House prices up? But asking prices are falling!

chucknorris

cells wrote: »

I dont agree, the capital side is just as important as the rental side, up or down. Of course I would accept that the rental side of the equation is more known and the capital side is more crystal ball future prediction

I think it would be a bad call to invest in London residential if I thought prices were going to fall by even small amounts say just 10% in 10 years. If that were the case it would surely be better to invest elsewhere via far more tax efficient methods eg shares in ISAs or even just to pay down debt



Right now my crystal ball is cloudy. A year ago I would have said that in 30 years London will be at least +3 million population and booming. Right now I think it could be +0 million if the brexit kicks in with tough migration rules.



Yes I suppose it makes sense although I dont personally see it as a necessity not unless I had >£10m net which I dont.

I agree with most of what you are saying, but I didn't start out with a balanced portfolio, it was massively property biased, so my focus was (and had to be) on rental income, it had to be profitable (it wasn't in the first couple of years, but it was for the following 23 years, and currently very much so).

Of course I did think about my exit strategy 25 to 30 years later and expected significant capital gain to be eventually realised (which it will soon as I have now reached that point in time), but that was like a pension pot, it was for future (not current) use.

The way that our wealth is stored is still property biased, but not by as much as it once was, following a current property sale going through (touch wood) it will be:

42% investment property (CGT deducted)
23% shares
13% DB pension
14% home
8% cash (most of this will probably be moved to corporate bonds)

There will probably be further property sales soon, and in about 3 to 5 years I would expect it look something like:

27% investment property (CGT deducted)
30% shares
13% DB pension
14% home
14% corporate bonds
2% cash

economic

chucknorris wrote: »

I agree with most of what you are saying, but I didn't start out with a balanced portfolio, it was massively property biased, so my focus was (and had to be) on rental income, it had to be profitable (it wasn't in the first couple of years, but it was for the following 23 years, and currently very much so).

Of course I did think about my exit strategy 25 to 30 years later and expected significant capital gain to be eventually realised (which it will soon as I have now reached that point in time), but that was like a pension pot, it was for future (not current) use.

The way that our wealth is stored is still property biased, but not by as much as it once was, following a current property sale going through (touch wood) it will be:

42% investment property (CGT deducted)
23% shares
13% DB pension
14% home
8% cash (most of this will probably be moved to corporate bonds)

There will probably be further property sales soon, and in about 3 to 5 years I would expect it look something like:

27% investment property (CGT deducted)
30% shares
13% DB pension
14% home
14% corporate bonds
2% cash

I take it you have left out your own home from this? I think your home shojld be included as it's also effectively an investment.

I do see a lot of young people who are buying in London putting all their money into the property. It'll be interesting to see how their portfolios change over time in the next 10-20 years. I don't think we will see the rises we have seen since you bought Chuck. As you had mentioned previously in real terms they are very likely to fall long term.

chucknorris

economic wrote: »

I take it you have left out your own home from this? I think your home shojld be included as it's also effectively an investment.

I do see a lot of young people who are buying in London putting all their money into the property. It'll be interesting to see how their portfolios change over time in the next 10-20 years. I don't think we will see the rises we have seen since you bought Chuck. As you had mentioned previously in real terms they are very likely to fall long term.

I did include the value of the home that we intend to buy next year (that's why I called it 'wealth storage' rather than 'portfolio'). I think that it is appropriate to include it in 'stored wealth' because we will be buying it for cash and also upsizing by about another £250k to £500k from our current home. We could easily decide to downsize again in the future, when we are older.

Yes, as I have said before in real terms I think that we might be at peak, especially in my lifetime.

economic

chucknorris wrote: »

I did include the value of the home that we intend to buy next year (that's why I called it 'wealth storage' rather than 'portfolio'). I think that it is appropriate to include it in 'stored wealth' because we will be buying it for cash and also upsizing by about another £250k to £500k from our current home. We could easily decide to downsize again in the future, when we are older.

Yes, as I have said before in real terms I think that we might be at peak, especially in my lifetime.

Thanks

That is the worrying thing about buying now just like cells has mentioned. It really is a difficult decision as it can easily go either way and potentially down a lot. I would always buy my own home as if you are not you are running a short position which is speculative. But any more then that is also speculative and the risks are higher then they have been for some time.

chucknorris

economic wrote: »

Thanks

That is the worrying thing about buying now just like cells has mentioned. It really is a difficult decision as it can easily go either way and potentially down a lot. I would always buy my own home as if you are not you are running a short position which is speculative. But any more then that is also speculative and the risks are higher then they have been for some time.

I understand what you mean, but we are at a different stage of life, and upsizing our home to us is more about using the money that we have to enjoy our retirement (I'll still be working, but just one day a week, so I still see it as retirement really), and we can't take it with us, it has to be spent somehow. So it is more of a lifestyle decision than an investment decision, our next home will probably be so for possibly up to 20 years, so any fluctuation in the value doesn't concern us.

I'm more concerned on buying somewhere that will enhance my life, than the cost. I particularly want to live in a house adjacent to somewhere like a common where I could go straight out my back garden jogging, cycling and walking with my dog for more energetic outings, and also with my wife for the more gentler outings.

economic

chucknorris wrote: »

I understand what you mean, but we are at a different stage of life, and upsizing our home to us is more about using the money that we have to enjoy our retirement (I'll still be working, but just one day a week, so I still see it as retirement really), and we can't take it with us, it has to be spent somehow. So it is more of a lifestyle decision than an investment decision, our next home will probably be so for possibly up to 20 years, so any fluctuation in the value doesn't concern us.

I'm more concerned on buying somewhere that will enhance my life, than the cost. I particularly want to live in a house adjacent to somewhere like a common where I could go straight out my back garden jogging, cycling and walking with my dog for more energetic outings, and also with my wife for the more gentler outings.

Sounds like a good plan. You should try Highgate it has everything you require although houses are expenses £2m plus but I think you can afford that.

westernpromise

If you think values are stagnating or may fall, this should affect your decision differently if you are buying to occupy versus buying to invest.

The relevant calculation in the former case is cost of buying a depreciating asset versus NPV of rents if you don't.

The howls one hears from those who've not bought are in many cases because they've failed to understand that distinction, and have shorted the actual roof over their head.

economic

westernpromise wrote: »

If you think values are stagnating or may fall, this should affect your decision differently if you are buying to occupy versus buying to invest.

The relevant calculation in the former case is cost of buying a depreciating asset versus NPV of rents if you don't.

The howls one hears from those who've not bought are in many cases because they've failed to understand that distinction, and have shorted the actual roof over their head.

Yep exactly. Everyone needs a home. I am so happy to own something. It's setting myself up for financial freedom which is my goal. Who wants an office job for the best years of their lives?

p1212

chucknorris wrote: »

Talk up the market :rotfl: you mean to the 20 odd posters on here, are these other examples of me talking up the market:










I could go on, but I think my point is made, don't you?

"London house prices might have already reached an all (real term) high"


lol !!!!!!?

it seems your left hand doesn't know what the right hand is doing...

chucknorris

economic wrote: »

Sounds like a good plan. You should try Highgate it has everything you require although houses are expenses £2m plus but I think you can afford that.

Highgate is very nice, but we much prefer being out of London, we are looking at Dorking (where we currently live), Ashtead, Reigate, Guildford and Leatherhead. We don't want to spend much over £1m, I think the 10% stamp duty (over £1m) is very bad value.