Panic selling by landlords could turn slump into rout

inmypocketnottheirs

Generali wrote: »

I think that house prices are waaay to high. I also think that they'll fall a long way. The best way to invest is to diversify as it is the easiest way to reduce your risk, not to hold all your assets in one class or worse, one item, IMO.

I agree with your final point, without doubt.

However re house prices I am not so certain. It all depends in what area. The UK housing market is so fragmented. Within 20 miles of where I am sat prices can vary for similar properties by 30-40%.

I am sure that there will be a stabilising of prices for the foreseeable future in many areas. However as wages increase and more buyers enter the market this is likely to fuel house price inflation again.

Generali

inmypocketnottheirs wrote: »

I agree with your final point, without doubt.

However re house prices I am not so certain. It all depends in what area. The UK housing market is so fragmented. Within 20 miles of where I am sat prices can vary for similar properties by 30-40%.

I am sure that there will be a stabilising of prices for the foreseeable future in many areas. However as wages increase and more buyers enter the market this is likely to fuel house price inflation again.

You're right for sure for the first part IMO.

In the second, I reckon you're wrong but time will tell.

There's a very good book called a Random Walk Down Wall Street that is excellent on the benefits of diversification.

tomstickland

inmypocketnottheirs wrote: »

I am sure that there will be a stabilising of prices for the foreseeable future in many areas. However as wages increase and more buyers enter the market this is likely to fuel house price inflation again.

You sound luck a stuck record from a year ago.

inmypocketnottheirs

tomstickland wrote: »

You sound luck a stuck record from a year ago.

Always dangerous to quote out of context.

inmypocketnottheirs

Generali wrote: »

You're right for sure for the first part IMO.

In the second, I reckon you're wrong but time will tell.

There's a very good book called a Random Walk Down Wall Street that is excellent on the benefits of diversification.

I just wonder what will happen if prices fall by say 20%.

Would there then be a clamour of buyers?

If so, would that then not fuel another HPI trend?

Lotus-eater

inmypocketnottheirs wrote: »

However as wages increase and more buyers enter the market this is likely to fuel house price inflation again.

Well we all know this is likely to happen, just when? 10 years? 5, 6? who knows. Not next year I think. I agree with Generali. Who seems to be getting a bit more bearish if I may say so. Like your new avatar as well suits you sir.

Generali

inmypocketnottheirs wrote: »

I just wonder what will happen if prices fall by say 20%.

Would there then be a clamour of buyers?

If so, would that then not fuel another HPI trend?

I suspect not.

The banks don't have the funds to maintain lending where it was last summer and so to allow demand to be maintained where it was. Demand at a particular price is a function of the number of people will and able to buy at any particular price. If funds available to lend fall, demand goes with it. People may want to buy but without a mortgage they can't.

If you need to save a deposit as an FTB to buy a place, that's pretty tough at current prices. There are very few houses and flats in London for less than £200k except in those places where the police draw chalk pictures of people on the floor most weeks. If you need a 10% deposit then you need to get together £25k to move in and that's before you've bought any furniture etc. That's a lot of money for a young couple to find.

I just don't see how prices can stay at these levels unless banks go back to lending how they were in the recent past and, as someone who spent a long time in banking, I just don't see them being willing or able to do that.

Lotus-eater wrote: »

Well we all know this is likely to happen, just when? 10 years? 5, 6? who knows. Not next year I think. I agree with Generali. Who seems to be getting a bit more bearish if I may say so. Like your new avatar as well suits you sir.

My idea of a worst case scenario is a lot more rosy than it was a couple of years back. My idea of the most likely outcome is probably a bit worse. I guess that makes me more bearish.

The avatar isn't quite what I was looking for but it'll do for now. Actually I'm on the lookout for a new signature. Woody Allen isn't quite up there with the great Yogi Berra.

scorpio_princess

inmypocketnottheirs wrote: »

I am sure that there will be a stabilising of prices for the foreseeable future in many areas. However as wages increase and more buyers enter the market this is likely to fuel house price inflation again.

I'm no economist, but why do you think wages will rise? Just about every industry I know of at the moment (and working in road haulage I know of quite a few) are struggling to keep their heads above water. This will continue until the price of oil stabilises - and the likelihood of that happening is...

rozeepozee

Not all small time landlords jumped in late. Are there any figures on when these landlords bought?

I bought 5 properties between 1999 and 2002 and then the sums no longer stacked up and house prices were in some cases double what I could have originally bought for. I sold my inner city flat in 2007 (which, incidentally, gave me a fair profit but didn't perform as well as the traditional properties I'd bought, even two years ago) and paid off a chunk of mortgage. My rents cover my mortgage, maintenance and some. I couldn't believe it when I saw people were still getting into btl, although for six years now as I predicted we'd hit the top of the market, I looked a bit silly as capital appreciation kept getting greater.

I'd panic sell if I could! No-one would want to buy in this market :rotfl:

inmypocketnottheirs

scorpio_princess wrote: »

I'm no economist, but why do you think wages will rise? Just about every industry I know of at the moment (and working in road haulage I know of quite a few) are struggling to keep their heads above water. This will continue until the price of oil stabilises - and the likelihood of that happening is...

You are quite right. For now. But in three to five years? Eight to ten years? I'm no economist either but I understand the economic cycle. No one can predict the future, and we can only use history as an indicator I agree. The economy is in a dire state, thanks to TB/GB (bearing in mind GB has been running the economy since 'Things can only get better') and there will be a stagnation in economic growth. But these things are cyclical.