UK Landlord Forum / Life

Reading this in the times today and thought i would find a link for ya, seems the price of property has/is rising risen 3 fold in recent times compared to what we earn. Take a look interesting read people.


Badger

http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article2388503.ece

I think that's a good article ... the kind of article that makes me want to flog my flat and put all my money in the stock market instead (or maybe some nice east asian stocks - HSBC has just bought a stake a Korean bank, could be a good bet). As said elsewhere, in the case of your own home its not such an issue - as long as monthly mortgage - rent (alternative) = less than the return you'd get elsewhere. Or if your buy-to-let will continue to turn a profit in your worst case scenario then you're on solid ground.

It is affordability that determines house price growth, but with the facts presented as they are in this article its difficult to see how much further house prices have to go. If growth over the last few years has excelled in big ticket properties (all those private equity specialists) perhaps the next growth area will be FTB and three bed family homes as the government clamours to reset the balance, improve social mobility and reduce the wealth gap.

There's some interesting comments on there too. I liked this one:

What's the problem? If housing is overpriced, don't buy it! If its cheaper to rent JUST RENT. Invest the difference in the stock market where the long term historical growth rate is significantly higher than property anyway. It means that you have to manage your own money, but it also makes you financially independent. The persistent dual complaint of first time buyers: "housing is overpriced / I want to buy" is moronic. If it's overpriced you don't want to buy, or at least you shouldn't if you have any sense!

I have several thoughts about this; part of me agrees with him - if it doesn't make financial sense to buy then just don't, but I "just didn't" for several years and probably missed out on three good years of equity growth as a result of all those "moronic" first time buyers who didn't see it that way. That's without the fact that the further you are down the property ladder, the quicker the price of those family homes is accelerating away from you (assuming consistent rate of market growth across all price tickets)