How interest rates affect property values

economic

Conrad wrote: »

1) If the market tanks - their JUDGEMENT was poor


2) If they do well from the market - their JUDGEMENT was irrelevant, it was PURE luck




Is that a fair summary of your position?

not at all. making money is mostly good luck, losing money is mostly bad luck. there's more skill in making money in BTL portfolios by consistently making a good yield however luck will play more a part of capital values.

Conrad

mwpt wrote: »

You are the contrarian here, not me. It is you (and your small MSE gang) who believe they know something most standard economists don't.

If there's one thing I've always maintained, it's to tend towards considering a contrarian view to the economists.


I've been over this countless times.


In a nutshell, too many economists think in a linear fashion and do not take due account of the millions of people out there making 'hunch' / everyday decisions that result in the market outcome.


If you could go back to my posting around 2011 on here you will see I did threads stating the boom was well under way, and got roundly kicked about for my efforts.


My 'intelligence' came from street level dealings which aren't 'mere anecdotes' as the graph lovers always claim, but genuine insights based on years of industry experience.


I am far closer to day to day dynamics than some dusty old economist looking at rear view mirror stats.


Of course I'm thick and rely more on gut feel, but I'd rather this than rely on utter plonkkas such as the interminably wrong Will Hutton - who I kept pointing out was wrong back in 210/11 when he kept saying we would not recover until 2025
Gillian Tett is another to avoid - always obsessed with dry academic study rather than getting out and getting a real sense of life in the trench


Prices are not going to crash for years unless we get a significant shock such as a global credit crunch

economic

Crashy_Time wrote: »

In a proper correction having a loft extension won`t save you...
:rotfl: The property will still just be massively overpriced. Any "inheritance" based on property will be crashing too so it will self perpetuate the downward spiral. It was a credit based Ponzi scheme, nothing more nothing less, people watched the telly and believed all the junk about adding bits on to their houses.

silly waste of time coment

Conrad

economic wrote: »

not at all. making money is mostly good luck, losing money is mostly bad luck. there's more skill in making money in BTL portfolios by consistently making a good yield however luck will play more a part of capital values.

Funnily enough I've been wrestling with my dilemma over whether to buy another place right now, or just pay down debt?


Those that say its all just luck forget that people have to wrestle with these choices.


I'm really torn on this and the agent I've found a place through (ages ago) is hassling me as to why no progress. I am very indecisive - always have been.




I've found a 1 bed at £207k - seems like a lot of money to me given these places were halve that 3 years ago, but I really can see them doubling again in the coming 3 years. The yield is ok and it will generate a decent net income after mortgage, BUT only halve of the sum I pay on my shop mortgage - so I could just pay off the shop (with the deposit I could use on this flat) instead of buying a new place, so it's a tussle between short and long term aims, and then there's the whole tax increase issue going forwards, arghhhh

economic

Conrad wrote: »

Funnily enough I've been wrestling with my dilemma over whether to buy another place right now, or just pay down debt?


Those that say its all just luck forget that people have to wrestle with these choices.


I'm really torn on this and the agent I've found a place through (ages ago) is hassling me as to why no progress. I am very indecisive - always have been.

yes me too. ive sold my first flat and bought another (Highgate). took me a whilst to decide whether to keep my old one or not but decided to sell - rental yield wasn't worth it, lease was 88yrs, area not improving and it took a while to get an offer so took advantage of it.

one thing I have learnt is never buy in a rubbish area. now ive settled in Highgate I'm thinking what to do next. whether to buy another for investment or not. reason being is my current one is a two bed flat worth around 600k. which means if I ever wanted to climb up the ladder ill be losing out if prices do go up. tough choice as it really depends on whether prices will go up or down. between now and the time I decide to sell and climb the ladder.

Conrad

Crashy_Time wrote: »

In a proper correction having a loft extension won`t save you...
:rotfl:


QUOTE]




To extend your logic, a car with factory tints, nice wheels, aircon, leather seats and the rest will not hold value any better than the basic 'skinny' wheeled vanilla model?


The opposite of what I've always found


Plus it's not all about money, people in the main like to improve their homes, they don't sit in the corner without the heating on eating baked beans from the tin worrying about tomorrows impending doom

economic

economic wrote: »

yes me too. ive sold my first flat and bought another (Highgate). took me a whilst to decide whether to keep my old one or not but decided to sell - rental yield wasn't worth it, lease was 88yrs, area not improving and it took a while to get an offer so took advantage of it.

one thing I have learnt is never buy in a rubbish area. now ive settled in Highgate I'm thinking what to do next. whether to buy another for investment or not. reason being is my current one is a two bed flat worth around 600k. which means if I ever wanted to climb up the ladder ill be losing out if prices do go up. tough choice as it really depends on whether prices will go up or down. between now and the time I decide to sell and climb the ladder.

I am more inclined to just not buy yet though. prices have gone up and I rather just wait. I don't need the space as well and happy where I am for the foreseeable future.

instead ill use the rest of my cash to invest in stocks/dollar.

once you have your own home you suddenly become a lot more selective where to invest.

Conrad

economic wrote: »

yes me too. ive sold my first flat and bought another (Highgate). took me a whilst to decide whether to keep my old one or not but decided to sell - rental yield wasn't worth it, lease was 88yrs, area not improving and it took a while to get an offer so took advantage of it.

one thing I have learnt is never buy in a rubbish area. now ive settled in Highgate I'm thinking what to do next. whether to buy another for investment or not. reason being is my current one is a two bed flat worth around 600k. which means if I ever wanted to climb up the ladder ill be losing out if prices do go up. tough choice as it really depends on whether prices will go up or down. between now and the time I decide to sell and climb the ladder.

Ha, me to, I've sold the flat I have that has a 69 yr lease and was a bit of a depressing place, and the idea is/was to replace it with a nicer unit, but I keep feeling torn on whether to buy-on or just use the sales proceeds to reduce debt.


Highgate is proper posh, I've invested in cheaper outer London - cos I'm a chicken and like smallish mortgages and as I have a pathological dislike of hassle - so I like them close to where I work.


You wont go wrong with Highgate.


I totally agree about carp areas - you attract bad tenants and the whole thing can be a misery (bearish types think B2L is easy and all luck - they haven't had the delights of being a LL)

cells

Conrad wrote: »

Funnily enough I've been wrestling with my dilemma over whether to buy another place right now, or just pay down debt?

Those that say its all just luck forget that people have to wrestle with these choices.

I'm really torn on this and the agent I've found a place through (ages ago) is hassling me as to why no progress. I am very indecisive - always have been.

This is normal for most people it happens to me too. The bit that makes it easier in London is that once you have an offer it takes 2-4 months to get towards exchange and by that time what looked like just an ok buy looks quite good value to what is on the market so its a little easier to say ok exchange contracts.

I've found a 1 bed at £207k - seems like a lot of money to me given these places were halve that 3 years ago, but I really can see them doubling again in the coming 3 years. The yield is ok and it will generate a decent net income after mortgage, BUT only halve of the sum I pay on my shop mortgage - so I could just pay off the shop (with the deposit I could use on this flat) instead of buying a new place, so it's a tussle between short and long term aims, and then there's the whole tax increase issue going forwards, arghhhh

I dont think prices can double in London in the next 3 years. In fact I think that would be impossible. We could see +30% though assuming we dont vote out of EU and property taxes are not increased further

economic

Conrad wrote: »

Ha, me to, I've sold the flat I have that has a 69 yr lease and was a bit of a depressing place, and the idea is/was to replace it with a nicer unit, but I keep feeling torn on whether to buy-on or just use the sales proceeds to reduce debt.


Highgate is proper posh, I've invested in cheaper outer London - cos I'm a chicken and like smallish mortgages and as I have a pathological dislike of hassle - so I like them close to where I work.


You wont go wrong with Highgate.


I totally agree about carp areas - you attract bad tenants and the whole thing can be a misery (bearish types think B2L is easy and all luck - they haven't had the delights of being a LL)

yes and what I found the hard way is that crap areas just don't appreciate as in value that much if there is no scope for improvement in the area. I learnt the hard way.

yes its a nice area and very close to the station (within minutes). perhaps my forever home.