New build is worst buy-to-let investment, experts warn

[Euro-commuter]

Just another example of bullcrap - ok, it is over long term, but can you spend 10 days under water without air? Creditors are not exactly prepared to wait long term in case of you having a problem with cashflow - you will be bankrupted pretty quickly, so point of long term is really only valid if you have got serious cashflow or reserves that allow you to weather the storm - most people don't have that, so those few who do can be ignored as they are statistically insignificant number (sadly).

What on earth are you on about?

[AtW]

ok, lets say you bought a house when valuations were at peak values - like about now, interest rates started going up and valuations dropped big time: you got negative equity so that if you sell then you will still be in big debt. Over very long time the house may regain its value either as face value due to inflation or actually due to new yet another speculative cycle. Sounds good eh?

Well, what good is it for you to know that the house will be worth more some years ahead, when due to higher interest rates and negative equity you can't move house and you can't afford ever-raising morgage payments? This means you lose house and all this long term thinking starts applying to someone else, not you - that's the point they don't tell you - the house itself might be worth again years later, but you might not be owning it to benefit from recovery.

Understand now?

[Euro-commuter]

ok, lets say you bought a house when valuations were at peak values - like about now, interest rates started going up and valuations dropped big time: you got negative equity so that if you sell then you will still be in big debt. Over very long time the house may regain its value either as face value due to inflation or actually due to new yet another speculative cycle. Sounds good eh?

Well, what good is it for you to know that the house will be worth more some years ahead, when due to higher interest rates and negative equity you can't move house and you can't afford ever-raising morgage payments? This means you lose house and all this long term thinking starts applying to someone else, not you - that's the point they don't tell you - the house itself might be worth again years later, but you might not be owning it to benefit from recovery.

Understand now?

Yes, I understand now, thank you. you were speaking of some hypothetical people who cannot afford such an investment. Nothing at all to do with which investment is better for thos who can afford it.

Or as an earlier poster said much more concisely: with equities you get liquidity.

[AtW]

Thing is - lots of people on this forum are certainly not representative of the average Joe: lots of things won't apply to most here, but it is wrong to extrapolate this over everyone else - the economy depends on behavioral patterns of an Average Joe, not Average CUKer: most people on here probably have got cash reserves to weather the storm, but most people don't - and it is them who would define when the crash comes and how severe it is going to be.

Or as an earlier poster said much more concisely: with equities you get liquidity.

I think the difference is more fundamental than this - you buy house with morgage which means you are in debt, but you buy equities with cash - you not incurring debt to get them, unless you are a hard core gearing speculant in which case you'd get all you deserve for borrowing money to speculate on a stock market, which is a con, but that's another story.

[sasguru]

ok, lets say you bought a house when valuations were at peak values - like about now, interest rates started going up and valuations dropped big time: you got negative equity so that if you sell then you will still be in big debt. Over very long time the house may regain its value either as face value due to inflation or actually due to new yet another speculative cycle. Sounds good eh?

Well, what good is it for you to know that the house will be worth more some years ahead, when due to higher interest rates and negative equity you can't move house and you can't afford ever-raising morgage payments? This means you lose house and all this long term thinking starts applying to someone else, not you - that's the point they don't tell you - the house itself might be worth again years later, but you might not be owning it to benefit from recovery.

Understand now?

Thanks for pointing out the bleedin' obvious.

[AtW]

Unlike you and me Euro-commuter did not graduate from Eton.

[scooterscot]

Thing is - lots of people on this forum are certainly not representative of the average Joe: lots of things won't apply to most here, but it is wrong to extrapolate this over everyone else - the economy depends on behavioral patterns of an Average Joe, not Average CUKer: most people on here probably have got cash reserves to weather the storm, but most people don't - and it is them who would define when the crash comes and how severe it is going to be.

You know I had a real good feel for what you are saying 5 years ago, I was average joe. But now I'm thinking, was what I did so radical? I knew affordability would become a problem in the future so I sought about increasing my income. I suspect this is what the average Joe may try to do. There will always be lazy folks who choose not to for reasons of their own, security, the children, public service, all valid I'm sure, which the media will choose to pan their cameras on - but faces facts you can't be a nurse or a fireman and live in Chelsa, chillsae, chalsie, or however the heck you spell it. it.

[AtW]

Long term survival in bad times depends on reserves - when **** hits the fan and economy tanks then everyone will suffer: I'd prefer NOT to have this house pricing bubble because when it bursts almost everyone will bleed from ears.

The key problem with an Average Joe is lack of savings - this means they are simply not prepared for long term downturn in their fortunes, especially if they get negative equity which means they can't move to get new job elsewhere.

The outlook is pretty dire to be honest - there is house market bubble, commodities bubble, share bubble - probably only bubbly champagne is not yet overpriced. Come to think of it I keep one of those in my fridge just in case

[sasguru]

Keep your powder dry. Some of us are going to make a killing at the next downturn.
Seriously I reckon I'll be a millionaire (without working) at the end of the next upturn

[scooterscot]

I think the UK is all about micro markets, whatever that means, if you bought in London you’ll always sell at a profit same with any of the UK attractive cities. I’d be more worried for the house I’d bought that was built yesterday over some reclaimed landfill site, who wants that? Someone with no roof and little cash and needs the room pronto, that’s who. To pay top dollar for that kind of property at this time? Crumbs the materials would probably not make a quarter of the value it was built for, I’d rather take a job with the post office in the highlands.