Do you think property prices will double in 10 years?

Chichi_2

Just wondering whether anyone thinks property prices will DEFINITELY DOUBLE IN 10 years' time?

Mum is buying a BTL in my name with an interest only mortgage. I want to take out life insurance to cover the cost of mortgage but only up to the time to sell it perhaps in 10-12 years time.

What do others think a £100K property will be worth in 10 years time?

free4440273

certainly property prices will drop (soon??) as they did during the early 90s bust. but, as they did then subsequently, they will rise fairly substantially. so yes a £100k property will rise in ten yrs - £200k????

master_blaster_2

it will if you buy in northern ireland
iv heard anicdotal evedince of propertyies doing that in 1 year
a lot of areas here are going up by 30-50 K over the asking price

glad im selling and not buying

Doozergirl

Chichi wrote:

Just wondering whether anyone thinks property prices will DEFINITELY DOUBLE IN 10 years' time?

Absolutely no way. They've already doubled and tripled. It's impossible for it to be a never-ending upward climb. I don't know who would be able to afford to buy the property from you if they doubled again.

Chichi wrote:

What do others think a £100K property will be worth in 10 years time?

Got a spare crystal ball? I'd be happy if prices rose in line with inflation.

Property is no longer a cash cow and buying Interest Only BTL is taking a massive risk. You must expect rent to, at the very least, cover the full cost of a capital repayment mortgage. Even, then, you're money would be better in the bank where it would earn interest and you'd not have the hassle and worry of bad tenants and void periods.

HelpWhereIcan

Assuming a moderate, inflationary increase of 3% pa, a 100,000 property would be worth approx £134,392 in 10 years time.

for a £100k property to be double over 10 years, you would need property to increase by approx 7.2% per year.

What you think will happen to property prices is up to you. My crystal ball is no better than yours.

Could the money that you have to spend maintaining the property/paying the mortgage work for you harder elsewhere? Would this be more or less risky/effort than putting it into the property?

What would you do if property prices fell? Would you be able to hold onto the property for another 10 years or do you definately need your money (£200k?) back in 10 years?

What is your main objective for the investment? Making money through capital growth or by generating an income? Would you plan to move into it at some point and have it as a home?

What will you do with the income it generates in the meantime? Will you use any surpluses to reduce the debt or invest elsewhere?

As Doozergirl says, property is not a sure fire winner and you need to treat it the same way as any other investment. Weigh up the risks, compare it to the potential reward and do not put all your eggs in one basket.

Hope this helps

Chichi_2

I don't really have eggs to put in my basket. As it's my mum's investment. I would benefit from the capital growth in x amount of years or on her death as it's in my name. There will be a life policy payable on my death so she gets the property unencumbered.

Her deposit of 20K could get her at most £1400 K a year gross interest at 7% in savings account. With a rental yield of 8%, she will have equivalent interest of £5400 a year which will be her rental income. She'd be better, we hope.

We have made allowances for tax and all outgoings associated with a BTL.

As for property prices going up, with inflation everything else goes up. So if property was only £134K in 10 years time, I get £34K minus CGT if I sell it.

Does anyone think there is risk in what we're doing?

Cara79

I would say there is always a risk in what you're planning on doing, but is it a risk you're / your mum is willing to make?

Personally I think it is the wrong time to be entering the market and certainly BTL, but saying that, I don't have a BTL property and so only see the downside of it - again personal opinion.

I also think that house prices will drop substantially in the nearish future, but ultimately think they will rise again, although whether it will outperform where we are now - who knows.

The one thing you need to consider between yourselves is - what happens if in 10 years time the house is only worth £90k - who will be liable for the £10k loss as it is interest only? You could find yourselves in negative equity.

Oh and I sincerely hope house prices do not double in 10 years time - unless pay rises etc go the same way, which is very doubtfull, otherwise like Doozergirl says, who would be able to buy a £200k property which is today worth £100k (and I personally believe that house prices are overinflated at today's rate)

Anyway, good luck.

lynzpower

Can I ask why the property is going in "your name" when you seem so unsure about doing it?

I would run a mile from this arrangement!

movieman

House prices are already unaffordable for most of the younger generation: how can they double again, unless wages rise massively? And how can wages rise massively when most jobs can be exported to China for a fraction of the cost?

There's always a slim possibility that Gordon Brown will come up with some way to keep the housing market rising, but IMHO it's far more likely that your 100k property will be worth 50k than 200k. Less, in fact, given it will presumably be a flat rather than a house and flats are insanely overpriced these days.

Stompa

Chichi wrote:

Just wondering whether anyone thinks property prices will DEFINITELY DOUBLE IN 10 years' time?

Let's hope not.

FaTB

Chichi wrote:

Just wondering whether anyone thinks property prices will DEFINITELY DOUBLE IN 10 years' time?

You must be joking, I think its much more likely prices will go down.

In ten years time we might be back to where we are now, but that's looking on the bright side.

It's a bubble, and eventually they pop !!

I wouldn't buy property now, especially not a BTL