How much can house prices keep rising ?

economic

chucknorris wrote: »

I can't remember when exactly but around 2013/14 there were some astonishing surges in London property prices.

They went up a lot between Jan - summer 2013 (when I bought my first) then again went up a lot first half of 2014. Crazy times.

Crashy_Time

chucknorris wrote: »

I can't remember when exactly but around 2013/14 there were some astonishing surges in London property prices.

That was your selling opportunity, did you miss it?

Crashy_Time

economic wrote: »

They went up a lot between Jan - summer 2013 (when I bought my first) then again went up a lot first half of 2014. Crazy times.

Exactly. Bankers and other VI`s were loving it though.

chucknorris

Crashy_Time wrote: »

That was your selling opportunity, did you miss it?

No it wasn't, they went up again, I just sold a 2 bed flat for £475k, we are expecting to exchange late Feb and complete on the first day of the next tax year (that way I get to use my CGT allowance), as I have already used it up (on shares) this tax year. Plus I get to keep (and invest) the CGT amount for another year. £475k is actually a record for a 2 bed flat in the block that my flat is in, despite the fact that my flat needs updating, so I did get top dollar for it. I have another 2 flats in that block, that I will also sell shortly (in about 1 to 2 years).

Crashy_Time

chucknorris wrote: »

No it wasn't, they went up again, I just sold a 2 bed flat for £475k, we are expecting to exchange late Feb and complete on the first day of the next tax year (that way I get to use my CGT allowance), as I have already used it up (on shares) this tax year. Plus I get to keep (and invest) the CGT amount for another year. £475k is actually a record for a 2 bed flat in the block that my flat is in, despite the fact that my flat needs updating, so I did get top dollar for it. I have another 2 flats in that block, that I will also sell shortly (in about 1 to 2 years).

Got a link to the flat?

chucknorris

Crashy_Time wrote: »

Got a link to the flat?

I'll show a link after exchange of contracts.

One of the potential buyers who was slow in putting in a bid actually lives above this flat. I emailed him last week to see if he was interested in buying another 2 bed flat that I have in the same block at £5k less (plus I would throw in all the furniture). However it would result in a higher net for me than the sold flat, because there would be no estate agents fee, and also because he is an investor and would take over the existing tenants, which means that I would get about an extra 5/6 months rent, right up to completion. I'm not really convinced that it will lead to a sale, but it is possible, otherwise I plan to put this flat on the market in 1 year from now.

Now that I have started selling, I have realised just how good investment property is (even more than I originally thought)! Because to match the rental income, I would not only have to invest in higher yielding, more risky (less diverse) funds/etf's like the ftse 100, but also they would have to perform quite well. That still doesn't change my decision to sell though, because I am at the right stage of my life to sell, and that is what my decision ultimately is based upon, rather than an obsession with house prices. I won't of course invest all the equity in higher risk funds/etf's, I will seek diversity, and settle for less income.

Jonbvn

chucknorris wrote: »

No it wasn't, they went up again, I just sold a 2 bed flat for £475k, we are expecting to exchange late Feb and complete on the first day of the next tax year (that way I get to use my CGT allowance), as I have already used it up (on shares) this tax year. Plus I get to keep (and invest) the CGT amount for another year. £475k is actually a record for a 2 bed flat in the block that my flat is in, despite the fact that my flat needs updating, so I did get top dollar for it. I have another 2 flats in that block, that I will also sell shortly (in about 1 to 2 years).

And you take the train up to Newcastle? You should be travelling in one of your Learjets or helicopters.;)

economic

chucknorris wrote: »

I'll show a link after exchange of contracts.

One of the potential buyers who was slow in putting in a bid actually lives above this flat. I emailed him last week to see if he was interested in buying another 2 bed flat that I have in the same block at £5k less (plus I would throw in all the furniture). However it would result in a higher net for me than the sold flat, because there would be no estate agents fee, and also because he is an investor and would take over the existing tenants, which means that I would get about an extra 5/6 months rent, right up to completion. I'm not really convinced that it will lead to a sale, but it is possible, otherwise I plan to put this flat on the market in 1 year from now.

Now that I have started selling, I have realised just how good investment property is (even more than I originally thought)! Because to match the rental income, I would not only have to invest in higher yielding, more risky (less diverse) funds/etf's like the ftse 100, but also they would have to perform quite well. That still doesn't change my decision to sell though, because I am at the right stage of my life to sell, and that is what my decision ultimately is based upon, rather than an obsession with house prices. I won't of course invest all the equity in higher risk funds/etf's, I will seek diversity, and settle for less income.

I am thinking of buying another and using London weakness over he next two years to do so. Not going to go for the most yield. I want a balance between yield and good capital growth and potential for me to live there as well.

westernpromise

economic wrote: »

I am thinking of buying another and using London weakness over he next two years to do so. Not going to go for the most yield. I want a balance between yield and good capital growth and potential for me to live there as well.

Buying somewhere you might also later want to use adds a layer of challenge to the decision of what and where you buy. While I'd love to move back to Little Venice, for example, it ain't happening while there are 4 of us who'd have to live under that roof.

Your thinking on this sort of thing morphs once you are no longer able to think only about what works for you as an individual. Once you have a family, you have to start thinking multi-generationally about preserving the family's painfully-accumulated capital. This is something I've only recently begun to do, not least because four members of my family have died in the last five years and I've observed at first-hand what happens if you don't.

If it were just about my own needs and economics, for example, I should probably sell the place in Little Venice. It has quadrupled in 18 years to about a million quid, but its price is levelling off now and it's not going to inflate at that rate over the next few years. Hence now might be a good time to extract the cash and put it to work elsewhere. But, but, but:

1/ I have 2 daughters who within 10 years will be working, probably in London. I don't want them renting some one-room dump south of the river on a graduate salary. I want them living somewhere pleasant and safe.

2/ To sell and re-buy a £1 million second property would a/ crystallise a £100k tax bill and b/ cost me another £100k in SDLT and other transaction costs. These are absolute cash losses. Worse, what if I had to pay £50k more on rebuying? Or £150k more? Then I'd be chucking £350k of family capital away.

3/ The tracker BTL mortgage on it has 11 years left and is at a rate unmatchable now. If I sold and rebought, as well as the £200k cash loss there would also be the higher cost of the BTL mortgage - and that's if such things are not legislated out of existence.

4/ The current tax attack on the private rental sector will make it contract, which is bullish for rents, especially if house prices were to come off. Any withdrawn equity would have to perform that much better in contrast to provide the same income.

All of which says Don't sell; we still need it. In effect I am treating the rental as part of the family's stuff. Like the main home, we own it because we need it. You don't speculatively sell the family home to rent. In 40 years' time I'd expect my daughters to be doing the same thinking.

One of the reasons crashtrolls are such a stopped clock about property is that they completely fail to understand this kind of non-cash, non-immediate-gratification motive, or indeed any motives other than their own. The state unfortunately is just as ignorant.

AdrianC

westernpromise wrote: »

1/ I have 2 daughters who within 10 years will be working, probably in London. I don't want them renting some one-room dump south of the river on a graduate salary. I want them living somewhere pleasant and safe.

That rules London out, then.