Is it a bad time to buy a house as an investment? If so why?

homelessskilledworker

wotsthat wrote: »

Foxy, you'll be paying other people's mortgages forever with that logic.

I bet you bought your first house in the '90's. History will likely show that people who bought in the '90's were the jammiest buyers in generations with affordability ratios at very low levels.

21 year olds buying houses on 3 x income has never been the 'norm' and it never will be.

Actually wotsthat/troll/Bruno

You remind me of the Bull idiot that was posting on Motley Fool a little while back, he wa called BK and was a suspect contender for being Bruno:). He came out with something similar to you...

That ALL the bad news had now finished(he was refering mainly to events of 2007/08), and also made the point about 90's house buying would be a one off never to be seen again buying opportunity.

He was obviously ripped to pieces on tha fact that he could predict that was the end of "bad news":rotfl:.. like he was some kind of fortune teller.

Some of you property bulls really crack me up

abaxas

FTBFun wrote: »

Yes I can. Why can't I, and why is it not "open or free?" There are no restrictions on whom I can sell my property to, just they have to afford it (obviously).

The market is directly controlled via planning. That has more of an effect on it than any supply/demand argument.

FTBFun

abaxas wrote: »

The market is directly controlled via planning. That has more of an effect on it than any supply/demand argument.

Utter twaddle.

Planning restrictions are a factor that determines supply. They are not a restriction on the market itself.

smala01

In my area the base price of a property appears to be the montly equivalent of a buy to let mortgage (approx 5%) less any renevation.

Example:

Rent achievable is £600
(Interest only Mortgage £500 + Profit @ 20% = £100)

= £120,000 value of property

this has been true for the last 10 years or so. There have been some huge losses for buyers (particulary new builds) - flats have lost half their value, houses 10-20%.

Of course, if you buy in an area that renting is not popular this will be less relevent.

Smala01

Loopgames

smala01 wrote: »

In my area the base price of a property appears to be the montly equivalent of a buy to let mortgage (approx 5%) less any renevation.

Example:

Rent achievable is £600
(Interest only Mortgage £500 + Profit @ 20% = £100)

= £120,000 value of property

this has been true for the last 10 years or so. There have been some huge losses for buyers (particulary new builds) - flats have lost half their value, houses 10-20%.

Of course, if you buy in an area that renting is not popular this will be less relevent.

Smala01

Of course that all goes out the window when banks stop interest only mortgages. Haven't they tightened on that already?

This is the whole point of planning carefully - all these worst case scenerios must be allowed for when buying for investment purposes.

Thrugelmir

smala01 wrote: »

Example:

Rent achievable is £600
(Interest only Mortgage £500 + Profit @ 20% = £100)

= £120,000 value of property

£100 to cover maintaining the property , void periods etc?


A loss situation in the making.

To make a return. Requires a 10% yield.

So £12k rent. Less £6k interest. Nets to £6k.

That's a base point for letting a property.

As then a good margin to cover all costs and lack of income. Along with paying the taxman his 20% cut.

smala01

Thrugelmir wrote: »

£100 to cover maintaining the property , void periods etc?


A loss situation in the making.

To make a return. Requires a 10% yield.

So £12k rent. Less £6k interest. Nets to £6k.

That's a base point for letting a property.

As then a good margin to cover all costs and lack of income. Along with paying the taxman his 20% cut.

Agree totally - new build flats / houses in my area are priced at 5% yield ONLY and are being snapped up- so these house prices can only go one way in my opinion.

I guess the point to make to the original poster is that there is housing stock that has a much greater risk of a price fall than others...

Smala01

Bigdeflationfirst

Timay wrote: »

I know this has probably been asked but I couldn't see anything as straight forward a question as that.

But let's say you don't need to buy a home but you want to buy a home in the uk (first time buyer) Is it a really bad time to buy a house and why?

Very simple, because soon the values will be much lower.

You may end up in neg equity.

Even if you did not need to borrow much, its not nice to see something you paid your hard earned money for going down in value.

ruggedtoast

Timay wrote: »

I know this has probably been asked but I couldn't see anything as straight forward a question as that.

But let's say you don't need to buy a home but you want to buy a home in the uk (first time buyer) Is it a really bad time to buy a house and why?

You seem to be conflating home and house. They are two very different things.

A house identical to the one I bought last year has just gone STC after one day, at a considerably higher asking price.

While its human nature to hope that it goes through, and the vendors get every penny, I cant realise any local price increase without selling my home and moving out (a significant disadvantage), and I wont be able to afford a better one in the local area as the rungs of the ladder have moved further apart.

Of course that all changes if you do want or need to sell, but on the whole I think the house as an investment boat -has sailed for most people who can't buy somewhere outright.

One thing thats worth bearing in mind however is that paying off the capital part of a mortgage is effectively tax free saving (assuming your house isnt plummeting in value) , so you should get the shortest term you can and overpay as much as possible.

IronWolf

I would ignore almost everyone on here, and say that it's impossible to generalise the "housing market" just like you cant say the stock market will make good returns over the next 10 years. Individual companies shares may do very well, others may do terribly.

With housing you cant really diversify so you need to make that 1 purchase a good one. Each house will have different rental yields and capital appretiation possibilities. You have to assess each in its own right before deciding to buy.

If you are looking at BTL, forget about the value of the house in the near future, the most important thing will be the potential rental yield and interest rates on the mortgage. Over 25 years capital value is a minor concern.