House Price Crash Discussion Thread

secondtoughest

http://www.guardian.co.uk/money/2007/dec/08/buyingproperty

Property 'professionals' answer the question 'is it mad to buy property right now?' 3/4 say no, it's still okay to buy as long you're looking medium to long term and you don't buy a flat. Bear in mind these people have made their careers on property..

For some (including me) a flat would be just fine, as long as I got it at a bargain price. And I mean bargain. I don't get the logic in people buying flats for prices at only a couple of grand lower than a 2 bed house but I guess people like the 'new-ness' of things.

Interestingly enough, the results of the reader survey answering the same question has 64% of readers think you would indeed be mad to buy now.

MissMoneypenny

secondtoughest wrote: »

http://www.guardian.co.uk/money/2007/dec/08/buyingproperty

Property 'professionals' answer the question 'is it mad to buy property right now?' 3/4 say no, it's still okay to buy as long you're looking medium to long term and you don't buy a flat. Bear in mind these people have made their careers on property..

Can't really expect them all to say yes. It would devalue their assets if property prices drop, so they need to encourage people to buy and keep the prices up. Didn't read all of the article, but notice the first one said they would sell their property portfolio if they had the right offer - so not in their interest for the prices to drop. Also notice they bought at auction. Having watched an online auction last week, I can't believe how cheap, house were going for. £121,000 for a two bed character semi in Bexhill on Sea, East Sussex.
2 up 2 down in Gainsborough for 50,000. Only 67% sold at that auction.

secondtoughest

Oh I agree, they're completely self serving and I would expect a little more balance.

Are all repossessions sold at auction? This might be my cheapest way to find somewhere when I do decide to buy.

m00m00

It IS madness to invest in property at the moment

it is rarely madness to buy a family HOME if you are buying within a range that is financially comfortable for the buyer.

Gorgeous_George

If the numbers stack, they stack up. If they don't, they don't.

If you have £100K to invest, a higher rate taxpayer who has used all of their ISA allowance etc., you could get just under £4K per year after tax, every year for the next 20 years. At the end of 20 years they have £100K (assuming all interest is spent).

Buy a BTL outright and rent can be £5K per year. You still have to pay some tax of course but there are lots of things that can reduce the bill and there will be other costs such as repairs. At the end of 20 years they have a house (value not known) but the rent may have risen to £9K assuming 3% annual rent increases.

The more properties that you have, the less %age risk carried due to dodgy tenants etc.

So, while I wouldn't buy today it may not be so unattractive as part of an investment portfolio.

GG

dunnomate

Yeah - but isnt that just the general rule of investment - spread your risks across a portolfios of investment.

cheers

dunnomate

boinging_2

Gorgeous_George wrote: »

If the numbers stack, they stack up. If they don't, they don't.

If you have £100K to invest, a higher rate taxpayer who has used all of their ISA allowance etc., you could get just under £4K per year after tax, every year for the next 20 years. At the end of 20 years they have £100K (assuming all interest is spent).

So, while I wouldn't buy today it may not be so unattractive as part of an investment portfolio.

GG

These figures don't add up... If you started in Year 1 with 100K and assuming you got the current best rate after tax (4.5%), you would end up with £241,171 at the end of Year 20. This is based on all interest being put into the same savings account (why would you assume all interest is spent?).

Against getting 5K a year rent (£40,000 profit for 40% tax payer).

Therefore you would need property price to have gone up by 100% just to get the same return as investing. (i.e. 100K to 200K). Unless of course you invested your rent return into a similar savings account then it's more like 75%.

Plus this doesn't even take into account, all the repair bills, periods of no rent, plus the tax when you come to sell.

Turnbull2000

In the secluded little world of Times property 'expert' Lucy Denyer, annual house price inflation of 9.1% is "healthy", and those who think otherwise are "doom-mongers"

http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article3009527.ece

Get those comments in please :beer:

But be careful, the Times tend not to publish highly critical comments.

ManAtHome

Lol - not like those blood-sucking leeches putting petrol up by a MASSIVE 5 or 6% then. Greedy oil companies, nobody should be allowed to make a non-properdee profit over 0.005%!!!!, especially as it's an essential!!!.

chriz1000

My prediction:
During January the news will no doubt remind us all that this was yet another expensive Christmas and people are spending well over there means. Attention will then lean towards the housing market IF there haven’t been any signs of improvement, as it will show it’s not just the time of year causing a problem. Statistics and graphs that we can already access online will be thrown onto the front page of every newspaper and making the headlines. Which will do what? It will cause people to panic even more, and try and sell up before there property loses unimaginable amounts of equity, just like when people were queuing up outside Northern Rock to make sure they didn’t lose there investment.
This will cause the housing market to correct itself very quickly (over 3-4 months), hopefully not over correcting itself or this will start even more problems.