Property !!!!!! A Nation Hypnotised? Blog Discussion

FaTB

MSE_Martin wrote:

Thank you

Just a quick note to say what an interesting position. Great to see so many views, argued coherently, and without venom. I think many less financially educated people reading this coming from the weekly e-mail will find the arguments educational (as do I).

Martin

PS. Just agreed to do a Tonight with Trevor on this subject, so the debate will continue

I hope you're gonna be a big grizzly "BEAR"

Chrysalis

the south east been overcrowded isnt a myth just drive down there and the packed roads is evident enough. Their is more urban areas up north as well but less population density and much less jobs, to solve this problem in itself it needs business to start locating away from london and the south east.

ReportInvestor

whambamboo wrote:

Everyone knows annuities suck - that's why we've got The Compulsory Annuity Purchase Protest Alliance. So what's your point?

That many people prefer to save for retirement via an additional property, rather than through a pension & this affects the property market.

Scotsman - Personal pension payouts halve in the last ten years
A combination of poor stock market performance, insurance company disasters and falling annuity yields.

The evidence is abundant that property does not perform as well as the stockmarket.

Try telling that to the great British public . Especially after the mortgage endowment "misunderstanding".

It is, however, a mistake to assume that stock market managers match the historic indices you linked to. They don't, not least because of charges & because the indices change dramatically over time, with managers not spotting the rising stars and hanging onto the laggards.

You'll get 3.5% income from shares, plus capital growth as well. And let's not forget, it's much cheaper and less hassle to hold shares.

The FTSE100 yields around 3.2%, the FTSE250 around 2.45%. Foreign shares yield less. Average charge on funds are 1.5%. That doesn't leave a lot of income when those are taken off the dividends.

If you want high-yield, you can do that too

Even High Yield unit trusts yield 3.2% and include the bonds you didn't think much of and often take their charges out of capital so it's a bit of a conjuring trick.

EdInvestor and others recommend & have created their own High Yield Portfolios, managed by themselves using direct investment into the stock market to vastly reduce charges - but most people still feel more confident with property.

My main point has been about people's search for income and how it may yet help sustain the property market in the absence of trusted alternatives. Only a slump is likely to cause a rethink.

I don't invest in buy-to-let property, preferring shares, but I have neither your out & out confidence about the latter, nor your doom & gloom about the former.

However, one bearish point on the horizon for property will be in 7 years or so, when the first cohort of super-indebted students hits 25.

F_T_Buyer

Chrysalis wrote:

the south east been overcrowded isnt a myth just drive down there and the packed roads is evident enough. Their is more urban areas up north as well but less population density and much less jobs, to solve this problem in itself it needs business to start locating away from london and the south east.

If you do your research you will find the south east is less urbanised than the north west, whereas the population is far greater than the north west.

Conclusion: Those in the south east are living in much smaller properties, and more to a room.


Also, anyone wanting to quote lack of housing stock for high house prices, don't forget to add the approx near million empty homes. Oh, and they are more houses per head than any time since WW2.

As someone has jokingly said, if there is such a shortage of housing, where is everyone living now?

Chrysalis

you just answered your own question, you cant expect people to move hundreds of miles away from their families just for a home, all the empty homes are congregated in areas that for a reason is why they empty no jobs etc. If their is no empty homes in leics but 500 in sunderland does that make it ok for the people in leics who need a home?

Also the houses that do get built they usually high priced luxury ones not solving the problem for the people who need something cheap.

nemo183

paulmuk wrote:

I believe that high house price inflation is partially a result of the restrictive nature of the British planning system.

I don't know just how well you actually know how the planning system works, but if you mean it's not possible to build just what you want, where you want - you're right.

On the other hand, since most planning decisions are now taken at national level, most things are possible.

I live in the South East, and in my part of the world I'll fight new housing tooth and nail. All our local schools are oversubscribed. Our water supply and sewage systems are in crisis. It takes 2 weeks to see the doctor. There is no NHS dentist. Our roads are a danger to walk along.

There is more to this issue than might appear.

zcaprd7

“but surely if you’re paying rent when you could be paying off a mortgage, you’re throwing your cash away?”

Aargh, I hate this view - so the money being spent in interest to finance the purchase isn't being wasted? Surely you're just throwing the money at your bank manager rather than a landlord.

To date, I've worked out that everytime I rent its cheaper than buying the same house and paying for (just the interest mind) a mortgage - on top of that there are no maintenance costs and the transaction cost is much lower than buying - oh, and only contents insurance to pay for...

Until rents rise or prices fall I will continue to rent.

claz

To be honest have not had time to read the full thread as i am at work and obviously shoudl be working ahhhhhhhhhhh

however, just like to get an opinion on my situation

my partner and i were renting a ground floor flat at £550 per month with council and bills etc on top of that

did not really have much choice with what property to rent as i am disabled and so this obviously limits where we can stay

however, we have now bought a 3 bed bungalow for £135,000 it is quite run down but luckly partner is electrician and his dad is is a builder so no problems with doing it up

we now pay £750 a month plus same council tax and actually bills are keeper than the flat as it is better insulated etc

now don't know after reading martins post whether this was a good idea or not

thing is i am 19 partner is 27 and we are not struggling to pay the mortgage every month, planning to stay there a long time so unless prices crash after about 10 years then we migh have a problem

don't really understand the economics of all of this (should do got an a level in business!!!!!!!) talk about imigration etc but would just like opinions on who thinks we have done the right thing

thanks

F_T_Buyer

claz wrote:

To be honest have not had time to read the full thread as i am at work and obviously shoudl be working ahhhhhhhhhhh

however, just like to get an opinion on my situation

my partner and i were renting a ground floor flat at £550 per month with council and bills etc on top of that

did not really have much choice with what property to rent as i am disabled and so this obviously limits where we can stay

however, we have now bought a 3 bed bungalow for £135,000 it is quite run down but luckly partner is electrician and his dad is is a builder so no problems with doing it up

we now pay £750 a month plus same council tax and actually bills are keeper than the flat as it is better insulated etc

now don't know after reading martins post whether this was a good idea or not

thing is i am 19 partner is 27 and we are not struggling to pay the mortgage every month, planning to stay there a long time so unless prices crash after about 10 years then we migh have a problem

don't really understand the economics of all of this (should do got an a level in business!!!!!!!) talk about imigration etc but would just like opinions on who thinks we have done the right thing

thanks

I assume the mortgage you have now is a repayment? Basically, you need to compare the rent you would have paid to the interest on the mortgage. If your rent is less, renting is cheaper. I don't this this is the case for you.

I think anyone buying needs to look at if they can afford it, and if they can, and want their own home - go for it. It's those who are borrowing far too much, or investing just because it's the done thing, that these warnings are aimed at.

whambamboo

F_T_Buyer wrote:

I assume the mortgage you have now is a repayment? Basically, you need to compare the rent you would have paid to the interest on the mortgage. If your rent is less, renting is cheaper. I don't this this is the case for you.

Dependes on the interest rate. Typical standard variable of 5.75% on £135,000 is £7762.50 per year, so £650/month. He's probably paying less than that.

The risk is of course that prices have risen a lot and may fall in the short term, meaning he could have waited a couple of years and get something better. Or maybe not...