How far will house prices fall [volume 4]
Discussion
jonah35 said:
But, no question about it, it's easy to buy a £60k house and get £450pm. Not a bad way to get a 'pension' in some people's eyes. £12k down and the rent covers the mortgage. In 30 years surely it will be worth more than £60k.
No other costs along the way?OK, rents should increase over time, but if you were unlucky with tenants you could have a nightmare, especially if you only have a small number of properties and you're doing it all remotely.
Sheepshanks said:
jonah35 said:
But, no question about it, it's easy to buy a £60k house and get £450pm. Not a bad way to get a 'pension' in some people's eyes. £12k down and the rent covers the mortgage. In 30 years surely it will be worth more than £60k.
No other costs along the way?OK, rents should increase over time, but if you were unlucky with tenants you could have a nightmare, especially if you only have a small number of properties and you're doing it all remotely.
What if we see a mass emigration of people?
Huge house building initiatives making values and rents drop?
Or just low demand for rentals?
Yes they are good value if you can buy outright, but you can't move them. You need to rent them locally.
If they are already unaffordable to buy outright at very low interest rates by people living in those areas, then renting them won't be much more attractive either.
And given we're already in local buyer induced doldrums in the 'North' due to low salaries/growth prospects, even with very low interest rates, there is only one way things will go longer term.
Ultimately things will either stay where they are, which is rents staying low, so poor ROI for the relatively high house prices to begin in those areas.
Or things will get better for owner buyers, which means even worse for BTL'ers using them for retirement incomes.
Personally if I were a baby boomer I'd sit on cash and make it work as hard as it can in that class, ISAs and the like. Wait until the long term outlook is clearer, and then jump.
The only way it'd work out is if salaries rise fast and there is big real economic growth in the North... but that is a big leap of the imagination given most of the towns which have seen massive rises in property values in the boom, have cores which are just rows of charity shops and gambling establishments, with fairly high youth unemployment etc.
There is sod all up here really, which is probably why property prices are low, which is why rents will be low. And when the positive swing does appear it'll probably be after most baby boomers are dead.
Dave
Justayellowbadge said:
Doesn't have to be the North.
Lots of studious/1 beds in places like Folkestone and Hastings for 40-50k that will get 350pcm rent. Not great, sure, and almost certainly funded tenants, but 10k down and look at it long term it's fairly limited on the downside.
Poor returns when you take into account maintenance charges, and the fact that 1 beds in those areas attract a certain type of tenant, in particular the type that will not pass on their HB, then trash the place and do a runner.Lots of studious/1 beds in places like Folkestone and Hastings for 40-50k that will get 350pcm rent. Not great, sure, and almost certainly funded tenants, but 10k down and look at it long term it's fairly limited on the downside.
I owned 2 flats in folkestone that I paid 26k each for, and was happy to sell them on after a year!
98elise said:
Justayellowbadge said:
Doesn't have to be the North.
Lots of studious/1 beds in places like Folkestone and Hastings for 40-50k that will get 350pcm rent. Not great, sure, and almost certainly funded tenants, but 10k down and look at it long term it's fairly limited on the downside.
Poor returns when you take into account maintenance charges, and the fact that 1 beds in those areas attract a certain type of tenant, in particular the type that will not pass on their HB, then trash the place and do a runner.Lots of studious/1 beds in places like Folkestone and Hastings for 40-50k that will get 350pcm rent. Not great, sure, and almost certainly funded tenants, but 10k down and look at it long term it's fairly limited on the downside.
I owned 2 flats in folkestone that I paid 26k each for, and was happy to sell them on after a year!
In the past maybe you'd shift it on, but if the market stagnates that won't happen.
Labour rates may go up for building/repairs, so you could end up spending 50% of your 'profit' making a property good.
Or people leaving because it's not good.
Going BTL now is like going long on the US stock market now, because it looks good right NOW, and did for the last decade.
To go BTL now with an eye on it being a good retirement cash stash and income is even more crazy!
Dave
Randy Winkman said:
9mm said:
economicpygmy said:
Mr Whippy said:
Indeed the only real issue I see today is super-high density s
t housing stock, which generally breeds a less nice environment for humans to be at their best and happiest.
A cynical person might say that keeping people in these places is good for business. If they could look out over open fields every morning and go for a walk, they'd begin to question the need to bother buying their big tellies or fancy phones to escape from the misery that may be present in a dense urban environment.
Dave
Very true, unfortunately its lost on many...t housing stock, which generally breeds a less nice environment for humans to be at their best and happiest.A cynical person might say that keeping people in these places is good for business. If they could look out over open fields every morning and go for a walk, they'd begin to question the need to bother buying their big tellies or fancy phones to escape from the misery that may be present in a dense urban environment.
Dave
NomduJour said:
Mr Whippy said:
To go BTL now with an eye on it being a good retirement cash stash and income is even more crazy!
I can think of much crazier ideas.
As much as an annuity isn't a great investment right now based on the providers future projections, that should tell anyone enough that the outlook for the future isn't so clear or hot right now.
But at least with an annuity you can't lose it all, or end up with an outcome that isn't planned for 5 or 10 years down the line.
As noted, too much is up in the air right now to make a decision that literally has to suit you till you die. If it goes awry and you can't just off the property market and re-invest elsewhere you're stuck!
Hmmm
Dave
Sheepshanks said:
jonah35 said:
But, no question about it, it's easy to buy a £60k house and get £450pm. Not a bad way to get a 'pension' in some people's eyes. £12k down and the rent covers the mortgage. In 30 years surely it will be worth more than £60k.
No other costs along the way?OK, rents should increase over time, but if you were unlucky with tenants you could have a nightmare, especially if you only have a small number of properties and you're doing it all remotely.
With a small terrace even if the tenant ripped everything out and left bare walls it would only cost £10k to make new. Plus it would be insured.
One day a £60k house will rent for £1k per month.
Yes there's risk but there's risk with money in bank (fscs limit, money grab like cyprus did) or money under bed (theft, fire, inflation).
Mr Whippy said:
Sheepshanks said:
jonah35 said:
But, no question about it, it's easy to buy a £60k house and get £450pm. Not a bad way to get a 'pension' in some people's eyes. £12k down and the rent covers the mortgage. In 30 years surely it will be worth more than £60k.
No other costs along the way?OK, rents should increase over time, but if you were unlucky with tenants you could have a nightmare, especially if you only have a small number of properties and you're doing it all remotely.
What if we see a mass emigration of people?
Huge house building initiatives making values and rents drop?
Or just low demand for rentals?
Yes they are good value if you can buy outright, but you can't move them. You need to rent them locally.
If they are already unaffordable to buy outright at very low interest rates by people living in those areas, then renting them won't be much more attractive either.
And given we're already in local buyer induced doldrums in the 'North' due to low salaries/growth prospects, even with very low interest rates, there is only one way things will go longer term.
Ultimately things will either stay where they are, which is rents staying low, so poor ROI for the relatively high house prices to begin in those areas.
Or things will get better for owner buyers, which means even worse for BTL'ers using them for retirement incomes.
Personally if I were a baby boomer I'd sit on cash and make it work as hard as it can in that class, ISAs and the like. Wait until the long term outlook is clearer, and then jump.
The only way it'd work out is if salaries rise fast and there is big real economic growth in the North... but that is a big leap of the imagination given most of the towns which have seen massive rises in property values in the boom, have cores which are just rows of charity shops and gambling establishments, with fairly high youth unemployment etc.
There is sod all up here really, which is probably why property prices are low, which is why rents will be low. And when the positive swing does appear it'll probably be after most baby boomers are dead.
Dave
Mass emigration of people could be an issue but unlikely, the UK is one of the most stable countries. Population is going up at present quite quickly. I'd still have my earnings, pension, savings, shares, and would just go and do it abroad. The UK wouldn't become a ghost town overnight and you can sell up if you see things changing.
If values and rents dropped I'd buy more properties. I'd love values to drop. £20k for a terrace? Yes please! Rents have never really dropped, ever.
Low demand for rentals? Perhaps a government incentive would change it but I'd still own the property and land and could just drop the rent.
Nothing is secure, none of the powerfully built directors businesses, employees jobs, your health, your life, your bank, your savings etc
Mr Whippy said:
To go BTL now with an eye on it being a good retirement cash stash and income is even more crazy!
I bought one last week & one the week before- call me crazy. One had a tenancy agreed before I'd even bought it. What they both have in common is that a nearby run-down community centre is about to be demolished to make way for some luxury apartments. This plus April's hoped-for BTL surge from released pensions might well make it a profitable venture even if I just sell in a year's time.
Not in any way a pop at you, but it always seems to me that the people who tell me about the BTL business are the ones who've never actually done it. They tell me where I'm going wrong & how I can do it better, followed by pointing out that if they were to do it they'd do so perfectly.
anonymous said:
[redacted]
Yes, you're right. Prices are still often at 2005 levels. But, reposessions are put on rightmove cheap and sell instantly.The market is moving again now, quite quickly actually, but £750k homes in places outside of cheshire sit on the market for years. Terraces sell fairly easily.
The thing is, in London £750k gets a manageable house with low ongoing costs.
Does anyone really want a 7 bed old house with high ceilings, outbuildings and 3 acres of land to tend to and maintain? My wealthier friends have flats or nice houses but they don't want anything that is a hassle to maintain because they're too busy going out and having holidays to want to bother with all the work that comes with a big old house - similar to having a big old 760 il bmw on a 52 plate - easily affordable but most people would rather have something that's less of a headache.
Rovinghawk said:
Mr Whippy said:
To go BTL now with an eye on it being a good retirement cash stash and income is even more crazy!
I bought one last week & one the week before- call me crazy. One had a tenancy agreed before I'd even bought it. What they both have in common is that a nearby run-down community centre is about to be demolished to make way for some luxury apartments. This plus April's hoped-for BTL surge from released pensions might well make it a profitable venture even if I just sell in a year's time.
Not in any way a pop at you, but it always seems to me that the people who tell me about the BTL business are the ones who've never actually done it. They tell me where I'm going wrong & how I can do it better, followed by pointing out that if they were to do it they'd do so perfectly.
Eventually it will change and something will happen but that, imvho, should not stop you living in the present. On a long enough scale the world will end but that doesn't mean just sitting there being pessimistic waiting for it to happen is likely to help. In the meantime you may as well make the most of things.
Eventually the North will pick up, london wasn't always the powerhouse of this country.
Plus, with Internet, home working and perhaps some new fangled invention it won't always be necessary to live in London to work in london. I bet one day people will sit at home and control a 3d hologram of themselves or they could leave a body at work and transfer the chip from their body at home to the body at work lol. Right, getting a bit daft now!
Mr Whippy said:
98elise said:
Justayellowbadge said:
Doesn't have to be the North.
Lots of studious/1 beds in places like Folkestone and Hastings for 40-50k that will get 350pcm rent. Not great, sure, and almost certainly funded tenants, but 10k down and look at it long term it's fairly limited on the downside.
Poor returns when you take into account maintenance charges, and the fact that 1 beds in those areas attract a certain type of tenant, in particular the type that will not pass on their HB, then trash the place and do a runner.Lots of studious/1 beds in places like Folkestone and Hastings for 40-50k that will get 350pcm rent. Not great, sure, and almost certainly funded tenants, but 10k down and look at it long term it's fairly limited on the downside.
I owned 2 flats in folkestone that I paid 26k each for, and was happy to sell them on after a year!
In the past maybe you'd shift it on, but if the market stagnates that won't happen.
Labour rates may go up for building/repairs, so you could end up spending 50% of your 'profit' making a property good.
Or people leaving because it's not good.
Going BTL now is like going long on the US stock market now, because it looks good right NOW, and did for the last decade.
To go BTL now with an eye on it being a good retirement cash stash and income is even more crazy!
Dave
From a yield perspective I get between 6 and 7% (it could be more but I havent raised rents at all). Which is a return on cash invested of around 14%.
from a capital perspective the properties have risen in value by around 25-30%, so on cash invested I'm looking at around 100% profit.
In 10-15 years they will be paid off, and paying me about 30k a year as a pension. To me thats far from crazy.
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