Stock Markets Bombing!

Orion_3

I don't mind if I put cash in and it drops further as I'd be leaving it there for a year or so at least. The important thing is that I didn't put the cash in when it was around the 6,500 mark!

dannyboycey wrote: »

Personally, I think it's best to max out your cash allowance before doing that.

You mean my £3K cash ISA allowance? I've already done that.

kennyboy66_2

Who would have thought that since the beginning of 2000 that building society saving accounts would have outperformed UK shares?

Just makes me think that house are move over valued than ever.

Orion_3

kennyboy66 wrote: »

Who would have thought that since the beginning of 2000 that building society saving accounts would have outperformed UK shares?

But isn't that mainly due to the FTSE100 dropping 5% in the past fortnight?

nollag2006

kennyboy66 wrote: »

Who would have thought that since the beginning of 2000 that building society saving accounts would have outperformed UK shares?

Just makes me think that house are move over valued than ever.

Why do you feel this links to an overvaluation?

Surely, if better rates of return are available from bricks and mortar than from the stock market, funds will flow into property and out of shares, as happened when the dot com bubble burst, and interest rates fell.

If anything, a weak stock market is good news for property investors...

:T

Guy_Montag

nollag2006 wrote: »

Why do you feel this links to an overvaluation?

Surely, if better rates of return are available from bricks and mortar than from the stock market, funds will flow into property and out of shares, as happened when the dot com bubble burst, and interest rates fell.

If anything, a weak stock market is good news for property investors...

:T

But you're not getting better rates of return on bricks & mortar (there are places near me with sub-4% yields, when savings rates are above 6%), the best you can hope for is capital growth.

kennyboy66_2

Orion wrote: »

But isn't that mainly due to the FTSE100 dropping 5% in the past fortnight?

it makes the comparison look worse yes, but the FTSE 100 (probably a better indicator would be the All share index) hit a high of 6930 on 31st December 1999. Its performance against cash savings would be worse if you chose any day this year. Why it should have peaked then I don't know - perhaps irrational millenium mania.

I'am not knocking share investment at all but it puts in some context the remarkable surge in house prices.

abaxas

nollag2006 wrote: »

Why do you feel this links to an overvaluation?

Surely, if better rates of return are available from bricks and mortar than from the stock market, funds will flow into property and out of shares, as happened when the dot com bubble burst, and interest rates fell.

If anything, a weak stock market is good news for property investors...

:T

People forget that the falls are due to a 'credit crunch'. House prices are based on people being able to obtain a suitable mortgage.

House prices are a reflection on the current availability of credit, ie prices will adapt to what people can pay via mortgages.

kennyboy66_2

nollag2006 wrote: »

Why do you feel this links to an overvaluation?

:T

Because stock markets, with dividends reinvested tend to out-perform property over the long term

nollag2006 wrote: »

If anything, a weak stock market is good news for property investors...

A weak stock market will certainly be bad for the higher end London housing market, and is probably bad for the wider market.

The prossible exception is BTL investors who may be encouraged to think that property will continue to outperform shares. Maybe these are the lemmings that are the last investors to buy into any boom. Who knows?

kennyboy66_2

abaxas wrote: »

People forget that the falls are due to a 'credit crunch'. House prices are based on people being able to obtain a suitable mortgage.

House prices are a reflection on the current availability of credit, ie prices will adapt to what people can pay via mortgages.

If only house prices were just based on what could be obtained by a suitable mortgage.

I would think that increased demand (immigration), shortage (planning), buy to let (who mainly buy 'starter level homes'), sentiment (house prices always go up), fear (I've got to get on the property ladder) all mixed up with a dead dogs eye - is what drives house prices.

Orion_3

Are immigrants buying lots of houses then? I thought they tended to RENT more than buy (Russian billionaires aside). And there's lots to rent at the moment, or rental prices would be rising much more than they are.