HPC are having a mass breakdown

_CC_

jamesmorgan wrote: »

It is somewhat of a fallacy to compare a geared investment on houses with a non-geared stock market investment. It is one of the reasons why the hype around home ownership investment is so pervasive. I recognise that some people will argue there is no risk with geared housing investment because 'everyone' does it. if you don't fully understand the risks with your investment decisions you need to tread very carefully.

All very true, although I suspect the above posters already know this.

They were probably referring to your assertion about the superior performance of the FTSE 100 compared to property over the past 10 years. For most people in the real world, this hasn't been the case as property is usually geared whereas few gear equities in the same way.

It may be different over the next ten years. Therefore diversifying to some degree is probably smart (including the selection of a world tracker instead of the FTSE 100).

GreatApe

jamesmorgan wrote: »

I do find it fascinating how views around home ownership seem to polarise into two extreme camps - or possibly not, as confirmation bais seems to cloud individual views to only see facts that support their own position. We are either told that a crash is just around the corner, or that anyone how does own their own house must be an idiot.

The facts, as is often the case, seem to present a picture in the middle of these views. According to Natiowide, HPI over the past 10 years has been around 15% (1.4% annualised). This compares to RPI which has annualised at 2.8%. So no crash, but HPI has been lagging in real terms. There are many reasons to buy your own home, but it has not been a stellar investment over the past 10 years. In comparison the FTSE100 total return over the past 10 years has been around 6.5% annualised.

If I had had £500K ten years ago and invested it in the FTSE100, it would be worth approx £930K today. If instead I had bought a house it would be worth approx £575K (and that is before you take off maintenance costs). Even if the investor had rented a property at £2000/month (total cost £240K over 10 years), they would still be left with £690K.

Whilst there are many varied reasons to own your own home, the recent 10 year history does not suggest that making money is one of them. My guess over the next 10 years is that HPI will tick along at around the same level as RPI. It is a bit boring, but you are unlikely to either lose a lot of money or get super-rich owning your own home. Renting is fine until you want to put down roots and stay somewhere for 5-10 years. At the point, you might as well buy.

I don't believe your numbers are accurate

You should factor in rent received on the investment property just as you look at dividends for the FTSE. Since rents are typically around 5%-7% property returns at least 4-6% and that is assuming no nominal price increases.

Land registry says nominal prices are up 23% from 2008-2018 which is another 2.1% annual

So you are looking at property returns of 6-8% if you bought cash outright

If you bought with a mortgage the gains were magnified further.

GreatApe

jamesmorgan wrote: »

You need to compare apples with apples and not oranges. If you are going to gear your house price purchase, for comparison purposes you need to gear with stock market investment. With interest rates so low, this can be done very cheaply with spread betting and comes with the benefit of no taxes on any gains. Of course, gearing any invesment comes with risk.

It is somewhat of a fallacy to compare a geared investment on houses with a non-geared stock market investment. It is one of the reasons why the hype around home ownership investment is so pervasive. I recognise that some people will argue there is no risk with geared housing investment because 'everyone' does it. if you don't fully understand the risks with your investment decisions you need to tread very carefully.

I also recognise that certain individuals will argue that they have done well in the housing market because of local conditions in their area. This is like arguing that if you had bought one individual high performing stock rather than the FTSE100 you could have done much better.

Let's be clear, I'm not advocating not buying property. Just saying that you need to have balanced view when comparing invesment performance with other asset classes.

There are no margin calls on a mortgage
There are no 20% weekly swings in house prices kicking you out of the geared investment
There is typically a saving going from rental to ownership
There is no stamp duty for most people buying their own home

jamesmorgan

GreatApe wrote: »

I don't believe your numbers are accurate

You should factor in rent received on the investment property just as you look at dividends for the FTSE. Since rents are typically around 5%-7% property returns at least 4-6% and that is assuming no nominal price increases.

Land registry says nominal prices are up 23% from 2008-2018 which is another 2.1% annual

So you are looking at property returns of 6-8% if you bought cash outright

If you bought with a mortgage the gains were magnified further.

I think you are mis-understanding the point. The comparison was not between a stock market investor and a BTL investor, but between someone who purchases a house outright to live in and someone who instead invests that money and rents.

lisyloo

You need to compare apples with apples and not oranges. If you are going to gear your house price purchase, for comparison purposes you need to gear with stock market investment.

Comparing something you can live in (and save rent) is not the same an investment that provides no other benefit. To repeat a cliche - you can't live in a share certificate.

I agree about comparing apples with apples but do take account of the cost of the accomodation (there is a phrase for this that escapes me at the moment - "implicit" something I think).

lisyloo

I'd never gear up a house deposit

Good point.
This just isn't somthing an ordinary person would do, so you are comparing something a lot of people have a desire to do with something very few even know about or understand.

triathlon

Has anyone else heard about HPC.com on the verge of closing down?

westernpromise

Nooooooooooo! I'd miss the lolz!

The tone over there is so vicious and hate-filled that the advertising space can have almost no value. Who'd want to sell anything to loonies like that who've no money anyway?

triathlon

westernpromise wrote: »

Nooooooooooo! I'd miss the lolz!

The tone over there is so vicious and hate-filled that the advertising space can have almost no value. Who'd want to sell anything to loonies like that who've no money anyway?

It made sense to me when I heard it, they are probably down to only a few dozen people now posting 90% plus of all the content on there. I think they are getting close to surrender now, if they have issues maybe they need to get more pro active rather than sat in their bedsits 24/7 screaming for something that just is not going to happen :rotfl:

triathlon

Seriously anyone, is HPC.com months or even weeks from shutting down, does anyone know any thing?

After all the lives it has destroyed it is not before time