selling!!!!!

F_T_Buyer wrote:

I'm not going to give details of specific investments, i'm not advocating anyone on here blindly go into such investments. They are plenty of websites/forums for this kind of stuff. But I like sticking around providing counter arguments to why property isn't a one way bet (as some make it out to be).

Why do you like arguing the case the other way? How can you give someone advice if you haven't even done it yourself!!!!!!!

stphnstevey

F_T_Buyer wrote:

Property prices fell around 75% over 15 years in Japan.

What the ****'s Japan got to do with the UK market??? I wish someone would consider moving to Japan. The mentality of some people...

stphnstevey

F_T_Buyer wrote:

Property prices fell around 75% over 15 years in Japan. But i'm sure if you took the price of property 100 years ago, you could say prices always rise. :rotfl:

A Deflationary recession in the UK is a possibility (although probably not likely). That would be devastating for people in debt.

If it's not likely, why are you so worried about it for!!!!!? It wouldn't be devastating for me and I am in debt?

BobProperty

stphnstevey wrote:

....Property prices are always rising.....

Sorry that's complete Bollards:
From my own experience
Bought 1983 sold 1996 same price give or take few 100 quid
On market 1989 agreed to sell at £120k twice - fell though both times. On market on and off throughout the 90's never at anything other than £120k until after 1996
Bought 1988 and spent lot on complete re-furb and conversion. Cost approx £65k-£70k I had valuations in the early 90's for £43k and £46k.

Now go on, say those 4 little words I want to hear:
"It's different this time"

lynzpower

Oh Bob, sometimes you are too much of a realist for your own good. If you believe it will happen ( repeat after me)

BobProperty

stphnstevey wrote:

What the ****'s Japan got to do with the UK market??? I wish someone would consider moving to Japan. The mentality of some people...

It's called the global economy.
"What the ****'s Japan got to do with the UK market" well nothing so long as we don't trade with each other, invest in each others countries and have no connections with any other country/economy where either the UK or Japan trade or invest. Simple. The mentality of some people...