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Thread: UK property market

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    UK property market

    I'm thinking of buying a property as an investment in the UK. Cash deposits are earning less than the rate of inflation whereas property will easily yield 5% and more.

    It is definitely a buyers market at the moment, but many owners either cannot or will not drop their prices. The ratio of earningsroperty prices is around 1:5 which is still above the long term average, which suggests that there will not be much room for an increase in prices. Interest rates are at a historical low and when they increase they may have a downward effect on prices.

    Just wondering if anyone else had any thoughts on the likely future move of property prices in the UK market.

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    Funny, I've been thinking very much the same. I'm not anyone's idea of an expert though, so bear that in mind

    Where we are, North West England, property prices are quite depressed and the rental market is holding up well. I can't imagine any further drops in property prices so I'm persuaded that now is the time to get into buy-to-let again. My mortgage guy / pal can get me 75% LTV at around 3.5% at the moment. The return on that is going to be 9% until interest rates start to climb. At those sorts of rates there is a lot of room for interest rate rises until you need to be worried.

    I can get 3 properties here for an initial investment of 45-50k, they will return somthing in the order of 11k P/A until things change. Even when things do change they will still return decent money. I can't see anything else that is worth putting money into just now.

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    Steve, is the 45-50k just 25% of the property value, i.e. the mortgages being the other 135-150k. That would mean 11k return on assets worth say 200kwhich is 5.5 %, bang on the figures I am coming up with in North wales. I'm doing cash only, so your situation with a mortgage is different to mine.

    I'm not convinced we have seen the bottom in the market prices just yet. They are coming down from a massive, unrealistic high and have only fallen around 10% (for the whole of England and Wales). IMO further falls could be possible. However the falls in your and my area are greater than 10%

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    Prices here are down by more like 40% in the places I'm looking, I just can't see them coming down any more. We are seeing 3 bed semis that will bring in 500-550 a month for 60k, 2 bed semis are 50-55k.

    They may fall some more but not much, more likely they will be difficult to sell if you need to get out. This is something I am looking at as a long term idea, short term it's probably dangerous if you are going to need your money back anytime soon.

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    Quote Originally Posted by Steve@thaib View Post
    Prices here are down by more like 40% in the places I'm looking, I just can't see them coming down any more. We are seeing 3 bed semis that will bring in 500-550 a month for 60k, 2 bed semis are 50-55k.

    They may fall some more but not much, more likely they will be difficult to sell if you need to get out. This is something I am looking at as a long term idea, short term it's probably dangerous if you are going to need your money back anytime soon.
    Where the hell do you live Afghanistan? Lucky to get a 1 bedroom flat for that price anywhere local to me. If i get could get a 3 bed semi for 60k i'd be all over it.

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    It's the same siyuation in most of Europe. I live in Denmark, and we have seen a 20-30% drop in prices. To me it looks like now is the time to buy. We have already seen small increases in value on appartments ( they are always the first to move ) and I have started buying property in my local region ( stick to places you know!!!). For me it's a matter of placing capital, so mortgage rates are not an issue. Over the last couple of years I have benn getting the same figures you are talking about, 5.5%-6.5% witch is more than double of anything but the uncertain stock market. In short: go for it.

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    Quote Originally Posted by NOM1S View Post
    Where the hell do you live Afghanistan? Lucky to get a 1 bedroom flat for that price anywhere local to me. If i get could get a 3 bed semi for 60k i'd be all over it.
    IUDs are not here yet, but parts of it are pretty bleak

    I'm looking at parts of Fleetwood, ex-council houses and relatively poor areas. I have a pal that owns an estate agents and manages a lot of property in the area. We can get 3 bed semis for that kind of money but you might not want to live there.
    Last edited by Steve@thaib; 12th May 2013 at 00:54.

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    Quote Originally Posted by Sirgezza View Post
    Steve, is the 45-50k just 25% of the property value, i.e. the mortgages being the other 135-150k. That would mean 11k return on assets worth say 200kwhich is 5.5 %, bang on the figures I am coming up with in North wales. I'm doing cash only, so your situation with a mortgage is different to mine.

    I'm not convinced we have seen the bottom in the market prices just yet. They are coming down from a massive, unrealistic high and have only fallen around 10% (for the whole of England and Wales). IMO further falls could be possible. However the falls in your and my area are greater than 10%
    The 45-50k is deposits, that's where I'm at cash wise. It will be either buy one for cash or take a bit of a punt on the interest rates staying fairly low over the next couple of years and put 25% deposits down on three.

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    Quote Originally Posted by NOM1S View Post
    Where the hell do you live Afghanistan? Lucky to get a 1 bedroom flat for that price anywhere local to me. If i get could get a 3 bed semi for 60k i'd be all over it.
    Same situation around my area of Poole/Bournemouth. Rock bottom price for a 1 bed flat would be around 85k if you are lucky. 50K wouldn't get you a beach hut on the seafront! Massive differences in prices depending on your location.
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    Not so bad 65 m2 with one bed would be about 250 k pound where i live ,its out of proposjons


    Bought mine in 94 for 70 k and thats only 67 m2

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    Quote Originally Posted by Steve@thaib View Post
    Prices here are down by more like 40% in the places I'm looking, I just can't see them coming down any more. We are seeing 3 bed semis that will bring in 500-550 a month for 60k, 2 bed semis are 50-55k.

    They may fall some more but not much, more likely they will be difficult to sell if you need to get out. This is something I am looking at as a long term idea, short term it's probably dangerous if you are going to need your money back anytime soon.
    Christ, that is a good rate of return. I can get a 3 bed semi for around 100k and rent of 525 PCM. The longer term you intend doing it, the better chance you have of a selling profit on top of the good yield in the meantime.

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    Quote Originally Posted by Sirgezza View Post
    Christ, that is a good rate of return. I can get a 3 bed semi for around 100k and rent of 525 PCM. The longer term you intend doing it, the better chance you have of a selling profit on top of the good yield in the meantime.
    I'm thinking pension more than anything else. I'm not convinced that our state pension will be worth a light by the time it comes round and I can't see a better way of putting the bit of cash I have to work.

    We are in a relatively poor area though and there is a lot of privately rented property so the systems are all in place. It's a lot of housing benefit and the rents are very healthy given what we are paying for the property.

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    Quote Originally Posted by Petter View Post
    Not so bad 65 m2 with one bed would be about 250 k pound where i live ,its out of proposjons


    Bought mine in 94 for 70 k and thats only 67 m2
    I could not afford to live where you live. I do ok here but 250k for a home is too rich for me. That kind of money would buy a 4 bed detached with a double garage here.

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    Quote Originally Posted by Steve@thaib View Post
    I'm thinking pension more than anything else. I'm not convinced that our state pension will be worth a light by the time it comes round and I can't see a better way of putting the bit of cash I have to work.

    We are in a relatively poor area though and there is a lot of privately rented property so the systems are all in place. It's a lot of housing benefit and the rents are very healthy given what we are paying for the property.
    Good thinking. Can you put the houses in to a SIPP? I think there would be a tax advantage. I seem to remember something several years ago the government were talking about letting people use property investment as a tool for a pension.

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    Quote Originally Posted by Sirgezza View Post
    Good thinking. Can you put the houses in to a SIPP? I think there would be a tax advantage. I seem to remember something several years ago the government were talking about letting people use property investment as a tool for a pension.
    Current advice is to get up to 3 and then take a view, that's from the accountant and the estate agent. Once it gets bigger than that it may need a different setup. I have a small limited comapny now that is very tax efficient and that will most likely be the way forward, nothing set in stone though.

    I guess the answer to your original question is that parts of the UK property market are ripe and it might be a smart place to put your money. I might be fortunate in living in one of the more deprived areas of the country, although my part of it is quite nice, and the numbers stack up quite well here. It's all a gamble though isn't it?

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    Quote Originally Posted by Steve@thaib View Post
    I'm thinking pension more than anything else. I'm not convinced that our state pension will be worth a light by the time it comes round and I can't see a better way of putting the bit of cash I have to work.

    We are in a relatively poor area though and there is a lot of privately rented property so the systems are all in place. It's a lot of housing benefit and the rents are very healthy given what we are paying for the property.
    but in an area like that, don't you worry about bad tenants?
    my area in Boston is not that well off either
    i could buy a 3 family home for 350kusd, and get about 3kusd rent a month from it but i would run into late payments and all sort of crap like that from who would be my tenants

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    Quote Originally Posted by marc26 View Post
    but in an area like that, don't you worry about bad tenants?
    my area in Boston is not that well off either
    i could buy a 3 family home for 350kusd, and get about 3kusd rent a month from it but i would run into late payments and all sort of crap like that from who would be my tenants
    You do yes, and that's why I backed out of buy to let the last time I did it. It seems like the structure is there to make it work now though and I'm fairly convinced. Most of the rent is going to come from benefit payments in that type of property. The people in those places don't have a huge amount of options so they can't really pick and choose, they can't move far geographically and if they don't pay their rent they will struggle to find anywhere else.

    If you keep your properties well mainatained there will be a queue for them here and people will want to keep them. There are some awful landlords keeping awful properties and some awful tenants that have little choice but to live in those properties. It is a bit of a vicious circle but you can do ok if you are picky with your tenants and manage your properties properly. I think.

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    Quote Originally Posted by Steve@thaib View Post
    Prices here are down by more like 40% in the places I'm looking, I just can't see them coming down any more. We are seeing 3 bed semis that will bring in 500-550 a month for 60k, 2 bed semis are 50-55k.
    WOW.. My old fella pays 1000 per month on a place now asking 220k down from 400k.

    I think theres room for more falls but the froth is out and timing the bottom always tough.

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    I think the UK will follow the US whos property market has already turned up for over 18 months now - so expect modest upside to UK house prices, probably skewed to London and the South East, but even nationwide do not expect further declines.

    Even more certian is that interest rates are not going up any time soon - the market is now pricing in no rate rise by the ECB until at least 2015, so very unlikely the BoE will raise rates with the economy sputtering along at near stagflationary levels.
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    Quote Originally Posted by LivinLOS View Post
    WOW.. My old fella pays 1000 per month on a place now asking 220k down from 400k.

    I think theres room for more falls but the froth is out and timing the bottom always tough.
    That private rental sector seems tough. People trying to sell houses and can't often rent them out to try and cover the mortgage and it's quite the buyers market, if you are paying your own rent you get a lot of bang for your buck.

    Bottom end stuff is very different.

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