Will there really be a crash?

chucknorris

AG47 wrote: »

No more boom and busts,

All boom forever from now.

And pigs have started flying

It might be a startling revelation to someone like you, but most investors have known for decades of their lifetime that booms and boosts are a fact of life, and invest accordingly. So what is your point?

Crashy_Time

chucknorris wrote: »

It might be a startling revelation to someone like you, but most investors have known for decades of their lifetime that booms and boosts are a fact of life, and invest accordingly. So what is your point?

Most people who have bought into this housing bubble didn`t think like that, or invest accordingly, IMO.

Crashy_Time

lisyloo wrote: »

Of course and at some point there may be a crash (which won't bother me that much if I'm living in it).
It is not a liquid asset which is why it's sensible to have liquidity in other parts of your portfolio.

The type of house I have is bought either by people going up-market or people downshifting from London (and it's cheap compared to London prices) so in both cases would have a reasonable % of equity.


However of course it's ILliquid and can go up and down.


It's still highly likely to be a good thing to do if you get 40 years of rent free living (estimated timescale :-)


I don't forsee a crash at the moment as there are so many people wanting to live in this country (net migration still positive and quite high) and unemployment is very low.

Why are transactions plummeting then?


https://www.independent.co.uk/news/business/news/uk-house-prices-property-market-growth-sales-drop-england-wales-latest-a8590626.html

ukcarper

Crashy_Time wrote: »

Most people who have bought into this housing bubble didn`t think like that, or invest accordingly, IMO.

What you don't seem to grasp is that the vast majority of people buy property as a home not investment and they eventually pay off mortgage. For the nearly all although initially mortgage payments are higher than rent on equivalent properties over the term they pay considerably less in mortgage payments than rent. For instance my mortgage was less than one third of rent for the later part of term and of course now they are nothing.

chucknorris

Crashy_Time wrote: »

Most people who have bought into this housing bubble didn`t think like that, or invest accordingly, IMO.

I have always thought like that, there is no other logical way to think! There were crashes in the 70's, 80's/90's (one event) and 00's, why on Earth would investors expect the future to be any different? I certainly didn't. I expected/anticipated to go through one or two corrections, before eventually selling. So far it's going to plan, and working out well for me. In fact, it's over really, job done, unless a comet hits the Earth. Which is probably your best chance of catching up with the rest of us.

lisyloo

Crashy_Time wrote: »

Why are transactions plummeting then?


https://www.independent.co.uk/news/business/news/uk-house-prices-property-market-growth-sales-drop-england-wales-latest-a8590626.html

Affordability hitting its limits
Stamp duty changes
Brexit

Does not however equal crash (although people who bought over the long term will still be better off long term if there is crash)

Crashy_Time

ukcarper wrote: »

What you don't seem to grasp is that the vast majority of people buy property as a home not investment and they eventually pay off mortgage. For the nearly all although initially mortgage payments are higher than rent on equivalent properties over the term they pay considerably less in mortgage payments than rent. For instance my mortgage was less than one third of rent for the later part of term and of course now they are nothing.

Great stuff, very sensible. The problems start when people believe that property is somehow a very liquid store of ever increasing cash, readily available for downsizing, holidays, retirement etc. That luxury comes from a well balanced, liquid and diversified portfolio, not seeming to buy into a property bubble at the right time. When property markets seize up a house is just four walls and a roof that you better enjoy living in because you are staying put whether you like it or not :rotfl:It was the belief in an ever increasing magic money tree in the four walls that you live in that encouraged hordes of people to borrow well beyond their means if rates rise, and the coming correction will put average people off over-borrowing on property for a very long time IMO. The point you really don`t seem to get (or want to get) is that buying "Just a home" has become a very expensive and risky endeavour because of financial engineering by the banks ( and speculation in BTL where the house very definitely IS an investment)

ukcarper

Crashy_Time wrote: »

Great stuff, very sensible. The problems start when people believe that property is somehow a very liquid store of ever increasing cash, readily available for downsizing, holidays, retirement etc. That luxury comes from a well balanced, liquid and diversified portfolio, not seeming to buy into a property bubble at the right time. When property markets seize up a house is just four walls and a roof that you better enjoy living in because you are staying put whether you like it or not :rotfl:It was the belief in an ever increasing magic money tree in the four walls that you live in that encouraged hordes of people to borrow well beyond their means if rates rise, and the coming correction will put average people off over-borrowing on property for a very long time IMO. The point you really don`t seem to get (or want to get) is that buying "Just a home" has become a very expensive and risky endeavour because of financial engineering by the banks ( and speculation in BTL where the house very definitely IS an investment)

But the majority of people don't do that, the vast majority pay off thier mortgage and end up living rent free. It's just you and a few deluded people that believe home owners are continually worry about the equity in thier home and with drawing it to pay for luxuries. Let's say your right and the price of my house drops 50% will rents drop 50% probably not but if they did I'd be saving £600 a month instead of £1200.

chucknorris

Crashy_Time wrote: »

That luxury comes from a well balanced, liquid and diversified portfolio,

Property is a legitimate part of a well balanced portfolio, but right now I have more in equities than in investment property, and that will increase when I sell another property this year (currently on the market) and I also plan to sell at least one more property next year too. I am actually diversifying away from property, and have been doing so for about 10 years.

lisyloo

is that buying "Just a home" has become a very expensive and risky endeavour because of financial engineering by the banks ( and speculation in BTL where the house very definitely IS an investment)

Long term buying a home vs renting is not expensive (for example factoring in the 40 years that are free). It has rarely been easy to buy initially and it's usual for people to make sacrifices.
I am not sure what you mean by risky. There have always been risks of varying kinds relating to the property itself, jobs, health, interest rates etc.
The banking industry have strict checks on affordability so it's better now than the days of liar loans, so in that sense things have improved in terms of preventing people taking on debts they can't afford.

I believe BTL speculation has been fixed as it's been made less attractive for amateurs to be landlords which IMO is a good thing, with tax and stamp duty changes.


I agree that property can crash but so can other types of investments as well which makes it a valid part of a diversified portfolio.
The fact that we all need somewhere to live, the investment is geared and main residences are tax free make it a very good investment for most people bearing in mind that OTHER investment can also go up and down, but people will always need somewhere to live. Also add into the mix that many of us are not sophisticated investors, so I myself don't expect to do fantastically well on equities.