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  • zar
    • #2
    • 12th Jun 06, 9:42 PM
    • #2
    • 12th Jun 06, 9:42 PM
    Remember renting isnít a crime.
    by Martin's Musings
    Thanks Martin, a very measured blog entry I think. There must be lots of people tempted to overstretch themselves to get into the housing market because they feel they have to, which is OK if they've thought about the risks but not so good when they think there aren't any.

    Renting really isn't all that bad if you are aware of the pitfalls - and those of us who aren't "homeowners" aren't second-class citizens either, although it occasionally seems as if we're viewed that way. Can I plug here the request to give somewhere for renters and landlords on MSE? - either a sub-board of our own or to rename the house buying/selling/prices board? I regularly see posts from tenants and landlords on there saying "I'm not sure if this is the right place to post but..."

    See:
    http://forums.moneysavingexpert.com/showthread.html?t=158641
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  • archived user
    • #3
    • 13th Jun 06, 10:43 AM
    • #3
    • 13th Jun 06, 10:43 AM
    Give me a rented house any day.
  • DrStep
    • #4
    • 13th Jun 06, 6:57 PM
    • #4
    • 13th Jun 06, 6:57 PM
    Are you kidding?

    I have 3 kids, £20,000 of unsecured debt, drive a Saab Convertible, and I have just remortgaged to buy 2 more buy to let properties, one in Bristol another in Bulgaria to add to my existing 2 others.

    When these go up in value they will be my pension and pay off my debts. I suggest buy as many as the bank lends you!!! Otherwise they could go up even more!



    i d ignore people on housepricecrash.co.uk as they are doom mongers who wont ever afford property as they missed the boat.

    Property is the BEST investment you can make, look at shares they are tumbling, whereas property is SOLID AS HOUSES. Property growth has slowed (but still climbing YoY figures show) as the mortgage lenders have predicted a soft landing, and they ARE RIGHT. We re about to move onto the next upswing leg as the market pauses for breath....

    Remeber what kirsty and Phil said on location location? As long as you follow their simple rules, you re on a winner, and I m on a winner! 47% profit in a few years here i come!



    This is a tongue in cheek post
    Last edited by DrStep; 13-06-2006 at 7:12 PM.
  • archived user
    • #5
    • 14th Jun 06, 8:06 AM
    • #5
    • 14th Jun 06, 8:06 AM
    Remeber what kirsty and Phil said on location location?
    What did Kirsty and Phil say on location location?
  • tonyg
    • #6
    • 14th Jun 06, 10:54 AM
    • #6
    • 14th Jun 06, 10:54 AM
    I am totally convinced that there will be a MAJOR CRASH in house prices. I feel it will happen within the next 2 to 3 years.

    This is backed up by a number of very influential economists. In the past there were some economists that predicted that they would rise and others that predicted they would fall.

    NOW, there are economists that predict they will be flat and others that predict that prices will crash. The tide has turned.

    The fact is that ridiculously high prices has ruined the fabric of society. High house prices have had a major major negative effect.

    There are those people who have benefited greedily by owning multiple houses reaping the benefits of year on year increases. Whilst there are other people, not only youngsters, who can not get on the first rung of the ladder of owning a single home or flat.

    Teachers can not afford to buy a home. Nurses can not afford to buy a home. Most people in these essential professions can not afford to buy a home. They move to lower house-price areas which helps to some extent. Youngsters can not afford to get married.

    All kinds of people can not afford to live a normal life. Totally because of the greed of people fuelled by the house-owning frenzy 25 years ago.

    House prices have divided society between the have's and the have nots. Thankfully house prices have no option other than to CRASH which will be a move to a much fairer society.
    • MSE Martin
    • By MSE Martin 14th Jun 06, 11:01 AM
    • 8,115 Posts
    • 42,285 Thanks
    MSE Martin
    • #7
    • 14th Jun 06, 11:01 AM
    • #7
    • 14th Jun 06, 11:01 AM
    Tony while I understand your sentiment. I don't agree that all economists predict either flat or drop. In fact last night I was on news 24 with the chief UK economist from Barclays Group who said "there's a limited supply of housing, which indicates house prices will continue to rise."

    Again as I note in the blog. The key is no one truly knows - its perfectly possible you are right Tony, then again so could the economist be. What people have to do is remember that there is no certainty and they must plan for the worst and hope for the best.

    Martin
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

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  • eels
    • #8
    • 14th Jun 06, 11:03 AM
    • #8
    • 14th Jun 06, 11:03 AM
    This is an easy one. If you are buying a house as a home its just that. If you are buying a house as an investment read 'gamble'. I bought my first house by myself for £44k and sold it for exactly the same 4 years later despite many improvements. I was happy as it was my home. My nextdoor neighbours sold theirs at the same time for a couple of £k less (smaller garden) but they had paid £60k for theirs and again made lots of improvements. If its happened before it can happen again.
    We are now about to spend a lot more on a more expensive property including a business. This is lifestyle change and again will be our home. Providing that, if prices fall, we don't NEED to sell it we won't have lost our because we will be paying what we think it is worth at the time.

    PS I've got a brand new Nissan and a Triumph motorcycle, 2 dogs and my only debt is my mortgage.
  • Aliktren
    • #9
    • 14th Jun 06, 11:38 AM
    • #9
    • 14th Jun 06, 11:38 AM
    Look at the geography as well not just the economics.....

    Growing population, fuelled as well by growth in divorce, limited housing supply not being replenished fast enough, limited space on island UK, high demand in certain areas influenced by transport links and jobs.

    And the thatcherite philosophy ingrained now into us all that we must own our own house. Good returns on investment mean owning multiple properties is likely to be a goal for many middle income families, further driving down available housing stock

    Put these together and you have good demand, there may be a dip at the lower end as first time buyers cant get on the ladder, but for people moving from an existing property, the above factors drive price growth in a resticted supply. All the signs, to my mind, is that prices will grow, they may grow slowly, but at the moment there is nothing that would influence a long term drive down in prices. Any drop will be taken up by investors taking advantage of bargains (I know I would). I sense the housing market now is a lot more like the stock market - over the long term you're a winner.

    Good demand will drive up prices in a limited market, I learnt this in A-Level economics.
    Last edited by Aliktren; 14-06-2006 at 11:41 AM.
  • john8888
    House Prices
    This is a subject fairly close to my heart as I have just written a book about it!

    My experience is in stock markets and I have done a fair bit of work on markets generally. Markets are manic depressives and property markets are exactly the same - they just don't seem to be because of all that solid real estate and because they are slower moving.

    But property markets have crashed in the past and they will crash in the future - that is guaranteed.

    If you look at the market today the view "it can only go up" is prevalent + we now have many people with not just one property, but often several. How many more people are there to buy this stuff? How many more houses do these people want?

    In my view a top is very close and, coincidentally, stock markets gave a major sell signal last month. The stock marklet collpase which started around the turn of the new millennium did not have much of an impact on property but I think this time it might be a different.

    I am not trying to be gloomy, the only constant in this world is change and the key is to be prepared.

    JOHN
    Last edited by MSE Martin; 14-06-2006 at 5:11 PM.
    • pjala
    • By pjala 14th Jun 06, 12:18 PM
    • 385 Posts
    • 142 Thanks
    pjala
    Looking at the wider economy, as well as house prices in the US, check out this article:
    http://www.moneyweek.com/file/13456/four-bear-market-warning-signs-to-watch-out-for.html

    A bear market is when the stock market is in a continuous downtrend, and needs some really good economic news to get out of it. As noted, this is already affecting house prices in the US, and there is no historic reason to assume we are going to be isolated from house price falls.
    • pjala
    • By pjala 14th Jun 06, 12:24 PM
    • 385 Posts
    • 142 Thanks
    pjala
    This is a subject fairly close to my heart as I have just written a book about it!

    My experience is in stock markets and I have done a fair bit of work on markets generally. Markets are manic depressives and property markets are exactly the same - they just don't seem to be because of all that solid real estate and because they are slower moving.

    But property markets have crashed in the past and they will crash in the future - that is guaranteed.

    If you look at the market today the view "it can only go up" is prevalent + we now have many people with not just one property, but often several. How many more people are there to buy this stuff? How many more houses do these people want?

    In my view a top is very close and, coincidentally, stock markets gave a major sell signal last month. The stock marklet collpase which started around the turn of the new millennium did not have much of an impact on property but I think this time it might be a different.

    I am not trying to be gloomy, the only constant in this world is change and the key is to be prepared.

    JOHN
    by john8888
    Is this a plug for the book? I think there needs to be more history with this user on the site, in terms of helping and advising, before a book plug can be taken at face value. It may well be true that caution is called for currently, but that does not make the individual of worthy reputation (at least on the site).
    Last edited by MSE ForumTeam1; 15-06-2006 at 7:51 AM.
  • zar
    Youngsters can not afford to get married.
    by tonyg
    Whilst this may be true due to the cost of weddings/living in general, you can get married when you can't afford to buy a house. We got married after leaving uni and have been renting since. I would prefer the stability of owning a home before having children, but at current house prices that's not going to happen - we certainly couldn't afford to buy a house big enough for a family - but I refuse to let high house prices stop me living my life now so we'll just have to find a landlord who'll rent to us with kids and a dog somehow. :rolleyes:
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    • F_T_Buyer
    • By F_T_Buyer 14th Jun 06, 3:08 PM
    • 1,112 Posts
    • 544 Thanks
    F_T_Buyer
    Tony while I understand your sentiment. I don't agree that all economists predict either flat or drop. In fact last night I was on news 24 with the chief UK economist from Barclays Group who said "there's a limited supply of housing, which indicates house prices will continue to rise."

    Again as I note in the blog. The key is no one truly knows - its perfectly possible you are right Tony, then again so could the economist be. What people have to do is remember that there is no certainty and they must plan for the worst and hope for the best.

    Martin
    by MSE Martin
    Hi Martin. Nice blog, of which I agree with. No one really knows what's going to happen.

    But I think the biggest point to shout about is don't over stretch youself, especially if you are a First Time Buyer. When you look at reports such as the CML saying the average FTB is on £33k, buying aged 34, it's clear something is wrong.

    I do think alot of people are complacent about negative economic conditions, such as rising interest rates, increasing unemployment etc. So not borrowing to the absolute limit is very important.

    Another thing is, well all the media, is how people reporting housing news have a vested interest. This, unfortunately is rife. Look where most people get their housing information from; Banks, Building Society's, Estate Agents, Surveyors. yet these are the very people who benefit most from rising house prices.

    Would you ask a windows salesman if its a good time to get new windows?

    As for the housing market and its future direction, I think it's quite clear that it is a bubble. Meaning values are not based on sound fundermentals. The only reasonable debate is whether prices crash or they slowly hiss with incomes rising. Either way, as an FTB, there is no hurry what-so-ever to buy (as some people make out)!
  • delboypass
    increasing UK rates with inflation (only thing keeping rates down is low paid immigration)
    increasing UK unemployment (UK manufacturing is suffering from inflation and the fact that people cannot afford to buy)
    crashing FTSE (Infaltion across the world causing share markets to collapse)
    Banks making less free credit available (banks being stung by increasing bankruptcy and IVAs)

    Only pointing in one way for UK - house prices downwards

    If house prices dont drop to a level where FTBs can get on the ladder, then quite simply all graduates they will leave this Island. You will be left with the illegal immigrants, baby boomers and all those happy on benefits.
  • meanmachine
    Well done Martin.

    A very balanced and intelligent blog.

    And from a recent home buyer too!

    Although, if I'd been able to buy without taking on a mortgage I think I could afford to remain fairly clear-headed about the realities of the market too.

    I don't resent anyone who has made property from the recent - and very protracted - global bull run. Good for them. But investors should be aware of the risks on the downside. And should the *worst* happen, not go running to the government with begging bowls.
  • odorus
    Very good blog. At last some sense being spoken on the subject, by everyone.

    As a landlord I would say that buying property on a BTL mortgage, anywhere south of Birmingham, is not a good investment anymore. Rents remain fairly low, whilst BTL mortgages have gone up, so the profits are not as good.

    The other big problem comes from selling the property. It took me over 12 months to sell my flat in London, because the managing agent wouldn't allow BTL buyers, and FTB's couldn't afford the property, it was not in a fashionable area so wasn't at the top of London pricing.

    It certainly depends on your own circumstances, but I would agree that renting is not a disgusting word. Look to Europe where most people rent and are very happy as owning property is often too expensive.
  • sikejsudjek
    This country can't cope with even minor interest rate hikes due to the irresponsible lending from banks. Plenty of people are on 5x or 6x income mortgages, and many have lied on their applications about their income. The banks did much to allow this to happen, by not checking applications properly, and using self cert mortgages. Hence this time around only a relatively small IR rise will have dire consequences for both the economy and house prices IMO.

    Buy to let will also make things worse, as people sat on debt will panic when they realise their 'investment' that they have mortgaged for equity release leaves them with a pile of debt which is going to cost them more than the rent to pay back.

    Its too late IMO to invest in property, the bubble is ripe to burst. Only needs a trigger and the pile of dominoes will start to fall. In the end economic fundamentals always win. Fancy buying some dot com shares ?

    We also sold a BTL - had to drop the price 10%, took 6 months and three people pulled out. Forget the spin about houses selling, the reality is that conditions are nothing like 2004 and have already dropped off.
    Last edited by sikejsudjek; 14-06-2006 at 4:32 PM.
    • mystic_trev
    • By mystic_trev 14th Jun 06, 4:37 PM
    • 5,147 Posts
    • 15,365 Thanks
    mystic_trev
    I've been a BTL'er for the past 10 years (it was called Residential Investment Property then!) but am now exiting the market. My net yields are just over 3% (over 10% on purchase price) and I can get a better return elsewhere.

    What frightens me is the new breed of BTL'er. Many haven't got the foggiest what they're doing, but because they know some bloke down the Pub who'd done "rather nicely" out of it, want a slice of the action too! If prices correct many of these will lose their "investment" and also thier homes. I'm afraid I will have little sympathy for these peoples plight - It's called greed - and often end up in tears!
  • DrStep
    My post on this thread was tongue in cheek

    and a reflection of some real life stories i read on forums who believe property is a one way bet to riches

    if life was only so easy in retrospect



    Kirtsy and Phil said about the three Rs

    Right Place

    Right Price

    Right Property

    or something like that
    Last edited by DrStep; 14-06-2006 at 5:46 PM.
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