The property boom

dunstonh

They dropped by a 40% after the last crash and that was far less of a bubble than the current one.

Generali

What I think is interesting in those figures (maybe it's just me of course) is that over any 10 year period starting between 1985 and 1991 you'd have been best off putting the money into index linked bonds if you just invested cash.

If you'd BTL'd in the current style - 80% mortgage and rent covering 130% of that - you'd have been crippled if you bought between 1987 and 1990 and held for 10 years. You'd still be completely wiped out after 10 years!

RufusFrog_2

dunstonh wrote:

They dropped by a 40% after the last crash and that was far less of a bubble than the current one.

When mortgage rates get into the high teens again, then I'll be worried.

PoorDave

Generali wrote:

After inflation (according to my dodgy sums at least) that's not true:

Year............Real increase/%
1983-93...........25.42
1984-94...........20.48
1985-95...........10.12
1986-96............3.60
1987-97...........-2.70
1988-98..........-13.45
1989-99..........-25.61
1990-2000........-9.60
1991-2001.........0.60
1992-2002........25.80
1993-2003........56.96
1994-2004........88.90
1995-2005.......105.52

I may have gone wrong somewhere with my methodology (I'm not a statistician) but I took the av. house price from HBOS, divided it by the RPI so that everything is in '1983 £s' and then measured the rise over each 10 year period. Only in the period 1995-2005 did house prices double.

But surely if your analysis proves anything, it only proves house price don't double every ten years! The original question was posed using 7 years, unless i'm mistaken. Good marks for application, fewer for answering the actual question.
:beer:

RufusFrog_2

Generali wrote:

Not sure about this - if prices can double they can halve!

But my tea leaves never lie!

ManAtHome

Property doubles every 7 years if you only consider the last 7...

But could be another of them new paradigm thingys - we can all pack in working and mark house prices up 15% forever can't we..?

JBeau

I owned a small flat in London. Purchased 1988 for 61K valued in 1991 for 24K.
You can work out the sums! Eventually sold in 2000 making 20K profit. Was it worth it? No.:mad:

franklee

RufusFrog wrote:

Now I don't fear another market drop - we are buying a house for £340,000, over half of which is 'virtual' money, profit from our current house

Please don't tell any of my account managers that, so far I've fooled them that the profit from selling my last house is real money. Heck, I need the income it generates for paying the rent so don't tell my landlord that either, I don't think he'd take kindly to being paid in interest from 'virtual' money :rotfl: :rotfl: :rotfl: :rotfl: :rotfl:

competitionscafe

dunstonh wrote:

What she should really be saying is "How I got myself into large debt and helped the banks own lots of properties".

That's true there was another prog on someone who did something similar but got carried away and got into trouble buying new builds off-plan. I think at one stage she had 28, 30 million 'worth' of property! (owned by the banks of course) but ended up going bankrupt?

Generali

PoorDave wrote:

But surely if your analysis proves anything, it only proves house price don't double every ten years! The original question was posed using 7 years, unless i'm mistaken. Good marks for application, fewer for answering the actual question.
:beer:

You want it? You got it. 7 year return from the starting year shown on the left:

1983.........52.96%
1984.........40.89%
1985.........23.67%
1986.........12.33%
1987.........-0.50%
1988.........-18.00%
1989.........-31.20%
1990.........-21.93%
1991.........-14.59%
1992.........-3.62%
1993.........10.25%
1994.........17.64%
1995.........41.27%
1996.........70.17%
1997.........93.17%
1998.........94.73%

That's total return, not annualised.

As 'normal' real stock market returns are 7%, you'd need 60.58% to beat that.