New thread: house prices

[Euro-commuter]

There is something I don't get about house prices. If prices are pushed up, beyond the reach of many would-be buyers, in part by the large part of the housing stock that is now in the hands of buy-to-let landlords, then where do people live who can not affor to buy a house? Obviously for some the answer is on the street, or with the parents, but for most I would think the answer would have to be that they rent those BTL properties.

OK, how much do they pay in rent? If it is more than the mortgage repayments, why do they not just buy the house? If it is less than the mortgage repayments, why is the landlord holding on to the property? Perhaps because he expects to make a profit out of capital growth.

But how can the price of the house keep increasing to provide this "growth", if fewer and fewer people can afford to buy it? Unless of course the landlord intends to sell it to another BTL landlord; who will presumably pay a higher price for it.

But why will the new BTL buyer pay a higher price for it? Not for the rent. It must be that he too expects an increase in price that he can profit from later, even if he has to rent it at a net negative yield in the meantime.

So the rising prices depend on buying and selling among BTL landlords, who do not actualy have a need for this asset and do not make a profit directly from it. In what way is this not a speculative bubble?

[Bagpuss]

Simple, The banks won't lend the money to the low paid, the rents are now less than the mortgages, the perception of unlimited free money is attracting moron BTL landlords which further depresses the rents.

[sasguru]

Simple, The banks won't lend the money to the low paid, the rents are now less than the mortgages, the perception of unlimited free money is attracting moron BTL landlords which further depresses the rents.

About the only thing in that statement that makes any sense is the word "simple" which describes you nicely.

[King Cnvt]

This subject is too complex for the feeble IT mind. Stick to computers.

HTH

[pickle]

In what way is this not a speculative bubble?

In no way is it not a speculative bubble. A speculative bubble is what it is.

The new entrants fund the gains for those who got in earlier. Those who got in early and big, and have already gotten out (or are in the process of) will make big cash, at the expense of those who got in recently. Its a giant Ponzi scheme.

[King Cnvt]

I've said this before.

It is a speculative bubble. One that has run its course. If you have been in this for a good few years, sell up, make a big profit and stash the cash in a safe high interest place. Wait a few years and repeat.

Massive Kerrching.

A long term investment is just a short term investment gone wrong.

HTH

[tim123]

There is something I don't get about house prices. If prices are pushed up, beyond the reach of many would-be buyers, in part by the large part of the housing stock that is now in the hands of buy-to-let landlords, then where do people live who can not affor to buy a house? Obviously for some the answer is on the street, or with the parents, but for most I would think the answer would have to be that they rent those BTL properties.

OK, how much do they pay in rent? If it is more than the mortgage repayments, why do they not just buy the house? If it is less than the mortgage repayments, why is the landlord holding on to the property? Perhaps because he expects to make a profit out of capital growth.

But how can the price of the house keep increasing to provide this "growth", if fewer and fewer people can afford to buy it? Unless of course the landlord intends to sell it to another BTL landlord; who will presumably pay a higher price for it.

But why will the new BTL buyer pay a higher price for it? Not for the rent. It must be that he too expects an increase in price that he can profit from later, even if he has to rent it at a net negative yield in the meantime.

So the rising prices depend on buying and selling among BTL landlords, who do not actualy have a need for this asset and do not make a profit directly from it. In what way is this not a speculative bubble?

Yep, you have IMHO hit the nail square on the head.

9 months ago I cashed out my 200K flat and rented a similar property. I'm paying 780 per month and I'm saving the 1000 a year that I previously paid in maintenance charges.

This is giving the landlord a return of little over 3% on the value of the property (tghough I'm sure that he paid much less for it) and I am more or less paying the rent out of the interest on my saying not owing a 200K flat.

By keeping the property, he's gambling on the price going up even more and I'm gambling on it not.

tim

[Sockpuppet]

The only reason I wait for the months to tick over now is to see the pain on peoples faces when the Bank Of England slap another .25% on the rates.

Roll on August when the low fixed rates are coming to an end. I suspect that is when a lot of people will start to sell up.

[KentPhilip]

Your question would fit nicely into the forums of:

www.housepricecrash.co.uk

Those guys there spend all day and every day discussing house prices. One guy has over 10000 posts - all about the same subject. Its's amazing how they can do this and keep each posting unique text, I think.

In fact, just for a laugh, I'll put a link to this posting on that site. Expect 10 or 15 new non-IT contractors to register on ContractorUK.com to write their views...

[Troll]

Yep, you have IMHO hit the nail square on the head.

9 months ago I cashed out my 200K flat and rented a similar property. I'm paying 780 per month and I'm saving the 1000 a year that I previously paid in maintenance charges.

This is giving the landlord a return of little over 3% on the value of the property (tghough I'm sure that he paid much less for it) and I am more or less paying the rent out of the interest on my saying not owing a 200K flat.

By keeping the property, he's gambling on the price going up even more and I'm gambling on it not.

tim

What happens when he (& all the other landlords) raise the rents?