How many housing bulls left?

chucky

investing in property is like a casino - the house always wins in the long term...

the_flying_pig

I'm bearish.

The most bullish thing I can say about housing is roughly along the following lines:

(1) Yes residential property is overpriced but not that overpriced, say 25% above the long run earnings multiplier... 'only' five years of absolutely static prices and modest earnings growth would see us back more or less bang in line with history;
(2) Yes of course the dreadful prospective economic/employment situation will be bad for prices but a fair-sized chunk [impossible to say how much... a bit? nearly all? who can say] of that downward pressure will be negated by the accomapnying ZIRP policy; and
(3) The impact of the very low recent and ongoing housebuilding is hard to put a figure on but it must place some upward pressure on prices.

My best guess is that we'll fairly quickly fall back to within a few percentage points [maybe a bit higher, maybe a bit lower, who knows] of the April 2009 trough, and that we'll stay there or thereabouts for long enough for this to become accepted as the proper price level, rather than something that's only for 'forced sellers', and long enough for 'four walls to a fortune' get-rich-quick notions to fade very comprehensively into a thing of the past, probably a fair bit more so than they did in the 90s.

In the very run prices will rise with wage inflation just as they always did. I'm in my early thirties now, by the very end of my lifetime it's very likely that the average house price will reach £1m, but that does not, of course, mean that buying now is a good idea, on the contrary, I'd guess that someone whose budget stretches to [say] a 3-bed house will very probably be able to afford a 4-bed one [and hence a materially greater standard of living if they have two or especially three children] with the same cash if they hold their nerve.

Dirk_Rambo

bulls are becoming an endangred species i think

Blacklight

the_flying_pig wrote: »

I'm in my early thirties now, by the very end of my lifetime it's very likely that the average house price will reach £1m, but that does not, of course, mean that buying now is a good idea, on the contrary, I'd guess that someone whose budget stretches to [say] a 3-bed house will very probably be able to afford a 4-bed one [and hence a materially greater standard of living if they have two or especially three children] with the same cash if they hold their nerve.

True enough and a fair refection of my sentiment and that of many people.

That said, people renting for five years to realise a saving is pretty much the same thing as someone buying now and using the rent money to pay off the debt. There's not much in it, they both lead to pretty much the same place by my reckoning.

I guess it comes down to what you honestly believe is going to happen.

Blacklight

the_flying_pig wrote: »

I'm in my early thirties now, by the very end of my lifetime it's very likely that the average house price will reach £1m, but that does not, of course, mean that buying now is a good idea, on the contrary, I'd guess that someone whose budget stretches to [say] a 3-bed house will very probably be able to afford a 4-bed one [and hence a materially greater standard of living if they have two or especially three children] with the same cash if they hold their nerve.

That said, people renting for five years to realise a saving is pretty much the same thing as someone buying now and using the rent money to pay off the debt. There's not much in it, they both lead to pretty much the same place by my reckoning.

I guess it comes down to what you honestly believe is going to happen.

Really2

Dirk_Rambo wrote: »

bulls are becoming an endangred species i think

TBF the bears seem to have all been sh!ting in the woods for the last 18 months.

the_flying_pig

Blacklight wrote: »

That said, people renting for five years to realise a saving is pretty much the same thing as someone buying now and using the rent money to pay off the debt. There's not much in it, they both lead to pretty much the same place by my reckoning...

(1) This argument applies to renting would-be FTBs but not to owning would-be upsizers [or, i suppose, people living with parents or house sharing - like probably many people i moved straight from a very inexpensive houseshare to owner-occupation, i never rented a full property myself].

(2) It appears to ignore the opportunity cost of interest on savings for deposits and/or the interest cost of borrowing. Neither is trivial given very low current rental yields.

Llubrevlis

So to answer my original question there are no real bulls left?

There used to be quite a few.

They are still lurking, just changed their tune now. Now they say "I have always said house prices will fall".

So it seems the debate is now not if but when and how much?

chucky

Llubrevlis wrote: »

So to answer my original question there are no real bulls left?

There used to be quite a few.

They are still lurking, just changed their tune now. Now they say "I have always said house prices will fall".

So it seems the debate is now not if but when and how much?

how would you know if "there used to be quite a few before" - you only joined in... wait for it... no, no... wait for it

Llubrevlis - Join Date: Jul 2010

what was your user name before you lost all credability and created a new one then?? :rotfl:

mramra

chucky wrote: »

how would you know if "there used to be quite a be few before" - you only joined in... wait for it... no, no... wait for it

Join Date: Jul 2010

what was your user name before you lost all credability and created a new one then?? :rotfl:

:rotfl:Columbo-esque detective skills!:rotfl: