Singing Pig

mbga9pgf3:

I would rather have a mortgage of 100K on a property that is currently valued at 450K than have a 400K mortgage on a property that has significant falls ahead of it.  Whilst I am paying less in rent than what I would pay in interest alone, I am sorry, but youir sums simply dont add up. (as long as you save the difference of course!) Pod, as an aside, would you agree that purchasing at the top of the cycle will get you  significantly less  for your money than investing at the bottom? Thats what I have been all about on this site since 2006; I have never said that property is a poor "investment vehicle" as you call it, I have only ever argued that since around 2005-2006, property has been a poor choice of investment due to market timing.  I guess the housing minister and Mervs comments yesterday have proved me right; either way, time will tell.   I have to be honest though, I am sitting quite happily on my 37.5K (and growing) deposit at the mo; I get the impression from my bank manager that he would lick my boots rather than have me move my accounts (which I threatened to do if they increased charges on my current account; I explained I knew all about Basel II and that I was capable of removing 4 Million in lending potential for his bank at the press of a computer Key). 

The verdict on whether singing pigs are "pros" as you put it is still out.

As for the mortgage market things just seem to get worse and worse dont they...

http://www.telegraph.co.uk/news/uknews/1961356/Housing-crisis-Mortgage-rates-at-8-year-high.html
 

So whatever happened to "House prices wont crash because the Government/BOE wont let them..." 

(Pod) seriously ... i do think we are headed for some tough times ... and i expect the BOE to come under pressure to reduce rates ..... expect 4.5% by end 2008, maybe lower.  i'm currently working with a major UK bank & the top bods there are very bearish on the UK economy ... one said that it is inconceivable that interest rates will not be cut by a fair chunk ...

Perhaps this top bod should look for a new job.

1) IT looks as if Merv has rates on hold for the forseeable.

2)  Rate cuts havent made the slightest bit of difference, other than stoke inflation and decrease returns for savers.  QED it is sensible not to cut rates when it doesnt solve what you hope to acheive. 

mbga9pgf3:

The verdict on whether singing pigs are "pros" as you put it is still out.

 

As for the mortgage market things just seem to get worse and worse dont they...

http://www.telegraph.co.uk/news/uknews/1961356/Housing-crisis-Mortgage-rates-at-8-year-high.html
 

So whatever happened to "House prices wont crash because the Government/BOE wont let them..." 

 

(Pod) seriously ... i do think we are headed for some tough times ... and i expect the BOE to come under pressure to reduce rates ..... expect 4.5% by end 2008, maybe lower.  i'm currently working with a major UK bank & the top bods there are very bearish on the UK economy ... one said that it is inconceivable that interest rates will not be cut by a fair chunk ...

Perhaps this top bod should look for a new job.

1) IT looks as if Merv has rates on hold for the forseeable.

2)  Rate cuts havent made the slightest bit of difference, other than stoke inflation and decrease returns for savers.  QED it is sensible not to cut rates when it doesnt solve what you hope to acheive. 

i didn;t say that all "singing pigs" (whoever they are ....... people who post on a website called singingpig ....... like you then?) were pro's ........ don;t put words in my mouth.  i'm making a distinction between experienced landlords & BTL newbies (and not for reasons of vanity ,,,, more in terms of experience, expectations, warchest etc).   i also didn;t say that house prices always rise, and never fall.  what I DID say was that if you have no property skills or experience, then paying market value for any old property in 2006 onwards probably was a poor decision as an investment ..... but if it's your PPR, then who knows?

 mbga, are you saying that you believe rates won;t be cut this year? just curious you see ....... now don;t be shy.  why would this guy look for a new job? because rates THIS TIME haven;t been cut?  I wouldn;t say at all that BOE has rates on hold for "the foreseeable" ........ just right now. but you can bet your bottom dollar than if & when things deteriorate, rates will fall.  just my view, which i'm happy to be unambiguous about. 

 From the Telegraph yesterday,

Mervyn King warned families to brace themselves for a further "squeeze" on household finances as rising energy bills and food prices continue to rise.

Mr King said that inflation was set to increase sharply to about 3.7 per cent - almost double the official target. As a result most British people will feel poorer this year as pay rises fail to keep pace with rising costs.

The Governor - who said that "the nice decade is behind us" - also warned homeowners that property prices would fall further and that it was impossible to predict the scale of the decline.

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He became the first senior public figure to openly discuss the possibility that the British economy may now be heading for recession. The economy was "travelling along a bumpy road" and that a sharp downturn could not be ruled out, he said.

The comments are some of the most stark issued by the Bank and indicate growing concern within Government over the economic prospects for the country. The prospects for the British economy have worsened since the Bank's last inflation report in February.

Mr King made his comments as official figures revealed unemployment rose last month and Alistair Darling, the Chancellor, conceded that British families needed help to deal with rising fuel, food and energy costs.

Mr King said: "There is going to be a sharp slowing in growth. It is quite possible that at some point we may get an odd quarter or two of negative growth, but recession is not the central projection…But clearly further shocks could push us in that direction."

The technical definition of recession is two or more consecutive quarters of negative growth, a situation last seen in 1991.

The Governor added: "As price increases feed through to household bills, they will lead to a squeeze on real take-home pay, which will slow consumer spending and output growth, perhaps sharply."

Mr King's mention of "the nice decade" is a reference to the acronym "non-inflationary consistent expansion" used by economists to describe the sort of growth since Labour came to power.

His intervention followed the disclosure that housing minister Caroline Flint backed independent forecasts suggesting prices will fall by between five and ten per cent this year.

On Tuesday it was disclosed that inflation had seen its biggest increase in six years to three per cent. The average family was calculated to be £600 worse off compared to a year ago as a result.

Mr King said: "We have already seen house prices starting to fall and they are likely to fall further but I don't think anyone can honestly know how much. We have already seen quite a significant adjustment in the house price to earnings ratio...I don't think anyone can be at all confident as to what will happen.

"No one who is honest can say where house prices will go."

The Bank's Monetary Policy Committee, which decides on interest rates, now faced its "most difficult challenge yet".

He said: "The credit cycle has turned, commodity prices are rising. We are travelling along a bumpy road as the economy rebalances. Monetary policy cannot and should not try to prevent that adjustment. The Monetaray Policy Committee must focus on bringing inflation back to the target in the medium term."

 

MErv is seriously scared about going down the stagflation route, its obvious.  I translate "medium term" above to mean in excess of 12 months, for the record.

There is a lot of talk regards the UK economy echoing the US economy.

Heres an interesting article from the Wall Street Journal reporting the bottoming out of the property crisis in the US.

If we do truly echo the US this may indicate that we should expect 10- 15% falls before the UK property market bottoms out in 12 - 18 months time.

But lets face it no one really knows. The UKs main resistance to property falls is down to restrictive planning practices and levels of immigration. To a large extent house prices are  in the hands of future political policy. 

Marvin 

Pod:

SpeedyThing:

mbga9pgf3:

 Pod, as an aside, would you agree that purchasing at the top of the cycle will get you  significantly less  for your money than investing at the bottom?

 I wouldn't bother Sam. I've asked this question many times and only ever received responses that drone on about "medium-to-long term investments" and actually ignore the question altogether.

ahhh. diddums speedy!  not quite sure what exactly you're spitting your dummy out about ... you came on a the property section of a financial freedom website & got the answer you must, surely, have been expecting?  

You must be going senile in your 'experienced' old age Pod. As I stated in the quote you used, I haven't received an answer... I feel like Jeremy Paxman asking whether Michael Howard "threatened to overrule him"!

It's a simple question yet all the bulls on this site get so defensive and sidestep the answer!  Let's make it easier and propose a specific example,

- Property worth £200,000 in year 0

- Property worth £150,000 in year 3

- Property worth £300,000 in year 10

In what year should the property be bought to maximise profit? 

It is a simple question but one that you have yet to answer. And don't start polluting the question with rents etc. Unless they equal £50,000 profit over the 3 year period then it won't change the answer.

marvin:

There is a lot of talk regards the UK economy echoing the US economy.

Heres an interesting article from the Wall Street Journal reporting the bottoming out of the property crisis in the US.

If we do truly echo the US this may indicate that we should expect 10- 15% falls before the UK property market bottoms out in 12 - 18 months time.

But lets face it no one really knows. The UKs main resistance to property falls is down to restrictive planning practices and levels of immigration. To a large extent house prices are  in the hands of future political policy. 

Marvin 

Errr... the US is still dropping and hasn't reached the bottom. If we do echo the US then it'll take longer than 12-18 months
 

SpeedyThing:

It's a simple question yet all the bulls on this site get so defensive and sidestep the answer!  Let's make it easier and propose a specific example,

- Property worth £200,000 in year 0

- Property worth £150,000 in year 3

- Property worth £300,000 in year 10

In what year should the property be bought to maximise profit? 

It is a simple question but one that you have yet to answer. And don't start polluting the question with rents etc. Unless they equal £50,000 profit over the 3 year period then it won't change the answer.

Agreed it is a simple question. But I have a simple question for you - what point are you trying to make with your simple question?

Obviously, if a prospective purchaser knew at year 0 that the price would fall over the next three years by an amount greater than any profit that could be made from that property during those three years (and that the property would be available to buy then), then he would almost certainly wait. I would, but then I can't see into the future, and nor can anybody else that I know of. It's a purely hypothetical question - what's the point?