The eight-year bear market in property

HAMISH_MCTAVISH

Flight2quality wrote: »

factors that could destroy the housing market

:rotfl:

interest rates.

:rotfl::rotfl:

The government has promised to build more

:rotfl::rotfl::rotfl:

immigration is likely to slow

:rotfl::rotfl::rotfl::rotfl:

Conrad

Thrugelmir wrote: »

And the relevance of this to the UK property or lending markets?

His point I think is that despite an armaggedon like event, UK property is still only 10% down - so calls of market misery ahead need to be taken with the recent experience in mind.

In any event etsablished LL's are making un heard of monthly profits. Little to fear going forward.

Thrugelmir

Conrad wrote: »

Yet despite this, landlords have never had it so good. Capital values become largely unimportant when the cash is rolling in. Who thinks about realising a value when times are tough and significant after cost cash is rolling in.

I can honestly say almost no LL I meet is remotely focused on price.

It's like shares, if the divis are decent, there's no point giving any thought energy over to price.

Have a read of NRAM's accounts particularly the section on Bradford and Bingley (half year at 30th June 2011). Seems as if not all LL's are experiencing such good times as you suggest.

Conrad

Thrugelmir wrote: »

Have a read of NRAM's accounts particularly the section on Bradford and Bingley (half year at 30th June 2011). Seems as if not all LL's are experiencing such good times as you suggest.

Yet B2L lending has expanded year on year and enough LL's are doing well which means enough attraction to the investment remains.

Nationwide have been actively expanding into this market via TMW - trust me, they know what they're about.


Imagine you were say a 60 yo looking at boosting your investment income. Your choices as an average unsophisticated Joe Bloggs, really dont amount to much and for millions a B2L offers a better return than other places.

One can buy a studio in North London for under £90,000 and let it to the concil for £775 pm with no sign of a cap or reduction, and even if the state does reduce the sum, one would still easily achieve £600 pm which is more than satisfactory even after costs and possible arrears fund are set aside.

Also note that many buy as a security valve to pass onto thier kids / grand kids one day.

Thrugelmir

Conrad wrote: »

His point I think is that despite an armaggedon like event, UK property is still only 10% down

And the ongoing financial life support from the UK Treasury to underpin the mortgage lenders and therefore the property market. Will this not impact future returns? If prices fail to rise then the return will diminish.

Thrugelmir

Conrad wrote: »

Yet B2L lending has expanded year on year and enough LL's are doing well which means enough attraction to the investment remains.

By expanding I assume you mean outstanding mortgages. Easy to answer. In 1998 there were only "BTL" 30,000 loans. So unless mortgages are redeemed (or repaid) which is unlikely given a 13 year growth time frame. The number has yet to peak before natural attrition will come into play and the number reduces.

Thrugelmir

Conrad wrote: »

Nationwide have been actively expanding into this market via TMW - trust me, they know what they're about.

The Nationwide has a total mortgage book of £12 billion pounds. Across all lending classes. Residential, commercial and BTL etc.

NRAM (excluding the new Northern Rock), has £26 billion of purely BTL lending outstanding on its books. All lent in the 9 years up to 2009.

Helps to put the numbers in perspective. When one talks about growth in the market.

IronWolf

I just like the faces of the writers you can see on Moneyweek. This guy looks pretty smug lol.

I don't think anyone can argue against buying your own home as a good investment. He's wrong when he says you shouldn't think long term about this, that's exactly how you should think. Eventually the mortgage will be paid off so in the long term you will save a fortune on rent payments.