Stock Markets Bombing!

Generali

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...

You're not comparing like with like. As it's name suggests, the dot com bubble was a bubble! I think this sell off reflects more general future problems in all risky asset markets (including property).

abaxas

kennyboy66 wrote: »

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.

If you remove the availablity of credit these factors are meaningless. The price is goods cannot be higher than the financing of them. If you remove the affordability all you have is valuation rather than price.

kennyboy66_2

Orion wrote: »

Are immigrants buying lots of houses then?

Probably not within 2 years of arriving no.

However, without the rental demand of recent years immigration how would BTL'ers fill their houses?

I'd imagine if you were Polish and had moved to the UK in 2004 and had put some roots down, you would probably be looking to buy a house - and why not.

sm9ai

kennyboy66 wrote: »

Probably not within 2 years of arriving no.

However, without the rental demand of recent years immigration how would BTL'ers fill their houses?

I'd imagine if you were Polish and had moved to the UK in 2004 and had put some roots down, you would probably be looking to buy a house - and why not.

No, because I would imagine the majority would be on minimum wage or less and probably intend to return to Poland where there money would be worth a fortune.

kennyboy66_2

abaxas wrote: »

The price is goods cannot be higher than the financing of them. If you remove the affordability all you have is valuation rather than price.

If you meant the price of goods cannot be higher than the financing of them, what explains BTL'ers borrowing money at 6% to get a 4% yield ?

sm9ai

nollag2006 wrote: »

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

:T

Sometimes, except this time the weak stock market is due to the sub prime mess e.g. The Housing Market.

The Housing Market has caused the current decline in the stock market, do you believe that the Housing Market will come out of this with more month on month increases?

kennyboy66_2

sm9ai wrote: »

No, because I would imagine the majority would be on minimum wage or less and probably intend to return to Poland where there money would be worth a fortune.

If you emigrated and possibly brought your family over and after 3 years you were earning minimum wage or less it would not be a conspicuous success.

In one afternoon outside any supermarket RDC or container yard I could find you dozens of eastern European transport drivers who are earning £25k plus (Class 1 HGV). Enough, if your partner was working to get on the housing ladder in the northwest.

They are probably not doing as well as polish plumbers or electricians.

abaxas

kennyboy66 wrote: »

If you meant the price of goods cannot be higher than the financing of them, what explains BTL'ers borrowing money at 6% to get a 4% yield ?

There are two different financial transactions here in different markets.

1) BTLer gets mortgage at 6%.
2) BTLer sells service to tenant.

The best way to look at this is that if the landlord wanted a 7% yield he wouldnt be able to obtain tenants. The rent is set by the market not the landlord ie the tenant's affordability.

kennyboy66_2

sm9ai wrote: »

No, because I would imagine the majority would be on minimum wage or less and probably intend to return to Poland where there money would be worth a fortune.

Not the most reliable of sources and I would take it with a huge sack of salt but according to the Daily mail "One in five of UK home buyers are Polish" http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=433442&in_page_id=1770

Not bad on minimum wage!

Guy_Montag

All this talk of immigration, particularly from Eastern Europe, to me has a lot of parallels with great that treatise on social conditions in the 1980s: Auf Wiedersehen Pet. In which a group of labourers went to Germany to work, since the economy in their home country couldn't provide them with jobs. They lived in overcrowded accommodation, and, most of them had no intention of staying once the economy in their home country improved.