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Effluent Man
5th Jun 2008, 10:27
Following on from a recent thread,I was talking to an Estate Agent friend yesterday and he perceives a kind of Doomsday scenario. He says that very few offers are being made and those that are are generally way beneath the asking price.What is interesting is the reaction of the vendors.Whereas previously an offer of 10% below has been rejected out of hand now people are seriously considering them.

The reasoning is thus: Everyone knows that prices are sliding and it seems that to take 90% now and invest it looks a reasonable move.The trouble is that if this happens the price falls will accelerate and create a self fulfilling prophecy.I said to this chap a few months I thought a 30% fall likely and he laughed.Yesterday he said he thought that realistic.

Big Tudor
5th Jun 2008, 10:41
I said to this chap a few months I thought a 30% fall likely and he laughed
So what will his opinion be a few months from now? I would love to meet the person who could predict what house prices will do in the next 12 months but I suspect he/she is probably the same person who knows the lottery numbers for tomorrow night. Property is, and always will be, a long term investment. People have been drawn in by some very high, short term gains, and are now getting their fingers burnt, but ultimately it will balance out. I think part of the problem is some people have seen property as nothing more than a quick way of making money rather than as somewhere to live.

FWIW I think that anyone who has bought in the last 12 months will not be able to sell at a profit for at least 12 months. After that it will (probably) start to increase, albeit at a far more reserved rate than we have seen in the last 5 years.

airborne_artist
5th Jun 2008, 10:52
Some developments will have to fall 30% to sell.

I was talking to the MD of one of the UK's largest estate agency chains. He told of a solicitor in her 30s who had bought five apartments off plan in Doncaster (of all places...). The developer/vendor had "guaranteed" the first year's rent at nearly150% of the actual rental value, ie was offering a cash-back scheme. The flats were probably 15-20% over-priced even after the cash-back, he thought. None of the flats are let, yet she's now servicing six mortgages (including her own house) off a salary of 50,000.

The solicitor was threatening legal action left, right and centre, trying to find a get-out. This is what happens when you invest in a business you don't understand.

kluge
5th Jun 2008, 11:00
Big Tudor is right.

To be an attractive investment (long term >10 yrs) the prices need to fall such that you can get at least 9-10% net yield on current monthly rent returns. Buying at a bargain price is critical and also assumes that the Govt don't screw up the immigration policy. It's not a short term capital gain (re gambling) market anymore.

If you are buying as your home then end price to a degree shouldn't matter too much over the long term and assuming you're not mortgaged up to the hilt. Again, buying at a bargain price relative to "market worth" (which is all relative) is what is important.

Property is just another asset class after all. You make you're money when you buy not when you sell.

gingernut
5th Jun 2008, 11:00
I think greed's probably too strong a word, but the folks who were quite willing to reap the rewards, must have had some grip on the risk?

As previous posters note, ya' gotta be in it long term. Old gitts like me have seen it all before.

My philosophy-it's a good time to buy if everyone says it's not.

Wouldn't mind this one http://www.rightmove.co.uk/viewdetails-9350871.rsp?pa_n=1&tr_t=buy

Mind'you, ya cash 'aint even safe in the banks anymore. (Apart from Northern Rock of course).

Wader2
5th Jun 2008, 11:01
A lot is driven media hype. 28% of couples can't afford to buy their first home. So? What's new? My parents rented, my wife's parents rented. I moved out of quarters and had great difficulty getting a mortgage.

The building society offered about 55% of the price as their loan book was capped.

After 9 years the house price had trippled. We sold as prices were peaking; we moved to an area where prices had dropped. For an extortionate amount of money (I thought) we upgraded to a much larger house - 2 bed to 4 bed. Now that house too has increased markedly in value. In 1990 my house was 'earning' more than I was. Now is is losing far less than what I earn.

Even if it drops 30% it will still be going down slower than it went up.

It all depends which sides of the wave crest you are when you buy and sell. Or in our case whether Spain or France are lower down the wave.

Blacksheep
5th Jun 2008, 11:14
Ain't it strange how the oil market is creating a world-wide "crisis" with huge price increases while the housing market is in "meltdown" with falling prices.

I suppose it depends on whether you're a buyer or a seller. :rolleyes:

Me? I just try to keep a roof over my head; I couldn't give a monkey's what its worth.

BAMRA wake up
5th Jun 2008, 16:51
Attempting, of an evening, to educate myself on the current economic situation I googled for and read a number of articles. The name 'Fred Harrison' kept cropping up and his pieces appeared to my layman's eye to be spot on. The interesting thing is most of his articles on the net were written in the mid to early 2000's and are astonishingly accurate about the current situation. In short, he doesn't foresee any improvement until after 2010.

http://www.dailyreckoning.co.uk/economic-forecasts/the-mystery-of-britains-missing-recession.html

GROUNDHOG
6th Jun 2008, 18:57
Since retiring from aviation for the last six years I have been developing property and renovating houses for resale. I have carried out about a dozen or so transactions but have now stopped due to market conditions.

IMHO it all depends on where you are buying/selling as to what prices will do over the coming period. I can only speak for my area Devon and Cornwall where sales have slumped in number but prices have reduced only slightly. It is not the same throughout the country.

The people that will be in the proverbial are those that HAVE to sell, they will be the ones that are forced to reduce the price of their property, investors will more likely sit tight and just rent out until the market stabilises which eventually it will do.

House price deflation will be good news for first time buyers and those trading upwards, not so good for those trading down and awful for the ones that need a quick sale!

airship
6th Jun 2008, 19:46
House price deflation will be good news for first time buyers and those trading upwards, not so good for those trading down and awful for the ones that need a quick sale! Well, who could ever disagree with that...?!

An abode is something that everyone (man, beast or whatever) has a right to fight for. Those who've speculated, earned more from their houses appreciating in value than what they got from their day-jobs should be grateful that they reside in a law-abiding land. Enough is enough, on behalf of all those people slaving-away in order to compensate their fellow-citizens and their surplus of capital (or means of borrowing). Stigma to renting, no - preserving capital- yes?! Widows and orphans need not be worried - just don't expect to get rich by renting out anymore OK? For Pete's (airship's) sake and everyone else who just want to see their limited years on this planet out in a reasonably dignified fashion without having to resort to tactics used in the African bush...,! :mad:

Krystal n chips
8th Jun 2008, 07:22
Well in keeping with this thread, here's the other side of the coin and it's not nice.......read the article in full please, then note the bit at the bottom...about "being in everybody's best interest" with regard to repossession as soon as possible..........that would be everybody except the occupant then....the others being the lenders......who mysteriously seem to have forgotten it was their policy to sell these "products" :yuk: to these people in the first place.......yet another Pontious act in the making :mad:

http://news.bbc.co.uk/1/hi/uk/7442155.stm

I do though, like :rolleyes: the bit about "Code of Conduct".....it's like the oft heard "Code of Practice".......sounds impressive..which is the marketing intent...but as much use in legal terms as ( insert description of choice here !) ...plenty to choose from re the Financial Services Parasites and Vermin sector after all.

DBisDogOne
8th Jun 2008, 15:25
Yes, really liked the "Being in everyones best interest" line, probably said at the time without the vaguest hint of irony and a straight face too. The M-F's!

G-CPTN
8th Jun 2008, 17:21
Being repossessed (or even the realisation of the threat) must be akin to being in a flood-risk area during a cloudburst.
There is (almost) nothing that can be done to halt the advance, and you just know that the aftermath will be messy beyond belief.

Then there's being given notice by your landlord . . .

Radar66
8th Jun 2008, 17:22
Serious question here for those in the know...

Am tentatively thinking of putting a foot on the first rung of the property ladder in England (more than likely in the South West), maybe later this year. Nothing extravagant, but am longing for somewhere that I can finally call 'mine'.

So, yes, I'm a 'first time buyer', and as this is the first opportunity I have had in my life to consider this, I have been reading all the property supplements etc in newspapers for the first time.

It's scary stuff. All I can really digest is that the mortgage rates in the UK at the moment are dire, but I am balancing that with lowering property prices and an abject hatred of paying 'empty money rent'.

To summarise:

Firstly, is it really a good time at the moment for first time buyers? Or would I be the fool to end all fools if I chose to buy soon rather than rent for another year or two?

Secondly, if I can, I would like to buy at least a two bedroom property so that I can rent out the other room in the hope that the rent will cover the mortgage payments. Is this a 'good thing'?

Thirdly, who is the best person to go to for mortgage advice. I'm a bit hesitant to go to the financial advisor at my bank as I'm sure that they will try to sell me their mortage above any other better ones out there.

Apologies if I come across as being 'stupid' but as I said earlier, this is the first time I've ever considered this so really am starting from scratch! :uhoh:

G-CPTN
8th Jun 2008, 17:46
Things to look out for include Stamp Duty (which can easily consume 10K) and the solicitors fees (another 2K).
Of course you can save the solicitors fees by either using a 'conveyancer' - or even doing the conveyancing yourself.
You'd need to do a lot of research (to understand searches and the like) and if the property is near a church take out insurance in case the church exacts a 'tithe' toward repairs and other such insurances to guarantee that you are covered if your land is subsequently discovered to be 'not freehold' or that proper planning permission hasn't been granted.

Of course you could just go into the purchase blind . . .

Buying at auction means that you accept 'warts and all' at the fall of the hammer.

There is a book (probably others) by the 'Location, Location' pair of Phil Spencer and Kirstie Allsop 'How to buy a house' ISBN 9780718147341 (try the local library or ebay) which might be worth you reading before you put you toe into the water.

http://fr.bookbutler.com/do/bookCompare?searchFor=0718147340&amountIn=gbp&shipTo=gb&searchIn=uk&zip=

frostbite
8th Jun 2008, 17:48
My guess is that you will be better off waiting until early next year at least, Rads.

The 2 bed/rental idea is a sound one provided you get a good tenant who is a reliable payer AND someone you get on with.

----------------

Edit to add - by all means consider auctions but do very serious homework. You can pick up some good tips from the very knowledgeable presenters on the BBCs 'Homes under the Hammer'.

Radar66
8th Jun 2008, 17:52
Thanks! :)

I've got a way of wiggling out of the SDLT but that's another story. Am tempted to buy at auction or to get a run down number and do it up myself, but obviously will need to do more research on that!

(by 'myself', I don't mean that I will literally renovate the building from scratch with my own fair hands... I might possibly get Gingernuts to do it for me... ;) )

The Wholigan's brother in law has his own very successful rental agency down this way so he's one of my contacts to 'tap' when i get to that stage.

Surrey Towers
9th Jun 2008, 08:37
Auction is the way to go.

The trick is to STICK to the limit you decide and not be tempted to go the extra grand.

And did you say you would rent a spare you room.........while you are living there.......?

Definitely not a good idea. They always think half of it is theirs! Nightmare :eek:

Effluent Man
9th Jun 2008, 08:37
Radar, The housing market moves quite slowly when on the turn.Best advice is don't enter the market until there is evidence that the falls have finished.This might be a year or more.My guess is that we will see a few more months of sharp falls followed by a levelling out.If the indices show upward movement for three consecutive months that will be a good time to buy.

Radar66
9th Jun 2008, 08:46
hmm.... thanks for that effluent ... i'll keep a look out.

if possible (depending of course on the property I end up with), I'm going to try and keep the 'rental' self contained - with their own kitchen and living area - ie a granny annexe or something with a lockable connecting door so that it is 'part' of the house to avoid all the tax malarkey... does this work?

I've rented myself all my adult life (and hated it!) so I reckon that gives me a pretty good idea what to offer.... :)

Effluent Man
9th Jun 2008, 08:51
Being a "Good Landlord" has it's advantages. A friend has 4 flats and selects his tenants carefully and provides excellent standards.This seems to pay off in terms of the tenants being responsible and good payers.The only one he had let him down was a gent with a double-barrelled name and voice to match who was hauled off on a videoing teenage boys rap.