Housing market: what's the latest?

[red devil]

Renting isn't a problem for flats either...

[MrBen]

I rent out my old 2 bed flat for a simple reason. I couldn't sell it at the price I wanted, and I could make a profit on renting in the meantime as long as interest rates stay at nowt. I've only had two changes in tenant and the last was swiftly handled by a private ad on this (great) forum and a two hour viewing period in which 3 suitable tenants turned up, all wanted it for ?1200 pcm, all with references etc in hand. I wasn't going to be a C$^%t and start a bidding war so just gave it to the first one that had turned up as that seemed fair.

There is a huge renting demand at the moment locally. Flats renting like hotcakes.

[Annette Curtain]

MrBen Wrote:

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> There is a huge renting demand at the moment

> locally. Flats renting like hotcakes.

What is this actually meant to mean Mr Ben.

2/10 3/10

[MrBen]

Imagine you had baked some hotcakes Annette. And then you wanted to rent them out...and...and...er.....*scratches head*.

Toss it into the "MrBen talking bollocks" bin. It's filling up fast. Despite recent valiant efforts from dear Mockers to catch me up.

I think you've been generous. Rescored as 1/10.

[MrBen]

Happy?

[new mother]

What yields do you reckon straightforward two bedders generate?

(by "straightforward", I mean central ED location, non basement, reasonable condition, prof tenants etc. I do not mean auction purchase, needs doing up style properties which obviously command a higher yield on the original price.)

Annette, you are very cruel.

[Annette Curtain]

new mother Wrote:

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What yields do you reckon straightforward two bedders generate?

(by "straightforward", I mean central ED location, non basement, reasonable condition, prof tenants etc. I do not mean auction purchase, needs doing up style properties which obviously command a higher yield on the original price.)

> Annette, you are very cruel.

I know I am but only where necessary.

Mr Ben needs it.

* files nails *

Nette:-S

[the carpet binder]

You can look on www.houseprices.co.uk you can check the actual sold price of any property going back a fair few years.

[DaveR]

I looked at the website for sales in ED in 2011

1/3 of all the sales recorded were in Landells Road

That seems odd - anybody have an explanation?

[ibilly99]

Bought this flat in Eastbourne for 15k and was on a graduate starting salary of ?8500 (yes really) so it cost about 2* my income - the price now is ?86k and graduate starting incomes (non finacial) maybe 22- 25 k so nearly 4* income - prices need to drop considerably for fair price (and first time buyers) to return.

[Huguenot]

You keep talking about the 'price' as if it's being set by some graduate hating Uberclass.

It's not, it's just what people are willing to pay. Houses prices don't fall in an abstract sense, it's just that there aren't people willing to pay.

[Mick Mac]

ibilly99 Wrote:

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> Bought this flat in Eastbourne for 15k and was on

> a graduate starting salary of ?8500 (yes really)

> so it cost about 2* my income - the price now is

> ?86k and graduate starting incomes (non finacial)

> maybe 22- 25 k so nearly 4* income - prices need

> to drop considerably for fair price (and first

> time buyers) to return.

You suggest two times salary is a fair price but four times is more appropriate to what people are willing to pay. And as buyers dictate what is a fair price (otherwise they don't have to make an offer) the four times must be a fair price and I'm not sure I see that changing.

[MrBen]

Yawns...

...But can't resist contributing...

The average SE22 3 bed terrace is now 600k odds. If you work on four times joint that requires a deposit of say 50k plus a combined household income of ?140,000. How many households have that income in reality? Prices still seem high to me.

[peterstorm1985]

MrBen Wrote:

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> The average SE22 3 bed terrace is now 600k odds.

> If you work on four times joint that requires a

> deposit of say 50k plus a combined household

> income of ?140,000. How many households have that

> income in reality? Prices still seem high to me.

But most people don't start with a 3 bed house (Do they?) They begin with a one/two bed flat and work their way up the ladder, so by the time they're on to a 3 bed house they're more likely to have ?200K equity/deposit and a combined household income of ?100K. And there are a heck of a lot of those in London.

[new mother]

Dave, a large house converted into various flats perhaps? Lots of different transactions?

Peter storm, agreed but many of those joint incomes will be hit by nanny costs or halved if one partner stays at home.... I can see how the 600k prices are "achieved" as the agents say, but not really how 900 plus Prices are arrived at for bigger houses. There are plenty of those in eg the village - where does the cash come from? Is everyone getting bonuses? I find it extraordinary....

[Mick Mac]

4 times one income is what I was referring to. If you bring in joint incomes you are assuming there will be.no time off for either party which is often unrealistic.

[tommy]

Residential property looks increasingly safe compared to the volatility in the financial markets.

[Townleygreen]

Residential property looks increasingly safe compared to the volatility in the financial markets.

What makes you think that?

If the economy stagnates or declines further, and unemployment soars, who do you think will be able to pay the current prices being asked?

There is every chance that house prices may well decline in the future. Perhaps massively. Don't be so complacent, tommy.

[Senor Chevalier]

Have to agree TG. The stage has been set and there must surely be more chance of prices going down than up now...? Only human inertia holding prices where they are as far as I can see and inflation is eroding real values.

Not sure there is anything that is a good safe bet right now. If you want to invest in something that will make a killing then I reckon you'd have to choose something like Libyan coastal property but it'd be quite a ballsy call.

[Saila]

For a ten year bet, either property or equities should work as they'll hopefully survive through inflationary times.

property is tough call as we're back to 2007 highs (or higher)

but the rental yield justifies current prices alone so you can forget about income multiples

the reason why london's property prices have maintained value is classic supply and demand. it's small example of what's going to happen worldwide over the next 50 yrs and why the states property market hasn't recovered. they dont have the same supply issues as we do.

ultimately London has a job market right now - the recession is mostly outside the M25 - this exacerbates the property supply and demand issue and will continue to do so over next 5 yrs or so.

the only reason why property feels like a 'safe bet' is cos it's returned in the past - this has no bearing to what it will return in the future

my personal bet is equities - the volatility makes it slightly scary - but investments like property and equities shouldn't be seen as 'short term'. ultimately if the sh1t hits the fan they'll just print more and more money. bodes well for real assets like property/equities/gold

interest rates aren't going up anytime soon

my money's on listed small uk companies (w/out currency risk) with investment overseas (emerging markets) but not property at these levels, despite all the positives, equities feel much better value and similar yields

[Mick Mac]

By my calculations (and a very small survey) east dulwich properties are yielding about 4.5%. I'm not sure equities can match that?.

[indiepanda]

For most of us who can only afford one house, surely the issue isn't solely about how reliable the return is from buying a house, but whether we enjoy owning our home.

I bought earlier this year. I know in the short term I might lose money, but I intend to stay here for many years, and whilst I know it might be cheaper renting, I wanted the freedom to decorate how I wanted and the comfort of knowing that when things go wrong I can get them fixed promptly rather than having to beg and plead with a miserly landlady to do work that should have been done years ago.

Putting money in the stock market just doesn't give me the same thrill as having my own home even if I might make more money.

[MrBen]

peterstorm1985 Wrote:

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> MrBen Wrote:

> --------------------------------------------------

> -----

> > The average SE22 3 bed terrace is now 600k

> odds.

> > If you work on four times joint that requires a

> > deposit of say 50k plus a combined household

> > income of ?140,000. How many households have

> that

> > income in reality? Prices still seem high to

> me.

> But most people don't start with a 3 bed house (Do

> they?) They begin with a one/two bed flat and work

> their way up the ladder, so by the time they're on

> to a 3 bed house they're more likely to have ?200K

> equity/deposit and a combined household income of

> ?100K. And there are a heck of a lot of those in

> London.

That's the textbook theory... but the reality is that anyone with 100-200k equity on an ED flat would have had to be holding it since 2001 odds and would have wanted a house by now (if starting a family). If moving from say, a Clapham flat to an ED house then it's more likely. You're also assuming that man with equity in flat can (a) sell it and (b) get a decent price to realise that equity. And flats are not selling well if at all, without significant price cuts.

"We're still at 2007 prices".

Not across the board. Some are less (e.g. flats) and some streets are significantly higher (good road, good houses). Even then, the 2007 argument doesn't hold as a good indicator. This was 5 years ago and we've since had half a decade of stagnation. If you look at compound inflation over that period that's around a 14% reduction on 2007 prices in real terms, and that's before any actual price falls.

Another 3-5 years of high inflation and 2007 prices, whilst showing a peak, will start to look average

"Equities are a better bet now"

Remember those Sunday times graphs in the boom that showed how property "outperformed" stocks in the past 50 years? They all made sense if you included the recent boom years but didn't amount to much if you didn't. In terms of absolute return, equities may at this point, offer better value. But that negates leverage. Property is still the most accessible leveraged investment to the man on the street. A 30k deposit on a 300k flat that then appreciates capital at 10% say, on sale, gives a 100% return on invested capital. And try getting a bank to lend you ?300k to invest in equities at the moment......

[Jeremy]

Don't invest in equities, unless you really know your stuff. Look at the FSTE/DAX/S&P charts over the last 10 years... there's no real growth there, only cyclical movements.

Although I am by no means suggesting that you should put your money into property either - especially if you are expecting good appreciation.

[Mick Mac]

The mattress perhaps Jeremy?