House prices to stagnate for 'years'

[numbercruncher]

bought block for 50k 8 yrs ago,

Hello

Thankyou

 

[robots]

hello,

oh yeah, it all just landed on his lap, well done

he put up with it like most who do the hard yards

thankyou

robots

 

[wayneL]

hello,

oh yeah, it all just landed on his lap, well done

he put up with it like most who do the hard yards

thankyou

robots

Hello.

You miss the point.

Goodbye.

 

[theasxgorilla]

London down 5%

London is a pretty big place...difficult to measure such a stat, but of course 'the mob' can only grasp simple ideas. And as with tradeable markets, a retracement on lower volume doesn't necessarily represent structural damage to an in place trend. Conversion of BTL to owner-occupied at a 5-10% discount is healthy IMO. Those BTLs who manage to hold on have eventual higher rents to look forward to due to a shift in the supply/demand balance.

I can't help but wonder how much of the negativity is mass-media induced group think. How long can we expect 'the mob' to remember to hold a given thought...without actually having any first hand experience of it? How long before the media get bored of saying, "we told you so", and instead start trying to be the first to predict the beginning of the end of the end? That is what is already happening in Swedish news. If you're still a property 'bear' here you're so old-school.

 

[wayneL]

London is a pretty big place...difficult to measure such a stat, but of course 'the mob' can only grasp simple ideas. And as with tradeable markets, a retracement on lower volume doesn't necessarily represent structural damage to an in place trend. Conversion of BTL to owner-occupied at a 5-10% discount is healthy IMO. Those BTLs who manage to hold on have eventual higher rents to look forward to due to a shift in the supply/demand balance.

Yes. The rent price cycle runs counter to the house price cycle generally, so the standard wisdom is that rents will increase as BTLs bail out.

<Gross generalization follows>But OOs are not buying the BTLs... They're not buying at all. It's the cashed up, pro LLs that are sitting there with low bids, waiting for the numerically challenged schmucks to capitulate. so actual supply of rented property is not diminishing at this point, and rents are not rising... yet</gross generalization>

I am firmly of the opinion that the CBs have pulled so many levers they never should have since 2001, that the normal cycle (AKA the economic clock) is FUBAR. Hence I wonder whether rents will rise at all (in real terms).

We're in a brave new world now, so any of several scenarios could unfold.

I can't help but wonder how much of the negativity is mass-media induced group think. How long can we expect 'the mob' to remember to hold a given thought...without actually having any first hand experience of it? How long before the media get bored of saying, "we told you so", and instead start trying to be the first to predict the beginning of the end of the end? That is what is already happening in Swedish news. If you're still a property 'bear' here you're so old-school.

Well we all know the media really are muppets, but here, the interminable bulls are suddenly bears. Once must consider an important dynamic here in the UK... all journos are into BTL and they've ramped it for all it's worth for years. For them to go bearish here... well, you know the sentiment is really negative.

 

[Tysonboss1]

Wot you talkin bout Willis ?

Aussie residential prop at Postive - noooooo, where is it ?

WayneL is talking about the UK,.... all I am trying to say is that if prices drop then yeild by default increases,....

there fore making it much easy to create a postive cashflow out come,.... However positve cashflow property is possible in Australia even in capital cities,....

you have to "create" your positve cashflow out come though,... not "Buy" it

 

[Tysonboss1]

The market would have to drop a freakin' long way from here for that to be a reality...

Not really,.... as I said you can't expect to walk into a real estate agent and purchase a trophy property and expect it to be cash flow postive,...

But after the market has droped a bit,.... combined with the factors I mentionen such as a property beening let far to cheaply, thats a bit run down, you should be able to create an outcome where you can increase the cashflow enough to bring it close to being postive,... then after tax deductions and depreation you should have a neutrel or cashflow positve investment,

 

[numbercruncher]

In the last approx 12 months rents have gone up by about 10pc on average, Interest rates have gone up about 20pc ..... I still cant see value in this yet ....

 

[Tysonboss1]

In the last approx 12 months rents have gone up by about 10pc on average, Interest rates have gone up about 20pc ..... I still cant see value in this yet ....

Interest rates affect all asset classes,... not just property,....and interest rate risk is easily mitigated,.. my comments were in relation to people talking about property prices on the verge of dropping in the UK,...

My opinion is that if property prices are dropping it is not a reason to steer clear it is a reason to look for value,... and if you are a proactive investor you will be able to create positive cash flow outcomes,..

Not one of my investment properties is Negative at the moment, and they are all within 35kms of brisbane or sydney,

some were negative but in within 2-3 years had become postive others were positive within the first 3 months, because 3 months is normally the time it takes to kick the tenant out make some changes and get a new higher paying tenant.

 

[Tysonboss1]

In the last approx 12 months rents have gone up by about 10pc on average, Interest rates have gone up about 20pc ..... I still cant see value in this yet ....

you have to be careful not to sit around waiting for the perfect market because there is never a perfect market,... you just get in there with a stratergy you know will make money,...

there are stratergies you can use to make money in just about any part of the property cycle,...

 

[numbercruncher]

Yes everyone was busy telling me how mad i was when I bought my first property back in 2000, now they are busy telling me how mad I am for not buying now .....

I kinda have these deep restful sleeps atm being completely free of debt whilst a Credit Crunch unfolds and House price falls spread from US to UK to Europe, I can see how Aus must surely be immune to this, I mean our massive population and shortage of land combined with such a fantastic Industry base beyond mining is so reassuring !



Renting is such a flexible option atm, runs at 1/3rd the cost of Ownership, Brand new home, lovely view and if the Owner gets annoying, Just sack him and move into another nice new home, perfect relationship!

I disagree I think there is a perfect market, history has shown me its when those around me are screaming sell sell sell or dont buy dont buy dont buy ....

Im flexible though, either way, house prices keep gaining 10pc+ p/a more the fool me, but I still wont be worried about it! Im more concerned with the downside risk than upside, old saying, greedy become the needy ..

Be Interesting to see if your 10pc rule works thou, average 500k house now, will it be worth 1m in 7 years, 2m in 14, 4m in 21 .... I think back to a house my parents bought 20years ago for 100k - should be worth 800k now with this 10pc golden rule, but its not ...

 

[wayneL]

Not really,.... as I said you can't expect to walk into a real estate agent and purchase a trophy property and expect it to be cash flow postive,...

But after the market has droped a bit,.... combined with the factors I mentionen such as a property beening let far to cheaply, thats a bit run down, you should be able to create an outcome where you can increase the cashflow enough to bring it close to being postive,... then after tax deductions and depreation you should have a neutrel or cashflow positve investment,

Sure, but nowhere near that point yet.

The problem here is that every second show on TV is about renovating and reselling/letting. Consequently, people have been paying a premium for "fixer uppers". They've been getting away with it because while the reno proceeds, the market has moved on. The profit has come from a rising market, not so much the reno.

When fixer uppers are at a genuine discount it'll be worth doing, but I think we are a few crises away from that. Meanwhile, capital, and more importantly time, is better utilized elsewhere for mine.

War chest at the ready however.

 

[numbercruncher]

Centro Properties Group down 70pc (seventy) today.....


Sign of the times perhaps ?

 

[wayneL]

 

[doctorj]

I think what's happening to Centro is indicative of how the credit problems are going to slowly migrate their way into the so called "real economy".
It starts with banks taking the hit to their balance sheet, then spreads to the more highly leveraged businesses (as they have to compete with banks for a more limited, more costly pool of funds).

You're already seeing property related companies struggle and companies that insure bonds. Next you'll see those that invest in these "safe" investments and those that earn fees from them.

Look to brokers, insurers & fund managers next.

Sooner or later the almighty US consumer will have to stop borrowing either because they lose confidence, their job or their home. The temporary recovery in US exports supporting the economy (as a result of the falling USD) will begin to fade as economic woes spread.
At this point retail, manufacturing and other discretionaries (travel etc) will take a hit.

I suspect the commodities will remain relatively strong as the credit markets make it harder to bring new supply harder to find (fewer explorers) and bring online.

It is a bit dooms day, but I think the US Fed realises this sort of scenario is relatively likely. You're seeing measures to increase money supply without cutting rates as they realise rising inflation is also a very real threat.

I wouldn't like to be a central banker right now.

 

[tronic72]

Sure, but nowhere near that point yet.

The problem here is that every second show on TV is about renovating and reselling/letting. Consequently, people have been paying a premium for "fixer uppers". They've been getting away with it because while the reno proceeds, the market has moved on. The profit has come from a rising market, not so much the reno.

When fixer uppers are at a genuine discount it'll be worth doing, but I think we are a few crises away from that. Meanwhile, capital, and more importantly time, is better utilized elsewhere for mine.

War chest at the ready however.

I don't know about the the UK but in Australia the "fixer uppers" are all fixed. You are spot on though, too many people have paid premium prices for a dump with new curtain, polished floors and new paint with the Real Estate Agents happily claiming these homes to be renovated.

It's been shown for a long time now, that the three over priced real estate Markets have been the USA, UK & Australia. The UK I could understand and the USA to a lesser extent but the Australian market is currently a joke.

Seems most Aussies have short, short memories. My family lost everything in the 80's so I'm pretty sensitive too high rates. I'm the only person I know who's locked in their home loan which at $180,000 is pretty low (considering we've only been in the house for 4 years).

I think this Christmas is going to tip many, many owners over the edge. Credit card debt is already high, people spent more during the silly season, petrol prices are at all time highs, inflation is way to high and the government is virtually guaranteeing at least 2 more rate rises.

Have just taken some modest losses to take my money out of play. I think cash is suddenly going to become much more expensive.

My Uncle has been fond of the following saying;
"When everyone can afford and car, house (or two,three or four) and a holiday house the "true" value of those cars and houses suddenly becomes very low" Has anyone tried to sell a second-hand car lately??? What about venturing down to places like Venus Bay (holiday suburb in Victoria) where every second house is on the Market?

Bumpy times ahead.

 

[tronic72]

In the last approx 12 months rents have gone up by about 10pc on average, Interest rates have gone up about 20pc ..... I still cant see value in this yet ....

Cruncher,

Keep in mind that rental prices stayed pretty much the same for 10 years. My Missus loves to remind me that when she left for the UK at the end of the 80s rental prices for a small apartment in Richmond were the same after nearly 9 years in the late 90s.

Rental rates has and still have a lot of catching up to do.

 

[numbercruncher]

My Uncle has been fond of the following saying;
"When everyone can afford and car, house (or two,three or four) and a holiday house the "true" value of those cars and houses suddenly becomes very low" Has anyone tried to sell a second-hand car lately??? What about venturing down to places like Venus Bay (holiday suburb in Victoria) where every second house is on the Market?

Bumpy times ahead.

Ha , I visited Venus bay several times in the last year for a spot of fishing and beach combing, your right, its unbeleivable the amount of property on the market there, Literally Hundreds of holiday shacks and blocks on the market, you could get a block there for like 10k and less 6 years ago!

And cars as well, I bought a newy 12mnths ago, its resale is 10k down already!

 

[Tysonboss1]

Renting is such a flexible option atm, runs at 1/3rd the cost of Ownership, Brand new home, lovely view and if the Owner gets annoying, Just sack him and move into another nice new home, perfect relationship!

...

The reason renting is cheap is because you will never own the property,...

and as I have said before Owning a property gets cheaper every year as your repayments decrease with inflation, and the cost of renting increases.

and don't bring up interest rates,.... interest rates go up and down it balances out,....

and secondly if you are not a leveraged investor you are really shooting yourself in the foot,..... sensible borrowers maintaining sensible Loan to valuation ratios are the last to get hurt in a credit crunch.

 

[numbercruncher]

and secondly if you are not a leveraged investor you are really shooting yourself in the foot,..... sensible borrowers maintaining sensible Loan to valuation ratios are the last to get hurt in a credit crunch.

I would of thought cashed up folks would be the last to get hurt in a crunch, and the first to prosper ?

And if your a leveraged investor facing asset price deflation your really really shooting yourself in the foot, no ? Maybe we could run that question past our mates at Centros ?