Singing Pig

Interesting article on the BBC website this morning...

http://news.bbc.co.uk/2/hi/business/7389560.stm

Not specifically about BTL, but interesting nonetheless. 

 

Pod:

brit, you show your naivety by misunderstanding that all purchases over the last 2 years have been overpriced ... it simply does not work like that 

Yes a little because prices have been overvalued for far longer than 2 years.  The 2 year mark represents what I and many people recognise as the most exposed purchases.

 

It is all based on loose lending, low interest rates (based on fraudulent manipulation of inflation) and speculation.  House prices go up by standard inflation unless you add value.  Prices have been going up far higher than inflation which amounts to speculation rather than sound growth.

 

The whole market has been very overpriced, why do you think banks are tightening their lending criteria so much if it is not.  They are trying to quickly reduce their exposure.

 

Pod:

Investors do generally go interest-only ... its called investment.  investors are only vulnerable of their cashflow is poor ...

 There have been far better investments with better returns than property in the last couple of years.  Property has just been a band wagon which every one has got on.

 

How can it be an investment if you have interest only mortgages, don't you actually need to invest.  What about all these gift deposits on mainly new builds.  In reality its all the banks money and false money not the investor.

 

Investors are vulnerable to price drops, margin calls, revaluations, tighter lending, oversupply and much more. 

 

Pod:

finally, you can;t seriously compare the UK market to Japan's?  that old chestnut has been rolled out umpteen times before ..... japan was a completely different story!

 

Its an possibility but I believe there will be a rapid deep property crash instead.

 

Pod:

& 3.5 times earnings?  since when has that been a 'norm'?  can't imagine why you might think this is some sort of baseline that we will eventually sink back to ... get real!   

 

Your see the market is correcting it self.  If you understand that inflation is going up and commodities such as oil are dwindling then you will know interest rates are to go a lot higher.  Hence mortgages are going to have to go back to normal.  Any bank after now being burnt isn't going to lend irresponsibly again for some years to come. 

brit, be careful not to assume that "everyone" is in property ... few people are landlords & even fewer have a large-ish portfolio.  there are plenty of amateurs that have paid too much for property ... but not every landlord is naive ... if you look through the looking glass ... you might learn something.  interest-only property investment has worked wonders for many (and still does) ... and not all are the financial nonces that you think they are. you are right though in that it's a tough time to be a landlord ... tighter lending criteria, lower max LTVs (not margin calls tho ... that is HPC nonsense) ... i can personally vouch for that!  you might decide that prices will fall, but can you really time the market...i think not.  

Pod:

you might decide that prices will fall, but can you really time the market...i think not.  

 

Your never get the exact bottom but you can get near.  Prices may fall further after you buy but quality of life becomes a higher priority or you will never buy.  As I studied risk management at Uni I will factor in the best time to buy when it is safe for me with a margin of resilience included. Thats why a purchase at 3.5% times salary, a large deposit and secure government job will most likely leave me secure.

brit1234:

Pod:

you might decide that prices will fall, but can you really time the market...i think not.  

 Your never get the exact bottom but you can get near.  Prices may fall further after you buy but quality of life becomes a higher priority or you will never buy.  As I studied risk management at Uni I will factor in the best time to buy when it is safe for me with a margin of resilience included. Thats why a purchase at 3.5% times salary, a large deposit and secure government job will most likely leave me secure.

interesting that you are already rationalising (for the future) why you bought (past tense) in case you don;t buy at the bottom!  i knew it ... (just kidding ... chill!)  ... !!  the day after these non-property owning bears buy ... and prices fall further .... it will be "i bought for the long-term" ... "it's a home not an investment" etc ...!  i suspect that studying risk management at uni & working in a "secure government job" are pretty unlikely to protect you from the market, once you are in it ... and be under no illusion, once you buy, you WILL face a property slump while you are a homeowner ... anyway, i wish you luck with your timing (genuinely) ... let us know when you buy so we can see how well you do time it ... ;-)  

Thanks. My biggest issue is not when to buy but to secure accommodation till that time where I am flexible enough to get out and buy. But thats going to have to be decided by more sensible planning and contingency measures.

 

Maybe it is time to give Caroline Flint some advice. 

 

 

 

brit1234:

 

Property has just been a band wagon which every one has got on.

To some extent I would agree with that - it's not hard to see why. A significant proportion of the population (in the UK, at least) will buy a property at some stage in their lives, and virtually everybody lives in property - so it is familiar, in a way that virtually no other investment is. 

brit1234:

There have been far better investments with better returns than property in the last couple of years. 

  

Which ones? I see this sort of statement repeated often at the moment, but rarely with any more details. I would be genuinely interested to know - I am a property investor, and have achieved satisfactory returns, but I am broad minded enough to consider other forms of investment, if the full information is available. Unfortunately it rarely is.

rc169:

Which ones? I see this sort of statement repeated often at the moment, but rarely with any more details. I would be genuinely interested to know - I am a property investor, and have achieved satisfactory returns, but I am broad minded enough to consider other forms of investment, if the full information is available. Unfortunately it rarely is.

 

Last year the big ones were most metals, oil and international agriculture.  At the moment if it wasn't for the mining stock the FTSE would have fallen far more.

Have a listern to some of the podcasts on this site below to give you some idea or watch the videos on Bloomberg.

http://www.minesite.com/webcasts/commodity_watch_radio.html