The crisis was caused by irresponsible sub prime lending packaged as AAA by dodgy investment vehicles.

There is always a risk associated with an investment, just with housing you think this not should exist or the government should absorb it all (taxpayer). Housing is seen as a national magic money tree which should be risk free. An elevator to a wealthy heaven for all.

 

The whole world has borrowed trillions and trillions to bail the banks out, what do you think would happen if interest rates rose that much making people loose even more properties due to high costs? how much would the world have to borrow then to get us in the same crap we are now?

 

Bad sub prime lending in the US?

 

*lose <cough

 

Previously near Truro, Cornwall, now Polzeath (also Cornwall!). Maybe we've got a bit lucky. You can't buy ANYTHING here for £70k, not even the tiniest flat. In fact it would probably not even buy you a shed. £250k might get you a pokey two bed with no garden. Buying here is a bit odd TBH.

 

Even though we are congratulating ourselves on the new 'boom", we haven't had any economic rebalancing, and will end up the same place we were pre financial crisis which is an inflated property market and an economy built on ever rising house prices, just now with the tax payer explicitly and implicitly underwriting a lot of it. High housing costs are ultimately a drag on an economy IMHO, it's not good.

Anyway, I suppose like you I am little despondent. Earliest I could really have stretched to buy a house in was in 2006 though, but it was not buying right after the crisis that was my mistake. I was prudent to save and got hit with a double whammy, as my savings increased, interest rates went down and housing went up in cost. I never wanted to buy a house with loads of leverage anyway, mostly with savings. I think that is still my aim. I'll keep saving for now. Still we have a new state underwritten property bubble in the making which could last for as long as the state can borrow cheap money. It's pretty depressing and makes me ask why I slaved so hard to save.

 

Your (and my) time will come - mark my words.

 

Forget saving, get on the ladder or you'll miss out on the forthcoming credit housing boom

 

Take away the stimulus spending and the only thing left is belief, but if enough people believe it then it hasn't been true lol








*I'm just waiting in the wings to collect properties when interest rates get shoved up 6 percent

 

The sensible people will all be on long term fixed rates by then

 

Could be years away though with the state underwriting it all. Property price 'resets' have been very painful in places like Spain, and ours could be worse if it comes with a sovereign debt crisis attached.

Back to find a canal boat to live on...

 

Hence why I'm fairly happy with the lack of new houses being built!

 

They cost though too.

 

More specifically you have fairly flat incomes and lots of low paid jobs being created such as zero hours contract jobs.

 

Out of interest I work with someone who used to live in Spain as an expat and you can buy awesome villas with swimming pools on decent sized blocks in say the costa blanca for less than 250k GBP it's insane! I can barely buy a budget terrace near me for that. Plus expats don't have to pay income tax.

 

The writing is now on the wall.

Anybody who holds cash as an 'investment' or for a return is screwed (for the next few years)

Anybody who continues to do so deserves everything they get ie an erosion of the value of their cash pile. You can't just expect to be paid for for parking your money in an account at zero risk. Do something with the money or you'll slowly lose it.

 

What happens to liquidity though

Say everyone takes every penny out tomorrow

 

When property crashes again in five years, at least you'll have property

Even if you've nothing to eat, an englishmans home is his castle an all that

 

What complete rubbish.

Cash is king and always has been. We're losing far less than a mortgaged up chancer and we simply replace it with more using the business. Which makes far more than an extra percent "invested shrewdly."

Of course with your job you don't need to worry about the economy or business climate; just spend away like most of the doctors I know. I can't believe how many have almost nothing left after pay day; I'd sooner take financial advise from a gambling addict than a doctor ;-)

 

I've only just realised who Stevebt actually is

 

Is Ding a doctor?

 

Cash is king only when you spending it, certainly not when you invest in a savings account in this economic climate. With gross interest on savings at 3% at best, your returns on cash investments is severely eroded with inflation running 2.9% and that is even before taking tax off any gains from interest.

Property on the other hand is rising 4.6% year on year and interest rates on mortgages are low with some as low as 1.5% and the base rate is not set to rise from 0.5% for another 3 years. As to a "mortgaged up chancer", at least the money they put into it is going on generally an appreciating asset, where as renters are putting money in someone else's asset. At the end of a mortgage at least you own a home, at the end of a tenancy agreement, you have nothing.

 

yep, but that is because very few people buy with a mortgage in Rock/Polzeath

and recent figures have shown that a large proportion of the money the banks are being given, at almost 0%, is being lent out as mortgages at 4% -- not the rather tricky "business loan" business

money for old rope

 

It will be interesting to get some thoughts on how to plot further strategy for the next phase once interest rates climb in say 4 or 5 years time. I am thinking that with the low rates I should get borrowing cleared, but it will then be whether to liquidate to cash to pounce for the correction. I don't have enough info yet.

 

Matteeboy, aside from the positions taken in this thread, I am genuinely interested in why now, with these policies, our currency is King? What timescale are you thinking over? I tend to change my position ever 5-8 years, but I don't have dependants to consider except a cat, and she can catch mice if hungry. As I get older and assets build, even though I am more indebted than ever, I remain what I think is conservative and risk averse.

 

Yep that kind of timescale.
We've looked at various investments (one still very much alive) and they are all business related, not home based. We just believe in using out business to "invest" while keeping our savings "safe" in the bank; our ISAs are actually getting good interest, the rest is naff all. Yes in real terms that an erosion of savings but rather than trying to be smart ***** by spending endless hours fretting about property, we sink our efforts into a much better way of making money.

Yep we've "missed" out on a couple of "booms" but it mostly evens out in the end and being flexible allows us to move when needed.

If something comes up (looked at plots of land, self builds, etc) we will buy it but we simply will not join for the standard property "ladder" paying stupid prices dreamed up by estate agents.

It may pay off in the end, it might not but in the meantime we are bypassing the "ladder," paying no interest to anyone and living in some very nice houses. And doing NO DIY; woo hoo!

 

I wouldn't miss the DIY. Trouble I see with plots is that if they have planning or are likely to get it then they are priced such that on completing a house on them it would cost at least as much as just buying an existing house.

 

The trick is to get somewhere with no planning that might get it then sit on it. A mate has just tripled his money doing this.

 

This is why car lots exist as far as I can see, they're sitting there till change use

 

John

Just curious, as you are going to leave everything to your cat why are you trying to amass so much asset? No point in being the richest man in the graveyard as they say

I have 3 kids so my assets will hopefully be put to good use when I'm gone.

Shaun