House prices....

tara747

bingobangobongo wrote: »

Whats the general feeling on longer term house prices. A lot of people have lost a third off the price of their house in the last 3-4 years. How long before (as an estimate) they could recoup this loss and afford to sell? 5 years? 10 years?

I am in this situation myself, but am keen to move to a bigger, family home. Makes sense to buy when the prices are 'low' - but if you rent out the other property how long would you need to rent it for before you could break even or even minimise the loss.

How long would you be prepared to be a landlord? 5 years? 10 years? 20 years? This is how long it could take for your house to go back to the price you paid for it.

Are you aware of the costs and legal obligations of being a landlord?

How much rent would you get, and would this cover the mortgage, rates, maintenence, void periods, landlord insurance etc etc?

Is the house in an area where it could easily be rented?

Hope this helps.

motorguy

x12yhp wrote: »

I don't know how we could take this beyond opinion but my opinion is that you are not right. We have not had a fast and steep correction. The prices have gone down, but only those which are selling. The majority of properties remain over-priced which indicates to me that there are a lot of people out there who want to sell, but who do not need to sell. Rates up and many of those may no longer 'not need' to sell.

I think that interest rates rising more than an arbitrarily small amount could lead to a genuine correction. Beyond property for sale, it will scare buyers...

So a drop from £270K to £140K inside two years isnt fast and steep?

No doubt there will be many repossessions though. I guess the speculation at this stage is how many?

motorguy

tara747 wrote: »

Thanks, I did see the guy on the news saying that. I always believe everything I hear, of course. Oh no, wait - I don't. Thank goodness! Otherwise I would have bought a house over and over again during this crash, as hardly a month or a quarter has gone by without some VI 'economist' or other saying that we are close to the bottom. :rotfl:

So someone puts on a negative slant and we all are just accept it at face value (to the extent that you THANKED them for their negative comment), but when someone says 'well actually the report also said this....', then we shouldnt listen to these economists.... yeah loving the logic there. :rotfl:

motorguy

tara747 wrote: »

How long would you be prepared to be a landlord? 5 years? 10 years? 20 years? This is how long it could take for your house to go back to the price you paid for it.

Are you aware of the costs and legal obligations of being a landlord?

How much rent would you get, and would this cover the mortgage, rates, maintenence, void periods, landlord insurance etc etc?

Is the house in an area where it could easily be rented?

Hope this helps.

I think you've misinterpreted what was said - the values are likely to go UP over the next 20 years from where they are now, so either bingobangobongo paid a massive amount for the house and are very much down on a large sum of money at present which they will LOSE if they sell now OR they were technically UP money when the prices rose. Either way in 20 years time, they are pretty much guaranteed to be a lot better off.

Personally, i'm prepared to be a landlord for the next 20 years. I've landlords insurance (less than £100 a year), and i'm happy to keep the house in a good state of repairs as its an investment.

By that time the mortgage will be long since paid off and we'll have a handy nest egg for our retirement.

Even IF there would be on average a deficit of £200 a month that we pay out ourselves (currently our rent covers our mortgage) then we'll have £1/4 million nest egg at the end of it.

Seems like a good deal to me.

How long have you been renting now?

x12yhp

pgilc1 wrote: »

So a drop from £270K to £140K inside two years isnt fast and steep?

No doubt there will be many repossessions though. I guess the speculation at this stage is how many?

That is not the 'norm'. East Belfast - the properties I looked at near the peak (orangefield, for example) were in the £160-220k region. You would not find one at 52% of that, now. The cheapest orangefield road/park/ave/etc semi that I can find is showing as sale agreed at £135k. That is a 15% (ish) drop, not the 50% you are talking about.

Perhaps you are right in some areas, but that is definitely not the case in and around east belfast, it is not the case in holywood, cultra, seahill, helens bay... MY point is that it should be and all those areas which are sitting pretty with much smaller drops are ripe for major falls if the interest rates rise.

tara747

pgilc1 wrote: »

So someone puts on a negative slant and we all are just accept it at face value (to the extent that you THANKED them for their negative comment), but when someone says 'well actually the report also said this....', then we shouldnt listen to these economists.... yeah loving the logic there. :rotfl:

Touche. :rotfl:

I am very bearish about the NI housing market to be fair, and I do of course have a VI in prices falling further. However, I fail to see on what basis that guy on the news could possibly predict a 'bottoming out'. All the signs are pointing to further falls. Inflation up, public sector job insecurity/cuts, stagnant wages, likely IR rises, water rates likely to be introduced, rates to be charged on empty properties from Oct 2011 etc etc etc.

pgilc1 wrote: »

I think you've misinterpreted what was said - the values are likely to go UP over the next 20 years from where they are now, so either bingobangobongo paid a massive amount for the house and are very much down on a large sum of money at present which they will LOSE if they sell now OR they were technically UP money when the prices rose. Either way in 20 years time, they are pretty much guaranteed to be a lot better off.

Personally, i'm prepared to be a landlord for the next 20 years. I've landlords insurance (less than £100 a year), and i'm happy to keep the house in a good state of repairs as its an investment.

By that time the mortgage will be long since paid off and we'll have a handy nest egg for our retirement.

Even IF there would be on average a deficit of £200 a month that we pay out ourselves (currently our rent covers our mortgage) then we'll have £1/4 million nest egg at the end of it.

Seems like a good deal to me.

How long have you been renting now?

But you've already paid for the house. So that's £200 a month on top of all the capital and interest that you've already paid. Care to do the maths? Still a good deal?

BTW, I didn't misinterpret bingobangobongo's post at all. From what he says, I get the impression that he is in negative equity - apologies if I have read it wrong. Either way, he doesn't feel that he would get the price that he is seeking for his current house and my questions are valid ones. Not everyone wants to be a LL. I have two friends in that position and they both wish they had sold their houses while they could. Neither were in negative equity when they first went to market... both had offers that were too low for their liking... both took the houses off the market after a year and decided to rent them out for a couple of years till the market picked up again (to warp speed presumably)... both now in negative equity on TWO houses each and both bitterly regret their decisions three years on. :eek:

p.s. how long have I rented? Since I was a student. By the time I had graduated and got a job and a few quid together for a deposit, the boom had started. I couldn't keep up so wisely decided to stay out of the madness and keep saving. As you can see from my sig, I have done very well so far and I probably have a higher net worth than most property owners my age. Lots of them have a net worth that is in 5-digit minus figures! OH has some impressive savings too.

Don't worry about me, I'll buy when the time is right.

BigAndy_79

I think the time to buy is now, tbh. Offer something a little lower and step right in. Chief economists have predicted that rates will begin edging up in 2012, so it is looking like being the right time to be looking. . . .

BigAndy_79

How did you amass so much on ebay, Tara ?!? You would be far better selling things locally - ebay fees are ridiculous these days !!

motorguy

tara747 wrote: »

But you've already paid for the house. So that's £200 a month on top of all the capital and interest that you've already paid. Care to do the maths? Still a good deal?

No we hadnt. there is £118K or so outstanding on the mortgage. IF we sell it now, we will probably get out ok, with maybe £10K in our back pockets - providing of course we kiss !!! of some buyer and they deem us worthy of selling them our house at a knock down price. OR we sit tight with it. The mortgage gets cleared every month and we've enough disposable income to see us through any times of non rental (it was rented out in 4 days last time, and theres a semi retired couple have taken it). So assuming a worst case scenario, say we average £200 a month of our own money over the course of the 20 years, and at the end of the mortgage its worth £250K, so we've put in £48K in our own payments and are getting back £250K.

Hows your maths now?

tara747 wrote: »

BTW, I didn't misinterpret bingobangobongo's post at all. From what he says, I get the impression that he is in negative equity - apologies if I have read it wrong. Either way, he doesn't feel that he would get the price that he is seeking for his current house and my questions are valid ones. Not everyone wants to be a LL.

So his choices are 'make do' with his current house OR take the hit on the negative equity and absorb it as a personal loss OR rent it out long term and have someone else pay off his negative equity for him (someone like you maybe? )

tara747 wrote: »

I have two friends in that position and they both wish they had sold their houses while they could. Neither were in negative equity when they first went to market... both had offers that were too low for their liking... both took the houses off the market after a year and decided to rent them out for a couple of years till the market picked up again (to warp speed presumably)... both now in negative equity on TWO houses each and both bitterly regret their decisions three years on. :eek:

So you're basing your knowledge of being a landlord on what happened two of your friends. Great!

tara747 wrote: »

p.s. how long have I rented? Since I was a student. By the time I had graduated and got a job and a few quid together for a deposit, the boom had started. I couldn't keep up so wisely decided to stay out of the madness and keep saving.

Conversely, after getting divorced i ended up buying an end of terrace house maybe a couple of years before the start of the boom. I lived in it a while, then rented it out when i got together with my now wife. I sold it at the very peak of the market and walked away with a cheque for £100,000.

Your cautiousness got you nothing, my 'luck' cleared me £100K. Was staying out of it so wise?

tara747 wrote: »

As you can see from my sig, I have done very well so far and I probably have a higher net worth than most property owners my age. Lots of them have a net worth that is in 5-digit minus figures! OH has some impressive savings too.

Don't worry about me, I'll buy when the time is right.

Yes, you seem to have done quite well at building up a little nest egg. Well done!

What if the 'right' time is NOW and you're missing out, like you did last time around? Heres an example. A friend of mine just bought a repossessed end of terraced three bed house outside banbridge for £47K, which he bought for cash - i guess a lot like you could do. The house was £170K at the peak of the market. Hes spent £2K on it and is just about to rent it out. It has a side garden just wide enough to put another house on so he is currently seeking planning permission to build one in the garden, which he will then rent out too. He'll probably build that for £40K ish. Maybe a bit more.

Tell me HOW that is NOT the right thing to do right now, and now tell me honestly is your money working as hard for you in the bank as this guys is? Whos going to have the bigger return in 10 years? Oh, and hes just a regular guy, not some wannabe property developer.

motorguy

BigAndy_79 wrote: »

How did you amass so much on ebay, Tara ?!? You would be far better selling things locally - ebay fees are ridiculous these days !!

Lets hope shes declaring any profits to the IR.