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Debate House Prices


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It can make a lot of sense to buy now.

I was pondering some applications I'm currently dealing with. At the same time I was thinking back to people I know who bought in past recessions, particulary in 1973, 1978 and 1991.

Current case - apllicants have sold thier home for £500k, having paid £140k in sept 1999.
It's a semi in Surrey.
They are buying a detached wreck for £615k on a huge plot.
He will do it up himslef in evenings (did this with last home) and it could easily be worth £1m in todays market, let alone 5 or 15 years time.

The new mortgage is £300k on C&I basis, fixed for 3 years at £1390 pm which for them is about 1 third of net income.
Sure rates may rise after 3 years (a certainty) but they will cope and will be sitting on a mass of equity. He really does transform a property.

Back to 1973. I have an applicant aged 68 who bought a big pile bear Jamie Oliver for £2,500! It's now worth £700,000.

Imagine you were on this forum and we were in the same economic times as 1973 - all the bears would say it was reckless to buy!

1978 - a current client bought a huge detached home with 20 acres back then for £60,000. It's now valued at about £3m.
Again if we were experiencing the economic tapestry of 1978, the bears here would be urging restraint.

THE POINT - It's always difficult to see the light when times are dark, but the brave / carefree will be investing now and sitting pretty in 20 years time.
«13456713

Comments

  • Dirk_Rambo
    Dirk_Rambo Posts: 387 Forumite
    with all the massive house price falls going on at the minute, id rather wait a few years and get it for half the price they are now
  • arby
    arby Posts: 173 Forumite
    I bought a pack of polos when i was a kid for 11p. Now look at the price!!! I should stock up on them as in 10 years they'll be sold for at least a quid! that's a 1000% increase in 30 years!! You might think this is a joke statement, but it applies almost directly to what Conrad is stating. Remove inflation from the scenario and things don't look as pretty.
  • MissMoneypenny
    MissMoneypenny Posts: 5,324 Forumite
    State worker job cuts; benefit cuts; rising interest rates. I can't see house prices going up. Better to wait and buy a house at the lower prices so people don't have to borrow so much.

    Got some houses to sell Conrad? I sympathise. We are still trying to sell my mother's house and the first time buyer in the chain is getting the jitters. I don't blame them. At least there is no mortgage on my mother's house, so we can just drop the price to sell and won't have to keep chasing the market down.
    RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
    Read the sticky on the House Buying, Renting & Selling board.


  • michaels
    michaels Posts: 29,211 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    I don't think it should be dismissed so quickly. There is a general point that buying when everyone is buying an asset and the prices are rising at best you will ride part of the upswing. Buy when prices are crashing and seller are panicking and huge profits can be reaped by the brave. Early 2009 is a prime example, prices were down sharply and sellers were motivated to take sometimes 30% reductions of asking prices to 'get out before it got worse' and yet those who caught the falling knives may have made 50% on their equity in 12 months if they got out again earlier this year...
    I think....
  • twirlypinky
    twirlypinky Posts: 2,415 Forumite
    why does it always have to be about making money? What's wrong with just buying a house to live in, and have it as a home?
    saving up another deposit as we've lost all our equity.
    We're 29% of the way there...
  • ninky_2
    ninky_2 Posts: 5,872 Forumite
    Conrad wrote: »
    THE POINT - It's always difficult to see the light when times are dark, but the brave / carefree will be investing now and sitting pretty in 20 years time.

    agreed but they can only do this if they have the means. the reason prices are not rising is not so much to do with confidence and capability. the brits are not generally cautious as a nation when it comes to spending on property but lenders are now being more so.
    Those who will not reason, are bigots, those who cannot, are fools, and those who dare not, are slaves. - Lord Byron
  • MissMoneypenny
    MissMoneypenny Posts: 5,324 Forumite
    michaels wrote: »
    if they got out again earlier this year...

    Finding the right time to sell and being able to find a buyer, are the problems. Hang on too long and you will do a Wilson.

    Opportunities always look bigger going than they did coming.:D
    RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
    Read the sticky on the House Buying, Renting & Selling board.


  • arby
    arby Posts: 173 Forumite
    michaels wrote: »
    I don't think it should be dismissed so quickly. There is a general point that buying when everyone is buying an asset and the prices are rising at best you will ride part of the upswing. Buy when prices are crashing and seller are panicking and huge profits can be reaped by the brave. Early 2009 is a prime example, prices were down sharply and sellers were motivated to take sometimes 30% reductions of asking prices to 'get out before it got worse' and yet those who caught the falling knives may have made 50% on their equity in 12 months if they got out again earlier this year...

    that's fine, you said 'may' inferring it's not a certainty, while the numpty at the top of the thread says it's a sure-fire guaranteed way to make money. there's a massive difference!
  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    it's always a good time to buy - it's just that some opportunities are better than others.

    it's not always a good time to sell though... selling at the right price and the right time is the tough part.
  • arby
    arby Posts: 173 Forumite
    chucky wrote: »
    it's always a good time to buy - it's just that some opportunities are better than others.

    it's not always a good time to sell though... selling at the right price and the right time is the tough part.

    do you really believe that? i wonder how some people get through life with such limited understanding. I could have bought 3 years ago. I didn't. The exact same house is now £40,000 cheaper while I've increased my deposit by £40,000. Tell me why 3 years ago was a good time to buy for me?
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