Has the market peaked?

padington

Crashy_Time wrote: »

Doesn`t help you if you need to sell?

Who needs to sell, interest rates are lowest for hundreds of years and rents are the highest in the known universe.

chucknorris

padington wrote: »

Who needs to sell, interest rates are lowest for hundreds of years and rents are the highest in the known universe.

We've started (slowly) selling, but only after 26 years from buying our first investment property, and thus reached the start of the end of a long term plan. If we were younger, or if we had children, there is no way that we would be selling. The return on the equity that we are releasing is far less than it previously was.

economic

chucknorris wrote: »

We've started (slowly) selling, but only after 26 years from buying our first investment property, and thus reached the start of the end of a long term plan. If we were younger, or if we had children, there is no way that we would be selling. The return on the equity that we are releasing is far less than it previously was.

because the stock markets are high? and there is no other alternative?

chucknorris

economic wrote: »

because the stock markets are high? and there is no other alternative?

No, not because of that, IMO it is a combination of mainly two things:

1. After holding property for a long time, there is going to be substantial capital gains tax, if you sell, you lose the return on that part of your investment. Whereas if you remain invested, that money (the tax) is still working for you.

2. The dividend yield (of less or average risk) funds is less than rental yield.

I'm selling for lifestyle reasons, as I'm sure you have seen in my posts. Although I have previously said dividend income is comparable, I was talking then about the ftse 100, but as I'm sure you already know, it wouldn't be particularly smart to be 100% invested invested in the ftse 100 (it seriously lacks diversity).

Although you do have a point about the markets being high. I would be very wary of injecting all my equity in the market at this high level, it's just as well we are looking to seriously upgrade our home, and therefore need to hold cash at the moment.

wotsthat

Crashy_Time wrote: »

Doesn`t help you if you need to sell?

That's right Crashy. Fixed rate mortgages are intended to fix mortgage payments rather than be an aid to selling houses.

GreatApe

MobileSaver wrote: »

No. Next question?

[There is a 99.9% certainty that house prices will be higher 11 years (the average length of time owner occupiers stay in any one home) from now than they are today.]

It is about 20 years on average between moves for an owner not 11

GreatApe

juniordoc wrote: »

Whilst salaries are stagnant, how can prices go up? Income multiples are the highest on record, and lenders are getting stricter, not more liberal.
An interest rate rise now looks less than 12 months away, these are not conditions that will promote house price rises so yes, I would say they are at a peak.

FTBs are at near record highs (as a portion of purchasers)

While wages might be roughly static, what's more important is household income. And even more important than that is marginal household income. With employment at record highs that marginal household buyers income must be rising fast which is pushing up prices and has been for five years.

lisyloo

Doesn`t help you if you need to sell?

Many mortgage products are portable.
If rising interest rates were an issue for me then I'd be looking for a fixed rate that was portable.
I also wouldn't be borrowing to the hilt unless it was expected to be for the long term.
Yes stuff happens - you protect yourself the best you can and mostly it doesn't happen.

westernpromise

juniordoc wrote: »

Whilst salaries are stagnant, how can prices go up?

Simple. Those whose salaries are stagnant stay put, and those whose salaries are improving - or who aren't reliant on a UK salary at all - are then the buyers.

This means that not all houses are traded every year. Which seems about right.

westernpromise

amateur_house wrote: »

At the other extreme there are people doing the same job they were 10 years ago but earning less due to so called 'restructures'. I, for one, have been in the same job 15 years but was given a new job title and a 10% pay cut 3 years ago, and had a 1% rise each year since. It​ will take me another 7 years to be earning the same as I was in 2014. I know of several people at various organisations in this same situation. Many others all over the country are in the same boat, thanks to the 'austerity' measures implemented by the government.

What is happening is that you are finding out the real market value of your labour. If you thought it was higher than this, you'd quit, and you'd be able get another job on the previous money. As that's not happening, the unavoidable inference is that you were and perhaps still are overpaid, at taxpayers' expense.