House buying dreams are dying

Conrad

Jegersmart wrote: »

From my side I am not exposed to house prices in the UK, but I am exposed to rent.



J

Nice post J.

I keep encountering this 50/60 something type investor lot more now. He typically 10 properties with very low gearing and super low mortgage rates (often older tracker deals).

This type are really going all out to expand thier portfolios and to be frank they tend to be pretty voracious. For example yesterdays chap - retired £4m resi home, no mortgage. Makes £100k profit form B2L alone. But like the others I meet lately he wants more, it's almost like a game of Monopoly.

They seem to equate number of properties with status. Thier passion is telling others at a BBQ / dinner party how mnay properties they own.

I would be careful if I were you because such people are taking an ever larger market slice. I cannot really see prices falling when yields are desirous. The typical model even with 75% gearing means a 10 appartment portfolio where each costs about £100k (London perimeter), will easily generate an immediate profit of about £50,000 pa allowing for all costs. Round here a £100k studio can be let for £800 per monht.

In reality though investors tend to have much lower gearing than 75%.

Jegersmart

Hi Conrad

Yes, in property one has to really manage the risk of overleveraging. Tracker deals are no good when rates rise and we all know they can do so at an alarming rate in certain situations. Whilst I made some good money in late 90's and early 00's I no longer play with properties, I see the longer term prospects changing fundamentally at least in terms of capital appreciation, so I prefer other "activities".

Anyway, best of luck to all whatever you are up to..

J

IveSeenTheLight

coastline wrote: »

I was considering where you're located and whats happening in your area..
The houses in the next street to me are going for 290 now and they are down from 375.
Again using that calculator I reloaded with 9%...your favourite number ....this time we've paid off 11%.
End of the day If you see the house of your dreams...buy it..

LOL, 9% is not my favourite number. I was replying to someone who quoted that as the average mortgage rate, which I refuted.

Property prices in my VI area are up on 2007 peak.
The rental market is crazy as well.
I bought a 4 bed house in December 2011 and am getting approx 13% on my invested capital.

I agree it's not similar throughout the UK, but there are areas where it makes sense to buy either for yourself or as an investment.

GeorgeHowell

Another factor may be the favouring of houses over flats in this country. That is chaning foir a number of reasons, but though I don't have statistics (and unlike some people can't be a**** to keep looking them up !) there is an impression that many of our continental neighbours are more content with a flat. In Germany a large Mercedes and a decent apartment would be seen as high status. Whereas here a detached house and VW Golf would probably be deemed superior. One of the problems in Britain is that housing counts for so much in the personal status stakes. That's why so many people are obsessed with house prices, even when higher prices do not really help them -- it's because of the status benefit to their ego and self-esteem of believing they own a high/higher value property.

Many young people don't seem to be bothered about gardens these days and as long as there is parking available (other than in large city centres perhaps) a decent flat would often support their lifestyles. There are downsides in that many new flats were grossly overpriced before the crash which has given them a bad name, freehold landlords are often exploitative, service charges too high, and security can be poor. But a move towards more flats and less houses would surely help.

coastline

Tower blocks..flats...maisonettes have all been pulled down throughout the UK and many were only 40 yo..
Local authority homes today... many look similar to starter homes in the private sector.