Robert Shiller on BTL (in the USA)

Generali

http://pragcap.com/robert-shiller-dont-invest-in-housing

“Housing is traditionally is not viewed as a great investment. It takes maintenance, it depreciates, it goes out of style. All of those are problems. And there’s technical progress in housing. So, the new ones are better….So, why was it considered an investment? That was a fad. That was an idea that took hold in the early 2000′s. And I don’t expect it to come back. Not with the same force.....



.…From 1890 to 1990 the appreciation in US housing was just about zero.

NB: This is the US housing market, not the UK's.

Generali

Interesting to note that according to this:

http://www.economist.com/blogs/freeexchange/2011/03/global_house_prices

UK house prices (after inflation) are up about 150% since 1975. US prices are up about 15-20% over the same period after taking inflation off.

France, often lauded as paragons of house market virtue, have seen real rises similar to if slightly below those in the UK.

chucknorris

Generali wrote: »

http://pragcap.com/robert-shiller-dont-invest-in-housing



NB: This is the US housing market, not the UK's.

Does housing stock really depreciate in value in the US? If it does then that is a MAJOR difference between our residential property market and theirs and it means that comparisons between the two are virtually meaningless.

EDIT: I see your second post (not visible when I started typing mine) does highlight the difference in the capital growths of each country.

Generali

When you buy a house you buy two things: a house that depreciates and land that does not. That's the same in all countries.

chucknorris

Generali wrote: »

When you buy a house you buy two things: a house that depreciates and land that does not. That's the same in all countries.

I think that is being a bit pedantic (although true)! I don't think we should all start editing our posts to reflect this, when mentioning capital growth.

the_flying_pig

Generali wrote: »

When you buy a house you buy two things: a house that depreciates and land that does not. That's the same in all countries.

yeah, i dunno.

US houses are very often [at least partly] built out of wood. maybe that's what the "depreciation" reference was about?

also you get a few countries whereby unusual [for whatevre reason] climate tends to make houses depreciate more quickly than they do here.

the_flying_pig

but ultimately i'd say that the depreciation comment is a total red herring.

if you were thinking about investing in, say, a car hire company, or a computer company, what kind of idiotic response woudl it be for someone to tell you 'nah - cars depreciate' or 'nah - computers depreciate'.

whether these are good business or not turns on whether or not the cashflows coming in are sufficient to compensate you for all your costs, including the need to maintain & replace assets.

HAMISH_MCTAVISH

it depreciates, it goes out of style. All of those are problems. And there’s technical progress in housing. So, the new ones are better….So, why was it considered an investment

And that is one of the biggest differences between the US and the UK.

Here, the old ones are usually considered to be better, more desirable, more sought after.

the_flying_pig

HAMISH_MCTAVISH wrote: »

And that is one of the biggest differences between the US and the UK.

Here, the old ones are usually considered to be better, more desirable, more sought after.

I think that's a really lazy, unhelpful, generalisation.

michaels

Generali wrote: »

Interesting to note that according to this:

http://www.economist.com/blogs/freeexchange/2011/03/global_house_prices

UK house prices (after inflation) are up about 150% since 1975. US prices are up about 15-20% over the same period after taking inflation off.

France, often lauded as paragons of house market virtue, have seen real rises similar to if slightly below those in the UK.

Juist a thought - are you able to find out what has happened to the total value of the two countries total housing stocks over the period?

the_flying_pig

michaels wrote: »

Juist a thought - are you able to find out what has happened to the total value of the two countries total housing stocks over the period?

Probably not helpful. Their population has skyrocketed in that period (up about 100m from 200m-odd to 300m- odd, so the best part of a 50% increase. Ours hasn't gone up by much more than about 5m, 50-odd m to 60-odd m, not much more than a 10% increase.

I won't do a HAMISH and pretend that this has even the tiniest beginning of anything to do with HPI.