How far will house prices fall [volume 4]

[SPS]

NicD said:

There are quality of life advantages living outside of London (I surmise)

I agree - lived in central London and in Essex. London really is far too expensive for everything not just housing.
Enjoyed living in Essex tbh just bloody hated the daily grind in and out of London - bloody nightmare and a financial rip off - but what's new there then..

[NicD]

I spent a week in Bradford installing a system and thought the surrounding area looked green yet prosperous.
Good roads busy only at rush hour.

I don't know what the fascination with London is (but I have lived only there) so its a quandry

[okgo]

We have had this debate elsewhere I think? But beyond housing and possibly the issue with schooling I cannot see what is more expensive in London than it would be in any other town.

[NicD]

I spent a week in Bradford installing a system and thought the surrounding area looked green yet prosperous.
Good roads busy only at rush hour.

I don't know what the fascination with London is (but I have lived only there) so its a quandry

[jonah35]

okgo said:

We have had this debate elsewhere I think? But beyond housing and possibly the issue with schooling I cannot see what is more expensive in London than it would be in any other town.

Whenever im in london I think how cheap it is (excluding housing). Friends outside of London all have cars costing hundreds per month in rent or depreciation, then insurance, fuel etc. in London an Oyster card is dirt cheap

[NicD]

jonah35 said:

Whenever im in london I think how cheap it is (excluding housing). Friends outside of London all have cars costing hundreds per month in rent or depreciation, then insurance, fuel etc. in London an Oyster card is dirt cheap

yes, but we still run two vehicles and have to pay to garage them.
I keep saying we could get by with just the bus and train but I love cars.

[fishballs]

Mr Whippy said:

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.

All on black

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[/quote
incorrect Dave. Annuity rates are poor because you get cash type investments and the filthy funds taking their huge fees. let's have a think. 1m in BTL which you can sell/mtge etc yourself or your million yielding £1,300 a month. Pension situations in the UK are a disgrace.

[jonah35]

NicD said:

jonah35 said:

Whenever im in london I think how cheap it is (excluding housing). Friends outside of London all have cars costing hundreds per month in rent or depreciation, then insurance, fuel etc. in London an Oyster card is dirt cheap

yes, but we still run two vehicles and have to pay to garage them.
I keep saying we could get by with just the bus and train but I love cars.

True. It would be easier to live in London without a car though. But we all love cars.

[Justayellowbadge]

I'm willing to be proved wrong, but I suspect, over any 10+ year period, better results have been achieved by those that betted on property than those that betted against.

Housepricecrash is a great source of anecdotals here, there are people there who sold to rent ten years ago and are just about to be proved right, every month. And yet...

[Derek Chevalier]

Justayellowbadge said:

I'm willing to be proved wrong, but I suspect, over any 10+ year period, better results have been achieved by those that betted on property than those that betted against.

Housepricecrash is a great source of anecdotals here, there are people there who sold to rent ten years ago and are just about to be proved right, every month. And yet...

That is the problem - how many people are old enough to remember that the property market is cyclical? Yet more moral hazard introduced by the Government....

[LucreLout]

Derek Chevalier said:

That is the problem - how many people are old enough to remember that the property market is cyclical? Yet more moral hazard introduced by the Government....

It no longer matters. Prices have risen for the best part of 25 years. There's no going back now, at least, not to a position that will bail out those who went short on housing.

Can the market retreat? Yes, somewhat. Will it? Not by much as there's no votes in that. Will it drop to 2003 levels? Not nominally, no.

[Mr Whippy]

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.

So you're doing this just for your retirement income?

Good luck


Now of course, if people have a load of other options to fall back on, then fine. But the way this was originally worded was that people would take their pension pot they'd normally use to secure an annuity, and get BTLs to secure an income for their life in retirement.
That would then drive a surge in demand for properties in the North where the yields are apparently good.

Imo, that is a bad idea. There is more risk imo, that it won't pay off, than it paying off.


If history repeats, then to get the last 60 years again, which have been so great for BTL till about a decade ago, then we need a huge world war again.

Now if a huge world war happens, then lots of weird forces that impact house prices might happen too. So relying on rental yields as your primary or only source of retirement income is a pretty iffy idea

Dave

[walm]

Mr Whippy said:

Now if a huge world war happens, then lots of weird forces that impact house prices might happen too. So relying on rental yields as your primary or only source of retirement income is a pretty iffy idea

So the reason you won't do BTL is because you are worried about World War Three.... OK.

Call ME crazy but I have a strict rule about not taking financial advice from someone wearing a tin-foil hat.

For my 2p - nothing is without risk.
But if you want to diversify then having SOME of your income needs met by rent from a BTL makes sense.
The UK economy is going OK-ish, rent tends to be sticky and even somewhat inflation linked.

It's much better than my crazy Granny who just put everything in Shell and Tesco because of their "rock-solid" dividends!!!!

[Mr Whippy]

walm said:

Mr Whippy said:

Now if a huge world war happens, then lots of weird forces that impact house prices might happen too. So relying on rental yields as your primary or only source of retirement income is a pretty iffy idea

So the reason you won't do BTL is because you are worried about World War Three.... OK.

Call ME crazy but I have a strict rule about not taking financial advice from someone wearing a tin-foil hat.

For my 2p - nothing is without risk.
But if you want to diversify then having SOME of your income needs met by rent from a BTL makes sense.
The UK economy is going OK-ish, rent tends to be sticky and even somewhat inflation linked.

It's much better than my crazy Granny who just put everything in Shell and Tesco because of their "rock-solid" dividends!!!!

The irony is that those who come up with annuity rates for pensions ignore wars, large natural disasters and other such forcings in their predictions because they are by their nature too chaotic to predict. So they take the good times data only.
And even TODAY when they use only good times data, their future predictions for growth are rather dire, given by a ~ 1-2% per annum net growth over the next 30 years the last time I looked.

But the history of the last 100 years has shown us that we have lots of wars, large pandemics, and quite a few moderate sized natural disasters.


It's not wearing a tin foil hat, it's being realistic about the future we face. Statistically. It's statistically ignored on one hand, and yet the statistical outcome that the best financiers today can offer for their long term insurance policies paints a bleak picture even without the added chaotic nature of wars and stuff.



So yes, run for BTL by all means if it's alongside other sources of income.

But are you STILL saying that BTL as a sole source of income for a retiree from today onwards, to about 25-30 years into the future or possibly more, is a good idea with their pension pot?

Given we're over-due all sorts of nasty chaotic events that history has shown we do have in abundance. And if we assume no nasties will happen, which annuity providers do, it's STILL a bleak outlook.

Dave

[Rovinghawk]

Mr Whippy said:

Good luck

I'll take that at face value; thank you very much.

Mr Whippy said:

relying on rental yields as your primary or only source of retirement income is a pretty iffy idea

Thank whomever that I have other investments and the ability to work even when a bit decrepit.

[Mr Whippy]

Rovinghawk said:

Mr Whippy said:

Good luck

I'll take that at face value; thank you very much.

Mr Whippy said:

relying on rental yields as your primary or only source of retirement income is a pretty iffy idea

Thank whomever that I have other investments and the ability to work even when a bit decrepit.

Well that's exactly the outlook that is healthier for a retiree, than just thinking a BTL with their newly de-annuitised pension pot is the only leap of the imagination they need to make.

So my comment doesn't really apply to you.


But if it were so easy then that would be what everyone would do. Annuities? Pah. Just buy a BTL.

Just buy cheap houses up'north. Returns are fantastic. I need to get my money put in a fund that invests in Northern BTLs

Dave

[walm]

Mr Whippy said:

But if it were so easy then that would be what everyone would do. Annuities? Pah. Just buy a BTL.

The rules recently changed.
That's why everyone didn't do it in the past. They couldn't.

[Mr Whippy]

walm said:

Mr Whippy said:

But if it were so easy then that would be what everyone would do. Annuities? Pah. Just buy a BTL.

The rules recently changed.
That's why everyone didn't do it in the past. They couldn't.

Individuals can do it now yes, but I'm amazed that there haven't been high yield BTL funds for annuity providers to use as insurance.

I'm just amazed that a BTL in the north can work out amazingly well, but an annuity today is completely crap.

Such a stark gap leaves you wondering who is right and who is wrong.

Dave

[Axionknight]

NicD said:

I spent a week in Bradford installing a system and thought the surrounding area looked green yet prosperous.
Good roads busy only at rush hour.

I don't know what the fascination with London is (but I have lived only there) so its a quandry

Really, where abouts, might I ask? As some areas of Bradford aren't great at all these days.

[walm]

Mr Whippy said:

Such a stark gap leaves you wondering who is right and who is wrong.

Not at all.

This isn't rocket science.
And annuity providers absolutely can use BTL (or rather "property" as it is more commonly known).
(Any corporation investing in property for investment purposes is by definition BTL.)

I don't know how much they do use property, probably not that much.

Annuities are essentially linked to gilt rates.
They are very very low risk investments, backed by large finance houses who (as above) will use a myriad of different investment strategies to guarantee the yield they achieve is over the rate they give their customers (the delta being their profit).

On the other hand a single unit of BTL should be considered VERY risky.
You will have voids, local issues, large one-off maintenance issues, the volatility of the rental market etc...

The reason the yields are higher on a BTL up-north than on an annuity is because... GUESS WHAT!! Risk-reward!

There is absolutely no mystery.