Why houses prices will always go up and up long term

Thrugelmir

terrencetrentderby wrote: »

My prediction is house prices will remain stable for the next five years and then start to rise again.

On what grounds? By stable do you mean stagnant?

terrencetrentderby

Thrugelmir wrote: »

On what grounds? By stable do you mean stagnant?

What would you mean by stable?

Thrugelmir

terrencetrentderby wrote: »

What would you mean by stable?

I'm firmly in the stagnant at best camp. As with the state of the UK's finances will only take one major incident to ignite the touchpaper. Maybe tomorrow , maybe in 3 years time. Issues are far from resolved.

terrencetrentderby

Thrugelmir wrote: »

I'm firmly in the stagnant at best camp. As with the state of the UK's finances will only take one major incident to ignite the touchpaper. Maybe tomorrow , maybe in 3 years time. Issues are far from resolved.

Stagnant is ok for a few years.

chucknorris

Thrugelmir wrote: »

The days of inflation being lower than wage increases are over. So disposable income is getting squeezed.

Not that I agree with you (nothing is over in the long term) but in any case when you buy you have locked in at that price and only pay the mortgage on that value, whereas with rent there will be rent rises over time.

Thrugelmir

chucknorris wrote: »

Not that I agree with you (nothing is over in the long term) but in any case when you buy you have locked in at that price and only pay the mortgage on that value, whereas with rent there will be rent rises over time.

Average fall in income since 2008 is now 7.4% (inflation adjusted).

Easy to live in a world cushioned from the real one.

chucknorris

Thrugelmir wrote: »

Average fall in income since 2008 is now 7.4% (inflation adjusted).

Easy to live in a world cushioned from the real one.

But rents have risen since 2008!

Thrugelmir

chucknorris wrote: »

But rents have risen since 2008!

Personally I think rents are to low in general still. Not reflective of either the potential the risk involved or long term costs of maintaining a property.

Of course lower house prices would solve this. As increase return on capital. Though leave recent investors with burnt fingers.

Like a game of chess only one piece moves at a time. As I've said before this a long drawn out battle that's some way to go. Before equilibrium is achieved. Continued weakness of the banks does little to inspire confidence.

chucknorris

Thrugelmir wrote: »

Personally I think rents are to low in general still. Not reflective of either the potential the risk involved or long term costs of maintaining a property.

Of course lower house prices would solve this. As increase return on capital. Though leave recent investors with burnt fingers.

Like a game of chess only one piece moves at a time. As I've said before this a long drawn out battle that's some way to go. Before equilibrium is achieved. Continued weakness of the banks does little to inspire confidence.

I think that you probably think rents are low because you are only looking only at the initial (year 1) yield. The properties that I bought in the 90's had low yields when I bought them. But expressing the current rents as a yield to the original prices, they are now just under 30%. That is why property can be a decent long term investment, it is because of the yield growth, initial yields rarely look good, I would never have invested without the benefit of rental growth.

EDIT: I'm not saying its good for everyone, I wouldn't invest any more now, after 22 years I have had enough of it. Of course I will continue for now though and wait for a better market to sell (probably in 8-10 years).

Thrugelmir

chucknorris wrote: »

I think that you probably think rents are low because you are only looking only at the initial (year 1) yield. The properties that I bought in the 90's had low yields when I bought them. But expressing the current rents as a yield to the original prices, they are now just under 30%. That is why property can be a decent long term investment, it is because of the yield growth, initial yields rarely look good, I would never have invested without the benefit of rental growth.

Good timing. 16 years of unbroken economic growth and prosperity may have helped you achieve your return. There's no such good news on the horizon I feel for investors now. So initial yield will be evermore important. As capital growth may be in short supply.