Zak64

If a lot of 'Buy to Let' property owners suddenly start dumping property the housing market could stall. There will be winners and losers: negative equity losers, sudden affordability for first time buyer winners. I don't see a late 1980s style crash, as there is still a lot of pent up demand, IMO. But certainly round here, Bournemouth, property prices have got silly, so maybe a bit of stagnation or a slight correction would actually be a good thing.

Too many people in this country suffer from the ridiculous idea (hallucination?) that we as a country can have perma-prosperity by endlessly selling houses to each other at ever increasing prices.

Perhaps such deluded individuals need to have their bubbles burst!

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eublues

The level of immigration has been a big factor keeping it going.

Mikeuk

So they keep telling us.

I agree that a lot of people have got involved in buy-to-let who haven't the faintest idea what they're doing, but unless they really are losing money hand over fist most landlords are likely to hang on.

The likelihood of vast numbers of buy-to-let properties coming on the market simultaneously strikes me as fairly unlikely at the moment. Anyway, even if this were to happen tending to drive prices marginally down, Owner-occupiers would then withhold their own properties rather than accept disappointing prices and this would tend to drive prices up again.

eublues

If immigration stalled (unlikely I admit) the situation would go drastic. Already rents do not cover typical interest and other costs for landlords, and properties can be empty for months.

Mikeuk

That might be the case in London but it certainly is not the case here.

Mind you, my rents have grown hardly at all in recent years, but only a few of my investment properties have mortgages on them.

One is with Mortgage Express. Every few weeks I receive from them a 'buy-to-let' magazine (which goes straight into the bin) with some deformed-looking freak on the front cover and a caption on the lines of 'I was an unmarried mother on skid row. Now I own a property portfolio worth £5m'.

That, of course, is exactly the kind of dangerous bullsh*t that should be discouraged,.

brian pearson

Fifteen percent down in the next six months is my bet. The more the better imo !

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C_steam

Crash my ****. A re-adjustment is coming, that's all. 10% over 18 months.

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brian pearson

Readjustment ? You've been listening to the estate agents too much. Or all the other agencies with a vested interest in this madness.

brian pearson

Just watched Newsnight that headlined with the latest house price reductions. They soon went off the subject and talked about the wider economy. Didn't seem to attribute the so called economic miracle we all think we are in on consumer debt. The biggest chunk which is huge mortgages on overpriced houses. Sarah Beeny has a lot to answer for.

Some big corrections to come !

Aardvark

Buy to let might be supported by immigration, but most migrants are at the bottom end of the food chain and are remitting much of their salaries home to buy in their own countries. Few migrants on minimum wage will be buying anything at today's prices.

A reversal of migration would lead to a slackening of the buy to let market - most EU migrants are temporary and the current numbers represent a 'churn' of people arriving, earning the requisite amount and going. They are succeeded by similar types of people doing the same. Many will settle long-term, but most east Europeans I have encountered are working to a finite timescale and will leave. The numbers will reduce markedly should France, Germany etc allow them in. That could affect the market.

Current prices are only sustainable by people remortgaging and moving up. Wage levels in this country do not link to current house prices in any way whatsoever. Most new mortgagees are overstretched and will not be able to move if prices stabilise since the increase in equity is used to pay stamp duty and fees. People on 5 x multiples are not saving cash to pay for the next move.

Does anybody really believe that a 0.25% cut in interest rates will cause a pick up in prices? Northern Rock will not be cutting the interest rates to their mortgagees as they would effectively be funding the reduction from taxpayers' money.

Mike, have you factored NR into your calculations. It's a long time since such a major bank went bust, but bust it is and something will give in the New Year. Darling will do his best to fend off a collapse of confidence, but that is what could well happen. At that stage, with banks trying to balance their books with the collapse of the US market and their high risk 'investments' coming home to roost there could be a complete seizure across the markets.

When banks talk of 'writing off' the investments this is not an opportunity for them to shrug their shoulders and walk away. They will reduce interest paid to investors and increase interest rates to borrowers in order to recoup the money to pay their shareholders. They will also reduce their exposure by dumping high risk properties onto the market. It won't be a flood, but there will be a lot of commercial property available for the next couple of years and costs will be reasonable. The terms available to potential buyers will be stricter and already, in the last 2 months, 90% of sub-prime buy-to-let arrangements have ceased to be made available.

I don't think today is the day to invest in property.

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"I do not wish to form my opinions by thoughtlessly quoting others; I wish others to support their opinions by sensibly quoting me." Paul Wesson (Aardvark) 13th April 2008