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Debate House Prices
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Property or shares?
HAMISH_MCTAVISH
Posts: 28,592 Forumite
It's a question that comes up quite often, but we haven't had one of these threads for a while, so may as well do it again now....
I've had an interesting PM conversation with someone who has asked a few questions.
I'd prefer to answer via a thread as the PM format is a bit limiting for graphs and such like.
Happy to leave them anonymous for now, but they can jump in and take credit if they wish.
Probably one of the more contentious issues online at the moment, and you'll get very different answers depending on who you ask.
I would, obviously, as I think we're on the cusp of the next big bull run in property due to fundamental supply shortages.
It is difficult to overstate just how critical a shortage of housing the UK now has, and that strong a fundamental imbalance can usually only have one possible long term outcome on prices.
They'll soar.
In my opinion, the only thing that has held prices down has been the severe mortgage rationing of the last 5 years, and with that now easing, the current artificially low prices must rise.
I can't see any reason why you'd not buy a flat if the rent can pay off the mortgage in 10 years.
Someone else (your tenant) has bought most of that asset for you.
Whether prices rise a bit or fall a bit, if you can turn a 50K deposit into a 150K flat in a decade, and someone else paid for most of the balance, it's surely a bit of a no-brainer?
I don't see that as likely.
Other opinions may vary of course. I'm sure some will be along shortly to disagree.
Over the long run in the UK, stocks plus dividends have been beaten by property plus yield.
I don't see that changing any time soon.
Stock markets to me look toppy thanks to all the QE that has poured in. Whereas that QE money has done virtually nothing to inflate UK property lending.
The number of mortgages being issued is still so low as to require government action to increase it to something resembling even the long term average.
For a well thought out opposite opinion, that disagrees with me on UK property, but seems to have a good track record with equities, try here....
https://www.retirementinvestingtoday.com
Youtube is very bad for your investing health. All the crazies and goldbugs hang out there, preaching doom and gloom.
Try reading more economics articles instead.
And the RIT site above is a good read as well.
I've had an interesting PM conversation with someone who has asked a few questions.
I'd prefer to answer via a thread as the PM format is a bit limiting for graphs and such like.
Happy to leave them anonymous for now, but they can jump in and take credit if they wish.
Given the view that the UK is on the upward trend would you recommend buying a rental property?
Probably one of the more contentious issues online at the moment, and you'll get very different answers depending on who you ask.
I would, obviously, as I think we're on the cusp of the next big bull run in property due to fundamental supply shortages.
It is difficult to overstate just how critical a shortage of housing the UK now has, and that strong a fundamental imbalance can usually only have one possible long term outcome on prices.
They'll soar.
In my opinion, the only thing that has held prices down has been the severe mortgage rationing of the last 5 years, and with that now easing, the current artificially low prices must rise.
I have £50k that I was going to invest in stocks.
I can raise a second mortgage to buy a BTL flat in **********.
The rental return would clear the mortgage of the flat in 10 years.
My only concern is that I am buying into a bubble that won't last 10 years...
I can't see any reason why you'd not buy a flat if the rent can pay off the mortgage in 10 years.
Someone else (your tenant) has bought most of that asset for you.
Whether prices rise a bit or fall a bit, if you can turn a 50K deposit into a 150K flat in a decade, and someone else paid for most of the balance, it's surely a bit of a no-brainer?
And also concerned about US running into problems that ultimately affect us.
I don't see that as likely.
Other opinions may vary of course. I'm sure some will be along shortly to disagree.
My question then; stocks or property?
Over the long run in the UK, stocks plus dividends have been beaten by property plus yield.
I don't see that changing any time soon.
Stock markets to me look toppy thanks to all the QE that has poured in. Whereas that QE money has done virtually nothing to inflate UK property lending.
The number of mortgages being issued is still so low as to require government action to increase it to something resembling even the long term average.
For a well thought out opposite opinion, that disagrees with me on UK property, but seems to have a good track record with equities, try here....
https://www.retirementinvestingtoday.com
Worth noting that I am an awful investor and it dominates my life - sitting on youtube!
Part of me thinks just putting everything into a buy to let would give me a much better quality of life - as long as markets progress.
Youtube is very bad for your investing health. All the crazies and goldbugs hang out there, preaching doom and gloom.
Try reading more economics articles instead.
And the RIT site above is a good read as well.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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HAMISH_MCTAVISH wrote: »
I'd prefer to answer via a thread as the PM format is a bit limiting for graphs and such like.
It's exactly the same...
Though I'm sure you'd have preferred an audience of just one. Honest guv!
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Another bizarre thread.0
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Graham_Devon wrote: »It's exactly the same...
Not really, it's harder to scroll down and read through.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
worst thread since, well, the last near-identikit one, albeit possibly without the small [well, tiny - oddly for a "property or shares?" post it only really discusses the former] amount of 'shares' talk added to the standard pwoperdee ramping.FACT.0
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HAMISH_MCTAVISH wrote: »Not really, it's harder to scroll down and read through.
Is it? Is there a special scrolling technique specifically for PM's that's somewhat more troublesome?0 -
There is certainly a housing shortage but I still haven't seen any evidence of this supposed mortgage rationing. The limiting factor here will be what house buyers can afford to pay and with almost stagnant pay and increasing costs of living I find it difficult to see how most people will be able to take on bigger mortgages to push prices too far.0
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Property can indeed form a valuable part of of a balanced investment portfolio. It can also provide an efficient way of providing a roof of our heads.
Like a good fund and stock choice picking the right property, at the right price, in the right place at the right can make all the difference. Get it wrong and it can easily become a liability.
Eggs and baskets need to be borne in mind.
EDIT:- Talking to yourself is always worrying, PMing yourself even more so."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
I am wondering why anyone would ask HMcT for advice on any subject at all, especially this subject.
Hello Mr Turkey, would you recommend Christmas :eek:'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
I am wondering why anyone would ask HMcT for advice on any subject at all, especially this subject.
Couldn't agree more.
Perhaps people should read this instead.....
http://monevator.com/10-why-houses-are-a-better-investment-than-shares/“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Couldn't agree more.
Perhaps people should read this instead.....
http://monevator.com/10-why-houses-are-a-better-investment-than-shares/
So why do YOU hold shares rather than houses?
Seems a bit weird to be stating how houses are a better bet, but after having told us you have the money to buy one, and indeed, at one point stating you were transferring money from other "investments" to buy a but to let.....you still....well, don't have one.
And anyway, your link to back you off starts with these words...This article does not argue buying a house right now is a better decision than buying shares, or vice versa.0
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