How far will house prices fall [volume 4]

[fido]

scenario8 said:

I'm regularly surprsied by the number of renters I meet who are paying thousands, often mulitple thousands, each month on property where my thoughts would be to get somewhere slightly smaller, slightly further from "must have" locations and to pocket 10, 20 or 50% of those rental costs.

Some peoples' attitudes to finance stun me.

It does take a bit of stepping back from the situation and to make a few semi-drastic changes. I'm renting myself and have used to it as an opportunity to get rid of stuff I don't want and put some "must have" items into storage. Also shaved about 20 minutes off my daily commute. It's almost 'fun' until I buy again.

[gumshoe]

anonymous said:

[redacted]

You're missing the opportunity cost of the capital element (eg £300k @ 1% pah!) and also not considering that the requirement for the deposit doesn't exist in a rental. Nor the cash for the stamp. That's putting the prospective buyer at £300k cash. Rental would want, what £4.5k deposit and proof they can pay the rent. Mortgage company will put their income under much more scrutiny and have (strictish) income ratios they'll work to.

[scenario8]

gumshoe said:

anonymous said:

[redacted]

You're missing the opportunity cost of the capital element (eg £300k @ 1% pah!) and also not considering that the requirement for the deposit doesn't exist in a rental. Nor the cash for the stamp. That's putting the prospective buyer at £300k cash. Rental would want, what £4.5k deposit and proof they can pay the rent. Mortgage company will put their income under much more scrutiny and have (strictish) income ratios they'll work to.

No he isn't.

[gumshoe]

scenario8 said:

gumshoe said:

anonymous said:

[redacted]

You're missing the opportunity cost of the capital element (eg £300k @ 1% pah!) and also not considering that the requirement for the deposit doesn't exist in a rental. Nor the cash for the stamp. That's putting the prospective buyer at £300k cash. Rental would want, what £4.5k deposit and proof they can pay the rent. Mortgage company will put their income under much more scrutiny and have (strictish) income ratios they'll work to.

No he isn't.

Apologies, correct he has accounted for the interest on the capital. But the second point is more about the fact that you need a proved income of 150-175k a year to achieve funding of 750k, AND need to have that capital whereas a renter can simply ensure he can show enough to be able to pay the rent, with no where near the same level of scrutiny.

My point being that not everyone will have that capital available, and that some renters are living in premises that are above their means in terms of being able to buy them (eg paying a larger proportion of their salary to live in that apartment). I've articulated it in an arse about way so apologies again.

One of the apartments I have that I let out returns me about 4% and another, after paying service charge and reserve fund, leaves about 3.5%. In the second case, I actually think it is cheaper for them to rent that apartment than to buy. Especially as in some years (like 2 years ago!) the reserve fund balloons to nearly 5k extra.

[fido]

http://www.telegraph.co.uk/finance/personalfinance...

On a side note, why is it always attractive single people in these articles?

[Pork]

fido said:

http://www.telegraph.co.uk/finance/personalfinance...

On a side note, why is it always attractive single people in these articles?

...with names like Persephone Bridgman-Baker.

[thismonkeyhere]

fido said:

http://www.telegraph.co.uk/finance/personalfinance...

On a side note, why is it always attractive single people in these articles?

I'd give her a deposit... etc..

[excel monkey]

Pork said:

fido said:

http://www.telegraph.co.uk/finance/personalfinance...

On a side note, why is it always attractive single people in these articles?

...with names like Persephone Bridgman-Baker.

Just googled the name - she bought a flat in 2011, according to the Torygraph! Bit cheeky to use her picture again on a "property is unaffordable" story...

http://www.telegraph.co.uk/property/investmentinpr...

[Muncher]

excel monkey said:

Just googled the name - she bought a flat in 2011, according to the Torygraph! Bit cheeky to use her picture again on a "property is unaffordable" story...

http://www.telegraph.co.uk/property/investmentinpr...

I know her, she is an associate where I used to work, so on over £60k now.

[turbobloke]

fido said:

http://www.telegraph.co.uk/finance/personalfinance...

On a side note, why is it always attractive single people in these articles?

Hint, it got your attention and Persephone Double-Barrel would get mine too. I see she's known to a PHer, not in the biblical sense presumably

As for the story, good things come to those who wait

[Ari]

anonymous said:

[redacted]

My logic is simple, I already own a house outright. which I live in.

At some stage I'll hopefully move to a larger one and let my present house out.

As to whether a £250K house will be with £150K in a couple of years, given it was £80K not that long ago before the banks got silly with their lending, who says it won't drop back to £150K? It would still be double what it was 15 years ago, sounds about right to me.

I don't know that it will, but you sure as hell don't know that it won't.

What I do know (as the plain evidence is all around) is that property prices are falling. So logic suggests why buy today when it will be cheaper next month and cheaper still the month after...

[Ari]

scenario8 said:

And that's a professional developer?

Good Lord.

To be fair, I don't know for a fact it was a developer, it just looks like a house that's been done up and turned around. Might be a couple that bought, did up and ran out of cash or split up or whatever.

Either way, it's had money spend on it and is back on the market for substantially less than it sold for a year ago.

[fido]

anonymous said:

[redacted]

That's because you have some exposure to the international market i.e. BRIC and EURO money. There are parts of London that are not shifting, albeit very slowly, and the only properties on the market are at comedy prices. It's literally down to postcodes. Agreed, nowhere is falling and if you will not find a place for 2009 [dip] prices anywhere commutable to London. My parents live in a nice but not very commutable part of SW London and it's pretty much flat for the last two years - though the odd 'international' buyer has paid a bit over in some cases for some horrendous ex-council properties. Having lived in one and experienced the total lack of soundproofing ones imagines they must be crying now after spending that much pounds (or dinar).

Edited by fido on Wednesday 19th June 21:32

[fido]

anonymous said:

[redacted]

Quite a few of my friends are from Durban (hence WimbleDurban or Zimbledon) - they don't get on with the other lot .. who sound like the ones who live near you i.e. penchant for big houses and barbed wire fence! I wish I was joking about the latter. However I stand to be corrected about the exact stereotypes - certainly my SA chums are a bit like Aussies.

[fido]

anonymous said:

[redacted]

They'll be minted then if they can afford a house in SW19. Come to think of it, most of my mates have flats which are round £6-700k (for a 3 bed) - but no desire to move further out!

Edited by fido on Wednesday 19th June 21:48

[fido]

anonymous said:

[redacted]

Last month's article but I think that sums it up.

http://www.dailymail.co.uk/news/article-2300854/Pr...

"Of the 598 homes sold for more than £1million in December, 70 per cent were in London."

So aside from hedge fund managers and traders, the market is mostly reliant on QE (which has the side-effect of making property more attractive to international investors)?

Edited by fido on Wednesday 19th June 22:06

[NomduJour]

fido said:

So aside from hedge fund managers and traders, the market is mostly reliant on QE (which has the side-effect of making property more attractive to international investors)?

No, mostly normal people buying normal houses, as you'd expect.

[excel monkey]

anonymous said:

[redacted]

Which area of the UK are you referring to?

[fido]

NomduJour said:

No, mostly normal people buying normal houses, as you'd expect.

I never disputed their sanity ..

[rover 623gsi]

Ari said:

What I do know (as the plain evidence is all around) is that property prices are falling. So logic suggests why buy today when it will be cheaper next month and cheaper still the month after...

propery prices are not falling

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_...