Good news for anyone buying ...

Really2

Browntrout wrote: »

If you own a house and did nothing else with it in the way of upkeep eventually the house would be almost worthless, this is nothing to do with the land that the house sits on, it is a different asset class.

In order to maintain the house it needs re-pointing, new windows, new roof etc to keep it's value as a shelter.

Residential property as an investment is questionable to say the least.


Depreciation from Wikipedia - Property
Many tax systems prescribe longer depreciable lives for buildings and land improvements. Such lives may vary by type of use. Many such systems, including the United States and Canada, permit depreciation for real property using only the straight line method, or a small fixed percentage of cost. In the United States, residential rental buildings are depreciable over a 27.5 year or 40 year life, other buildings over a 39 or 40 year life, and land improvements over a 15 or 20 year life, all using the straight line method.

For it to be a depreciating asset it has to depreciate faster than its upkeep costs.
So upkeep £500 - £1000 per year max. Could you point out a time over a mortgage period (25 years) that the house as actually depreciated in the UK?.

You are looking at liability not depreciation.

Would the USA and Canda not allow that because wood structures do have a limited life span in their climates?
Also your quote is regards to taxation EG landlords to offset. It does not mean the assets is worthless at the end just that they can claim a loss against it. But should they sell they would have to pay any tax on the profit over the rate they depreciated against.

Browntrout_2

I think property is a generally a depreciating asset and the last 25 years are no indication on what the next 25 will be.

What was house price inflation from 1950 to 1975 for example?

I don't know but suspect it was nothing like it was from 1980 to 2005.

House prices may rise in the next 25 years but only after they have settled from the phenominal rise over the last period which lifted property out of reach of 1st time buyers, a huge indication they got way too expensive.

Any future house price rises in the next 25 years will keep place with inflation so net net no real increase, IMHO.

IveSeenTheLight

Browntrout wrote: »

I think property is a generally a depreciating asset and the last 25 years are no indication on what the next 25 will be.

What was house price inflation from 1950 to 1975 for example?

I don't know but suspect it was nothing like it was from 1980 to 2005.

From this link http://www.nationwide.co.uk/hpi/downloads/UK_house_price_since_1952.xls

House Price Q4 1952 = £1891
House Price Q4 1977 = £13,150
Resultant HPI increase of 695.5%


House Price Q2 1998 = £34,174
House Price Q2 2010 = £168,719
Resultant HPI increase of 493.7%

Browntrout wrote: »

Any future house price rises in the next 25 years will keep place with inflation so net net no real increase, IMHO.

That may be true, however the debt remains reduces and doesn't increase with inflation. It actually decreases due to capital repayment.
This means that throughout the period of a mortgage (25 years), the debt becomes easier to manage due to inflation (wage)

chucky

Browntrout wrote: »

I think property is a generally a depreciating asset and the last 25 years are no indication on what the next 25 will be.

any purchase has risks - with property, the house ALWAYS wins :T

Really2

Browntrout wrote: »

I think property is a generally a depreciating asset and the last 25 years are no indication on what the next 25 will be.

What was house price inflation from 1950 to 1975 for example?

I don't know but suspect it was nothing like it was from 1980 to 2005.

http://www.wwwk.co.uk/culture/housing/index.htm

1950 = £1.9K
1975 = £11.7K

over 500% increase in 25 years. That is bigger than the last 25 is it not?

Yes the last 25 years are not an indicator of the future, but there are no indications in modern history that have shown house prices to be depriciating assets.
Inflation has seen to that.

StevieJ

PasturesNew wrote: »

I went to see a really shabby chalet today. Flat roof, total floor space about 20'x16', into which they'd squeezed two single bedrooms (just, both 7'x6') and a shower/loo in the corner of the living room... flat roof, parking up the road, overlooking a pub car park, blighted by pub kitchen extractor fan noise... £200k. Views to die for though! I was thinking £85k ... and that'd be pushing it. Too tight to buy into a shack in the middle of millionaire-land

With money one could treble the size of it and make it a real "wow", as it is, it currently looks like a derelict public lavatory.

I know it's all about location, but ... I can't do it for this one

You are not an alcoholic are you

Fiddlestick

nearlynew wrote: »

...... there are good deals to be made if you are prepared to wait to find the right house and seller.

I have just had my offer of 245k accepted for a house that was initially priced (9 months ago) for 365k

What makes you think it was a good deal?

Just because the seller priced it at 365k, doesn't mean it was actually WORTH that.

An asset is only worth whatever price the buyer and seller can negotiate between them...

nearlynew

Fiddlestick wrote: »

What makes you think it was a good deal?

Just because the seller priced it at 365k, doesn't mean it was actually WORTH that.

An asset is only worth whatever price the buyer and seller can negotiate between them...

Oh I know all that.

The point of the thread was that finding the buyer looking to deal is just as important as finding a house.

Many of the others I looked at between £350k and £400k are either inferior and/or owned by people that won't even budge £5k

They are in for one hell of a shock.

Davesnave

nearlynew wrote: »

The point of the thread was that finding the buyer looking to deal is just as important as finding a house.

This is it. In early 2009 we were fed up with non-dealers, so with cash in the bank, we confined our attentions to those we knew, or suspected, would be in a state of high motivation. (Someone say 'Ghouls?' )

Well, we saw some things that were scary, like the elderly couple who'd not been upstairs in their own home for two years, but even with folk like these, there was little doing. They're still on the market, at the same loony price and, no doubt, their kids still won't have cleaned for them!:(

Then we hit on this place. There was a pretty weird back-story here too, but at last we had a vendor with a strict deadline, who simply wanted the low asking price and completion asap. Deal done. She didn't even take a gazump a few weeks later.

We met our vendor socially a few months ago, though she no longer lives near here. She's not only happy in a new job, but she has a new man too, so life has moved on for her, in the right direction. Like us, she just wanted to get on with things. Regrets? I don't think so.

mcc100

IveSeenTheLight wrote: »

From this link http://www.nationwide.co.uk/hpi/downloads/UK_house_price_since_1952.xls

House Price Q4 1952 = £1891
House Price Q4 1977 = £13,150
Resultant HPI increase of 695.5%


House Price Q2 1998 = £34,174
House Price Q2 2010 = £168,719
Resultant HPI increase of 493.7%



That may be true, however the debt remains reduces and doesn't increase with inflation. It actually decreases due to capital repayment.
This means that throughout the period of a mortgage (25 years), the debt becomes easier to manage due to inflation (wage)

Not sure your figure for Q2 1998 is correct.