What are your thoughts on the UK housing market?

[Atilla]

Well you better go talk to the BOE then because they suggest they are done with QE and if they are the long end of the yield will wipe it's feet all over mortaging costs and your "marginal" rise will choke a horse. Basically the borrowing requirement from the bond market won't be taken at current rates and that will mean mortgaging costs could move significantly higher and in % terms even a move from 4% to 6% is an increase of 50% !
When the Tories come in and slash spending AND increase taxes though this might influence the aforementioned the other consequences are of course detrimental to those factors that make house purchase both affordable and desireable from a confidence point of view and in terms of net disposable income.

Only the supply side criteria (scarcity) have been a plus for the UK ,but even allowing for that prices can only be flat at best given the rate of growth prospects we have here in the UK in the next several years.

That's far from a disaster ,but it isn't bullish either.

Scenario for rising interest rates is primarily inflation.

If inflation takes hold of the economy then property is the best place to be for ones investment. Regarding ability to meet mortgage payments the days of 6x earnings or 125% mortgages are long gone and burried or very rare. New mortgages are at 3x earnings and more often fixed for 2-3 years at least. Also to get one now you need to place anything above 20% deposit.

Thus the doom scenario is over played. There is plenty of cash out there and people are beginning to get on the band wagon.

Rental prices really haven't come down that much either. Two bedroom flat costs anything from £170-£900 pm around Leyton / Leytonstone. That is pretty much the mortgage on a £140-160K two bed flat at the moment (I'm sure with good negotiations you can get that for £130K. That is 5-8+% yield on your investment. Throw in likely capital gains in there too and it is far more fruitful than any equity purchase with dividend returns imo.

QE is a flash in the pan anyway. No one expected it to last. It was always a short term measure.

Basically - any rise in interest rates will be counter-balanced by inflationary pressures increased economic activity.

Inventory levels have leveled off. Manufacturing confidences is not lower but higher. Not to mention string manufacturing stats coming through.

We are near the bottom. The next test imo is likely to be a higher high in the indeces pointing to a steady pick up from next easter onwards. Even Ford's car sales have picked up. Basically this recession has been going since 2007. Next year it will be into its 3-4th year.

Crux of the matter is I am a green shoot and I'm not alone... :cheesy: :clover: 👍

 

[Xeno]

I think over the autumn and winter period there is obviously going to be some slow down but bargain hunters are out there and recovery is well in sight. Next spring will be busier than this year imo.


All this aside, there is imo - impending inflation in the system. I don't see deflation at all. All the cash that has been pumped in to the economy will ultimately end up in the devaluation of currencies and movement of capital and revaluation of commodity & asset prices. There is no doubt in my mind just as after the oil shock of the late 70s house prices will rise. In inflationary periods tangiable assets will maintain value. In contrast I feel equity returns will be highly risky and limited in gains due to continuted conservative expenditures.

You seem to think the recovery is well under way because of these green shoots signs in the housing market. This ignores the fact that these green shoots are completely normal in the middle of a house price crash - so what is more likely? It's different this time? Add that to property is nowhere near historic affordability, and credit is very hard to get? Still bullish?

And inflation?? It's easy to say QE = inflation, but again, look at the hard facts. Best estimates are 12 trillion wealth destroyed globally, and 2 trillion so far in QE. Throw in rapidly rising unemployment?

Says it it all to me.

cheers

 

[davidcamm]

I forgot to mention that a house is not actually an investment unless you derive a rental income from it.

Otherwise you would be far better off renting and just put the money you save into a long term investment, over time the investment will by far exceed the value of the house even allowing for inflation.
For a full explanation read the rich dad poor dad book and Cash flow quadrant by Robert Kiyosaki.

It is amazing just how much extra you can save over time by renting your dream home instead of buying it (almost twice as much)?

Comments?

 

[Atilla]

You seem to think the recovery is well under way because of these green shoots signs in the housing market. This ignores the fact that these green shoots are completely normal in the middle of a house price crash - so what is more likely? It's different this time? Add that to property is nowhere near historic affordability, and credit is very hard to get? Still bullish?

And inflation?? It's easy to say QE = inflation, but again, look at the hard facts. Best estimates are 12 trillion wealth destroyed globally, and 2 trillion so far in QE. Throw in rapidly rising unemployment?

Says it it all to me.

cheers

Originally Posted by Atilla View Post
I think over the autumn and winter period there is obviously going to be some slow down but bargain hunters are out there and recovery is well in sight. Next spring will be busier than this year imo.


Don't make me repeat my self Xeno...


I am not a weed 😡

I am a green shoot. :cheesy::cheesy::cheesy:

 

[anley]

I forgot to mention that a house is not actually an investment unless you derive a rental income from it.

Otherwise you would be far better off renting and just put the money you save into a long term investment, over time the investment will by far exceed the value of the house even allowing for inflation.
For a full explanation read the rich dad poor dad book and Cash flow quadrant by Robert Kiyosaki.

It is amazing just how much extra you can save over time by renting your dream home instead of buying it (almost twice as much)?

Comments?

Yes. Can you give us all a quick example, what you say sounds very interesting. Thanks

 

[Technically Fundamental]

I don't think the current level of buying based on what I've seen from estate agents in my area will sustain the market especially considering that it's mainly cash rich people raping several K off of recent buyers looking for a "good deal". That being said if people continue to invest in buy-to-let for old age and there is credit available then who knows. There is likely to be increased demand for rentals now isn't there?

 

[Technically Fundamental]

Yes. Can you give us all a quick example, what you say sounds very interesting. Thanks

Because people always forget to calculate how much interest they've paid when they work out the capital gain made and count so the profit is skewed but rental properties basically pay their own interest.

 

[Xeno]

Originally Posted by Atilla View Post
I think over the autumn and winter period there is obviously going to be some slow down but bargain hunters are out there and recovery is well in sight. Next spring will be busier than this year imo.

Alright, change what I said to 'well in sight'. It doesn't change my other points in the slightest.

 

[Atilla]

Alright, change what I said to 'well in sight'. It doesn't change my other points in the slightest.

If I may dear Xeno - I wouldn't "Throw in rapidly rising unemployment?"

Rise in unemployment is slowing down now...

My footsie company is looking to recruit around Oct/Nov time... :clap::clap::clap:

Green shoots about to sprout all around us... :clover::clover::clover:

 

[anley]

Because people always forget to calculate how much interest they've paid when they work out the capital gain made and count so the profit is skewed but rental properties basically pay their own interest.

So what's you're saying is that if you bought a property for £100k (using a 100% mortgage) and it's not worth £200k most people will think they've made £100k.

But in reality they've paid out £10k in interest so the net profict becomes £90k.

 

[Xeno]

If I may dear Xeno - I wouldn't "Throw in rapidly rising unemployment?"

Rise in unemployment is slowing down now...

My footsie company is looking to recruit around Oct/Nov time... :clap::clap::clap:

Green shoots about to sprout all around us... :clover::clover::clover:

Actually, you could also leave that out - still doesn't really change my point....

However, when you say slowing down now, do you mean this week, or yesterday? This is the sort of slowing down that is actually 'noise', i.e. statistically insignificant compared to the trend. Rather like sales plunging 90% then a 'green shoots' rise of 5%

Of course all that is also if you actually define the following as 'slowing down' (I don't)

"The increase in the unemployment total of 281,000 in the three months to May was the biggest quarterly rise since records of the ILO measure began in 1971." - latest official figures, BBC

 

[Technically Fundamental]

So what's you're saying is that if you bought a property for £100k (using a 100% mortgage) and it's not worth £200k most people will think they've made £100k.

But in reality they've paid out £10k in interest so the net profict becomes £90k.

90k before capital raping tax and 10k is a very conservative amount of interest payable imo.

Don't forget council tax and all that shizen and insurance too.

 

[Atilla]

90k before capital raping tax and 10k is a very conservative amount of interest payable imo.

Don't forget council tax and all that shizen and insurance too.

Get a grip guys...


You have to fly to Amsterdam from London?

1. By coach cost is £50 takes 19 hours (I'm guessing)
2. By air cost is £90 takes 35 mins from City Airport (I'm guessing)

True cost of flying to Amsterdam is £40 not £90. You still have to get their one way or another.

You are still liable for Council Tax and Content Insurance when you rent?

 

[Technically Fundamental]

So if I tell that to the coach driver will he let me on for free?


Also liabilities differ from landlord to landlord. I personally wouldn't live in a high rent high rent property unless the landlord swallowed that cost.

 

[anley]

Renters pay council tax don't forget that.

 

[Atilla]

Actually, you could also leave that out - still doesn't really change my point....

However, when you say slowing down now, do you mean this week, or yesterday? This is the sort of slowing down that is actually 'noise', i.e. statistically insignificant compared to the trend. Rather like sales plunging 90% then a 'green shoots' rise of 5%

Of course all that is also if you actually define the following as 'slowing down' (I don't)

"The increase in the unemployment total of 281,000 in the three months to May was the biggest quarterly rise since records of the ILO measure began in 1971." - latest official figures, BBC

Quicker prices and figures adjust quicker we are out of recession. If last month was a record than unless we have another record it will only be deemed good news. 👍

http://www.statistics.gov.uk/CCI/nscl.asp?ID=5481

Things can only get better... :clover::clover::clover:

 

[Xeno]

Quicker prices and figures adjust quicker we are out of recession. If last month was a record than unless we have another record it will only be deemed good news. 👍

National Statistics Online

Things can only get better... :clover::clover::clover:

Right, you've got it now. It will be deemed good news, even though it isn't fundamentally. As for prices correcting quickly, do any search for property and property finance affordability.

 

[Trader333]

In my view it will only be deemed good news if the actual figure is better than the forecast.


Paul

 

[hornblower]

In my part of the world tenant are very thin on the ground
looking in my local paper there are 78 properties to rent ,and some of them have been in for months, plus the ones that they did not advertise
unemployment figures will be up again next month
there are no one to rent these places
several friends of my sons have gone back to live with mum and dad
several houses that I have looked at ,have gone down 3 and 5 thousand in the las 3 months
as they cannot find a buyer, and there is no point in buying as I cannot find a tenant

 

[Atilla]

In my part of the world tenant are very thin on the ground
looking in my local paper there are 78 properties to rent ,and some of them have been in for months, plus the ones that they did not advertise
unemployment figures will be up again next month
there are no one to rent these places
several friends of my sons have gone back to live with mum and dad
several houses that I have looked at ,have gone down 3 and 5 thousand in the las 3 months
as they cannot find a buyer, and there is no point in buying as I cannot find a tenant

Just curious as to what part of the World you are in?

Never Eat Shredded Wheat :cheesy:

Childish I know as this is what my kids said to me when I asked them a similar question. That's easy dad... :clap::clap::clap: