How much can house prices keep rising ?

chucknorris

hildosaver wrote: »

I suggest you save your money and look outside of the south east of England.

I see that proposal of more of a problem than a solution, the problem with buying cheaper and further away, is that you end up having to buy more units (to invest the same amount) and consequently increase the required effort, because long distance management is more hassle, even if you do use an agent (which I don't). If I could re-do what I did, I think I would have bought less of more expensive houses, rather than more flats (although my wife has some houses, but I've mainly got flats). Of course the problem now would be the bloody 13% stamp duty!

economic

chucknorris wrote: »

I see that proposal of more of a problem than a solution, the problem with buying cheaper and further away, is that you end up having to buy more units (to invest the same amount) and consequently increase the required effort, because long distance management is more hassle, even if you do use an agent (which I don't). If I could re-do what I did, I think I would have bought less of more expensive houses rather than more flats (although my wife has some houses, but I've mainly got flats). Of course the problem now would be the bloody 13% stamp duty!

not to mention twice the potential repair costs.

buying more expensive place by sacrificing soem yield may make sense.

hildosaver

economic wrote: »

not to mention twice the potential repair costs.

buying more expensive place by sacrificing soem yield may make sense.

I think there are valid arguments for doing either - cheaper initial cost of property = much higher yields generally. Down-side is more management issues due to more properties, etc.


I prefer to rely on yield rather than capital gains personally as I feel more comfortable with it. Mind you a lot of that is due to where I live and the fact we are still about 50% down on the peak prices so capital gains is a pipe dream here.

chucknorris

economic wrote: »

not to mention twice the potential repair costs.

buying more expensive place by sacrificing soem yield may make sense.

I've said more than once to my wife that I wish that I had bought 2 houses instead of 4 flats.

economic

chucknorris wrote: »

I've said more than once to my wife that I wish that I had bought 2 houses instead of 4 flats.

yeh as the saying goes its about the quality rather then quantity.

hildosaver

economic wrote: »

yeh as the saying goes its about the quality rather then quantity.

Depends on your budget though as well.


We don't have a massive amount of cash but we managed to buy an end terrace via auction and get an 11% yield on it (once insurance, rates, etc. taken off). You would be doing very well to get a yield anywhere near that on a more expensive property.

chucknorris

hildosaver wrote: »

Depends on your budget though as well.


We don't have a massive amount of cash but we managed to buy an end terrace via auction and get an 11% yield on it (once insurance, rates, etc. taken off). You would be doing very well to get a yield anywhere near that on a more expensive property.

Absolutely, but I note that you bought a house rather than a flat, so you are doing what I said.

hildosaver

chucknorris wrote: »

Absolutely, but I note that you bought a house rather than a flat, so you are doing what I said.

True - I do have a natural tendency to go for a house before a flat - that and the price was right.

padington

economic wrote: »

I'm thinking about buying another London property but not sure where. Ideally in zone 2. Buy to let. 2 bed upto 650k. Any suggestions?

Wood Green side of Alexandra palace for zone 3. Maybe get a nice 3 bed house.

Zone 2 not sure. Buy near a night tube though.

westernpromise

chucknorris wrote: »

If I could re-do what I did, I think I would have bought less of more expensive houses, rather than more flats (although my wife has some houses, but I've mainly got flats). Of course the problem now would be the bloody 13% stamp duty!

But that 13% stamp duty would be a major impediment to offloading your fewer more expensive properties when you wanted to. The consensus seems to be that stamp duty is what has screwed London demand. The tax punishment for buying an expensive property has now gone past the tipping point.

Consider your canonical Chinese/Russian/Saudi investor who has the equivalent of £10 million to spend. For that money he could buy one £8.775 million property and pay £1.23 million in stamp duty.

Alternatively he could buy fourteen flats for £670k apiece and pay £44k stamp duty on each one.

He spends £10 million either way. But in the first case it buys him £8.775 million of London property, while in the second it buys him £9.38 million of London property. One of those £670k flats is, near enough, free. Its price is virtually paid for by the stamp duty savings. So what's a rational investor going to do? The return on the 14x flats option is now immediately 7% better just off the tax saved.