What are your thoughts on the UK housing market?

[hornblower]

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:

East Yorkshire
you can have several 3 bed semi detached houses, central heating dg, private drive way ,garage about 8 years old ,nice area £119.950

 

[Atilla]

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?

I only have to look at my own finances in the last 7 years. Inclusive of price falls I am still better off owning my own property than living in a rented place supporting family of four. I doubt I could rent our current property anything under £1500 in London. My mortgage is considerably less than that.

You make sufficient assumptions and you can tell any story you want.

If your house gains in capital and protects you from inflation by maintaining its value it is effectively an investment tool.

Wine is not an investment either if you drink it. But what if you keep it and then sell it on for a higher price than you've paid for it?

In fact property in the shape of a house is one of the best investment tools all around. What instrument allows one to have full use of it only to sell it on (assuming timing is right) for a profit???

I think you should question your assumption about what is an investment and what not?

 

[Atilla]

East Yorkshire
you can have several 3 bed semi detached houses, central heating dg, private drive way ,garage about 8 years old ,nice area £119.950

Wow that is good value. Probably much nicer people too. 😉

I would have thought investing in property in one of the University towns up there - York or Leeds would be good consideration? Endless supply of lodgers with no permanent fixtures.

 

[hornblower]

Wow that is good value. Probably much nicer people too. 😉

I would have thought investing in property in one of the University towns up there - York or Leeds would be good consideration? Endless supply of lodgers with no permanent fixtures.

York is 1 hour away
you need to be around when you have tenants

in East yorks, I am , correction, I was looking for a return of 8% return on capital ,and capital growth , in the old days thats what we where looking for ,
but now , about 5% if you can let it

 

[aleclaw]

An interesting proposition - have we reached the bottom of the Housing Market?
Recent surveys suggest that house price falls have stabilised, and we may have seen a slight increase in prices over the last 6 months - this is likely due to the shortage of available product causing renewed price competition for those people who simply have to move house. But, with continuing pressures on unemployment, a shortgage of "cheap" borrowing and continued consumer pessimism, I reckon we're still a long way off seeing a return to house price inflation - maybe 12 to 18 months away.

Having said all that, I'm buying again. We live in an area which never saw the double digit annual house price inflation of the last 7 years, and consequently prices have perhaps only softened by around 5 - 10% of where they were 2 years ago. But the shortage of buyers with cash deposits means property has been very slow to sell, so we are able to negotiate discounts of around 10% off "For Sale" price for those who have to sell. Then in turn, they offer 10% below asking price to the next person in the chain - everyone is happy, and gradually we can un-block the constipation in the market.

Sellers need to be realistic, and accept reasonable offers if they want to move. They need to forget what the nominal value of their home was 2 years ago, and be grateful for the fact that, in most cases, they have still enjoyed a substantial capital gain on what they paid 5 years ago. Bad luck if you bought at the top of the market, and face negative equity, but not the end of the world - only a loss if you have to sell today. Remember the last crash in the early to mid 90s - even at today's depressed prices, house values are 200 - 300% higher than then, and look at the individual net wealth that has been created as a result.

We live in a culture that values home ownership, we have historically low interest rates, there is a UK wide shortage of available property so it has to make good long term sense to buy again whilst prices are depressed and sellers desperate. We are looking to pay around 3.5% interest, rent at 6.5% yield, and enjoy 5% annual capital gain. A simple formula that works well in our area, and no shortage of rental demand - especially from those unable or unwilling to buy.

Obviously different regions face different challenges, but where we are, right now, we're buying again. Hope that answers the question!

 

[meanreversion]

It's important to remember that the US and UK governments actively encourage and incentivise home ownership. In both countries the capital gain is tax free, whilst in the US you can offset your mortgage payments against tax (this used to exist in the UK - MIRAS - but was tinned about ten years ago).

The idea is that a neighbourhood of homeowners will look after their properties and build a community etc. This implies that in areas with a high proportion of renters, there will be more unrest and crime. Germans might beg to differ on this point, as renting is far more prevalent over there.

Anyway, if you live in the UK remember this.. the government wants you to buy a house (stamp duty) and then will do all it can to ensure the housing market stays afloat (lower interest rates, no capital gains, other concessions). This is also the case in the US. Also, these governments are both heavily indebted and will lean policies towards inflation.

As long as you believe in the Western system of capitalism and the ability of the governments to sustain fiat (unbacked) money, you might as well go along with it. I don't buy the "we are short of land" line, I don't think that's relevant. But the other reasons are.

 

[Technically Fundamental]

I only have to look at my own finances in the last 7 years. Inclusive of price falls I am still better off owning my own property than living in a rented place supporting family of four. I doubt I could rent our current property anything under £1500 in London. My mortgage is considerably less than that.

Yeh you're right... depends on geography.

What instrument allows one to have full use of it only to sell it on (assuming timing is right) for a profit???

Are you really asking that questioin on a trading website? lol 😉

 

[Atilla]

Yeh you're right... depends on geography.




Are you really asking that questioin on a trading website? lol 😉

Originally Posted by Atilla
What instrument allows one to have full use of it only to sell it on (assuming timing is right) for a profit???


It is a rhetorical question to the person who stated a house is only an investment if you rent it.

Question still has point value if one considers most products are bought and sold without use. Thus house is a special commodity. Not exactly antique but you get the picture... :smart:

 

[anley]

In fact property in the shape of a house is one of the best investment tools all around. What instrument allows one to have full use of it only to sell it on (assuming timing is right) for a profit???

But have you made a profit, or has the house just kept up with house price inflation.

For example, if you bought your house for £100k and now it's worth £200k but want to move (to a similar house in the same area) there's little if any profit there.

But if you bought the house (didn't live it in, just as an investment) then yes there is a profit.

Also, a point which so many miss is that this property slump is great news for people who want to trade up to a larger or better property. So losing 50% on your present home is time for popping corks.

 

[Technically Fundamental]

Well if I was going to be particular I'd say in your example the house is more of a hedge against inflation rather than an investment 😉

 

[Atilla]

Well if I was going to be particular I'd say in your example the house is more of a hedge against inflation rather than an investment 😉

House as a commodity is an expensive piece of item. Inelastic in supply and has high maintenance and transaction costs in an illiquid market. But hey if you want to hedge you hedge...

You need to see my shrink he'll sort you out... His not cheap but very good. 😉

 

[Atilla]

Bank of England appears blind to the economic springtime - Telegraph

What does this mean?

IMHO - I would start the winding back as the economy works with long time lags. Why the extra QE. Bad move for the record. Will be regretted in due course. :-0

Is this down to political pressure due to electioneering? 😏

Inflationary drums are beating to the rhythem of my heart... 😎

 

[Trader333]

Is this down to political pressure due to electioneering?

Yes it probably in my view.

Inflationary drums are beating to the rhythem of my heart...

Hmm, I am not convinced of this as of yet.


Paul

 

[chump]

Bank of England appears blind to the economic springtime - Telegraph

What does this mean?

IMHO - I would start the winding back as the economy works with long time lags. Why the extra QE. Bad move for the record. Will be regretted in due course. :-0

Is this down to political pressure due to electioneering? 😏

Inflationary drums are beating to the rhythem of my heart... 😎

It means they understand the bond market a lot better than you. Were you paying attention you would have noted yields rising and mortgaging costs rising with them, threatening growth being choked off before it could get going. It's a bonus that taking more QE action not only deals with that situation it also put the break on the ascent of the GBP against the USD and Euro and I am sure they don't want to see any rising currency strength at this time ..a weak £ equals more competitiveness for our exports and at a time when inflation is still weak. Best move they could have made.They have to find a way to keep those yields depressed through the first half of next year to give growth a chance.

 

[Atilla]

It means they understand the bond market a lot better than you. Were you paying attention you would have noted yields rising and mortgaging costs rising with them, threatening growth being choked off before it could get going. It's a bonus that taking more QE action not only deals with that situation it also put the break on the ascent of the GBP against the USD and Euro and I am sure they don't want to see any rising currency strength at this time ..a weak £ equals more competitiveness for our exports and at a time when inflation is still weak. Best move they could have made.They have to find a way to keep those yields depressed through the first half of next year to give growth a chance.

Good to see the robust Chump back in action... but typically - you over extend your self in overtly strong opinions true to your hat size... If the Fed or the BoE understood the markets as well you suggest we wouldn't be in this mess as we are today. Now pay attention and see what you can go away with... :cheesy:

Just as the US has had trouble financing its massive debt recently, UK will be in the same position very shortly. No body will step forward to buy government bonds when yields are at ridiculously low rates. Number of bloggers including my self have already pointed to this consideration several days ago.

Expectations are already in the system pencilled in. This is why the £ is rising coupled with some normality returning to the financial markets. People sooner or later will get the inflation & tax bill. Yields will have to rise! :!:

If you seriously think by maintaining QE and raising rates the BoE can hope to maintain balance then you lend far too much credence to government know-how just like your good self. 😉

Back in July 2008, banks typically added 0.5 % to the average mortgage on top of their borrowing costs. But these days they are adding an extra 2.5 % or more.

What is happening here is we have a gross redistribution of wealth from the tax payers to shareholders. Bankers get rich either way. Will it solve our economic woes? No not one bit. More money injected into the system now means higher yields, interest rates & mortgage rates and taxes later. Just as they were too late with tightening when inflation reached 5.4% they are far too expansive now as economy is recovering. Inflation by the way is yet to fall below 2% - comically - BoE inflation target.

Err... some people still talking about deflation. What's the blurb - risk to the economy from deflation outweighs inflation or some jibberish along those lines. 😆

So as if all the tax payers money injected into the system isn't enough BoE in its wisdom is releasing $50bn more to keep rates low so that it can finance its government treasury bonds to balance the books. Now that is funny... 😀

Sadly the average joe public does not understand the nature of these billions of £ sloshing around in the system. I for one do not believe in the fodder the Fed or the BoE dish out.

If you let go of your ego sometimes you might then find your grey cells get a breath of fresh air instead of anal bs. Always a pleasure... 👍

 

[poborsky]

I smell fear in this latest move by the BoE. Reflating the credit bubble is delaying the inevitable or more than likely causing total disaster later. At the moment we have credit, stock and bond markets propped up with printed money. Smart move has got to be purchase property on long term fixed interest rate mortgage. Dont worry about picking a bottom in the market, let inflation take care of that. Any spare cash, buy a wheel barrow.

 

[Trader333]

Inflation by the way is yet to fall below 2% - comically - BoE inflation target.

Which inflation figures are you looking at because in July CPI year on year was at 1.8% and RPI was at -1.6%


Paul

 

[Atilla]

Which inflation figures are you looking at because in July CPI year on year was at 1.8% and RPI was at -1.6%


Paul

Fair observation Paul, you got me on the .02%.

However, CPI does not include council tax, fuel or heating. Oil dropped to $35 for a brief moment only to subsequently rise again to $70 and we are to understand we at the cusp of the worst recession for years.

Highest law and order of the land playing silly buggers if you ask me. It helps with wage negotiations to fool the lay man on the street.

Be interesting to see if CPI is still rising next month or deflation is all around us???

 

[counter_violent]

I just don't see where inflation comes from ....intervention with all these billions thrown at the economy was to stop a deflationary spiral...this does not however necessarily morph into inflation....i just don't see the rational for this argument....demand for goods and services will not pick up whilst all these jobs are being lost....and coming out the other side...demand will be slow because even when the jobless get jobs...the first thing they will have to tackle is personal debts before going on any spending sprees...and its the same for property price recovery.

This whole recession is all about job losses and prevention of a depression.

 

[Trader333]

demand will be slow because even when the jobless get jobs...the first thing they will have to tackle is personal debts before going on any spending sprees

Based on what I have seen I think the opposite will happen so long as they can get sufficient credit.


Paul