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  • Property-a-holics

    Housing market - what is REALLY going on?



    This morning I put the search "housing market" into google to see what would come up.

    Below is a screenshot of the results.  For anyone considering entering the sector it must be very confusing. When someone is confused, they tend not to act.



    From an investor/landlord perspective, this once again highlights why the focus must always be on net cash flow, not capital growth.

    There is so much uncertainty in the property sector that I believe both investors and owner occupiers may delay decisions about buying.  Indeed, people who have the means to buy, may well decide to rent until they feel comfortable with the market to buy!

    Having said that, the above headlines and metrics are generalisations and "averages" and we know that these should be taken with a pinch of salt.  However, it is what the regular consumer sees and believes when they read it over their cornflakes each morning. 

    Those more engaged with the property market know there will be areas of the UK that are robust, and landlords need to seek them out. Those who become experts at due diligence and research will still be able to find opportunity.

    Anatomy of a property hotspot - 12 indicators

    5 factors indicating capital growth potential

    Interestingly, one of the other results on google was that Topps Tiles are struggling.

    "The reality is we need people to feel confident investing in their homes," said Matt Williams, the boss of Topps Tiles. "And we are lacking that confidence. I think the big jump down in confidence was around the Brexit decision, and it hasn't changed much since then."

    The tile-maker reported a 2.3pc drop in like-for-like sales, a key growth metric used by the industry, in the third quarter of its financial year.

    Landlords spend a huge amount of money in such stores as B and Q, Homebase, Howdens, Wickes etc.

    As landlords exit the market or stop growing their portfolios due to all the challenges in the market, I can see these businesses suffering.

    It is all unfolding very gradually and there is a lot of pain to come because of Government intervention in the PRS.

    It is so confusing that Government is trying to deter landlords from the sector, but them asking them to commit to longer tenancies. Does not compute to me.

    There is no joined up thinking or policy and that will have a huge negative impact on the wider housing market and businesses that rely on it.  It has only just begun.  I fear a lot more confusion and pain to come.

    Here is the view of property market analyst, Kate Faulkner:


    In the video, Kate shares some interesting insights into the property market and what is likely to happen in the future.

    SEE ALSO  -    Aspects of property investment that remain constant, despite market conditions

    UP NEXT -       12 of the biggest property questions - answered      

    DON'T MISS -   Where next for house prices?

    NOW WATCH:


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    Landlords spend a huge amount of money in such stores as B and Q, Homebase, Howdens, Wickes etc.

    The like of the above have never shown our sector support which to say is a disappointment

    The Property Market is so important to the UK if BTL is 20% that's a huge slice which may not be using the above companies

    what comes round goes round

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    Learn Change and Adapt ?????


    I discovered Howdens now have a trade card which entitles you to 10% off. I went there on the off chance yesterday and got a 15% discount which was great!

    Let's look at the reality - how many people change their tiles (Topps Tiles) like they change other aspects of their homes? It's a company on the way out, as LL's can buy square white wall tiles anywhere for pennies ;->

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    The likes of B&Q, carpet shops, kitchens, bathrooms etc are dependent on owner occupiers moving, it is on new home purchases that the large money is spent on refitting to own likes, if their sales are falling I expect it is a sign of people not moving rather than a reduction in landlords.

    When there are confusing signals on the state of the market it normally means that the market is at a peak or at the bottom and is about to change directions.

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    Uncertainty is a big concern, and I see it as is one of the main reasons for the market stagnation.

    I am in a position to buy my next project (or possibly buy a main project and also a cheap holiday cottage), but am planning to avoid buying until at least early next year. This gives me time to see what is happening with price trends, sales from S24, etc.

    Buying a cheap holiday cottage this year would be very convienient for me but the 3% SDLT on 2nd properties means I need to buy my main property (std SDLT) before I buy a cheap cottage (at SDLT +3%), Buying a cheap project first would result in having to pay 3% on the more expensive property..

    For info, Homebase were sold to a restructuring company last month for £1 - more at https://www.bbc.co.uk/news/uk-england-be...s-44647437

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    I was a bit disappointed with Kates presentation

    Kate says she will only analyse the  prices since 2005

    She does this to consciously  to ignore  the good growth from 2000- 2005

    At least she is honest but why would one want to do that

    She says that skewers the figures . Yes but that is precisely what very good or very bad years do

    But by looking at all figures that gives you a true picture not an artificially distorted one like the one she presents

    She surely must have heard of the 18 yr property cycle.

    Whether one agrees with that supposition or not it if you are looking at the `real` picture it  should really form part of a balanced presentation

    She says you will be in it for maybe 30 - 40 years . I agree . So why focus on just a snapshot of 13 yrs of figs

    It will naturally distort the overall picture

    It would be like me ignoring  years 2007 - 2012 simply because that was a period when prices went down 25% in some areas

    She is happy to include those though in her anaylsis

    They surely  skewer it in another direction

    I want to look at the picture  for every year of the past 50 years  to make a valued judgement going forward in 2018

    To not do so is  just as misleading as a `guru` saying they double every 10 years

    The fact is in some 10 years period in history they do double and in some 10 year periods they don`t

    An unbias presentation with no agenda would present surely  the good and the bad years of historic growth

    The years 2000 - 2005 are as vital as any other

    I dont get why she chose to airbrush those from history

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    Jonathan Clarke. http://www.buytoletmk.com

    Maybe because excessive growth during that period was largely down to massive fraud within the global banking system.

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    Rachel 

    "Change is a prerequisite to longterm survival".

    The establishment is rigged so that the rich stay very rich, and the poor get poorer.

    In my opinion we are at the begining of a two tier housing market. Investors Vs Joe public

    So looking at market conditions is not giving true reflection.

    A design to keep investors, speculators and landlords - artificially ringfenced and at worst some form responsibility taxation falling on broadest shoulders.

    Those who have profited the most, pay for others to have dreams of home ownership.( Direct and and indirect disguised taxation )

    I speculate

    A type of rent to buy will be next big mooted election promise - landlord forced to provide discount for length of stay. 

    why two tier - we are seeing intial clues.

    Only be able to sell with tenant in situ - a slight devaluation with occur as investor who buys will want discount.

    Or forced incorporation through incentives - again ringfencing.

    The normal property ladder and aspirations will continue but we will not able to sell into it, in future. That choice will be eroded away. Longer tenancy is just the start.

    I would encourage everyone to re-evaluate individual exit strategy -

    You may find the pool of options of being limited in the next 5 years.

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    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 


    Not being able to sell into an open market will have severe repercussions for property values.

    Therefore LL need to consider moving away from BTL.

    Adopting the lodger strategy will mean the same net income could be achieved from just a few properties which could be sold into the open market anytime required.

    So for many LL reducing say 10 BTL properties to say 2 main residences taking in lodgers might make more financial sense.

    CG is all very well but if your asset as a BTL is not permitted to be sold in the open market CG it a moot point.

    It will be artificially restricted and that causes a problem for lenders.

    You could be looking at a situation of values where there was a regulated tenancy from the days of yore!

    I intend never to have a standard BTL property.

    I will use the lodger strategy if I can afford a PPR and and main residence.

    Having sold 5 BTL properties in the next 3 years I hope to be able to buy at least a PPR and if things went really well...................................which I doubt I would buy another main residence.

    Using the lodger strategy for both.

    It would also stop any Rent to Buy possibility.

    If LL want to ensure they retain maximum property value it could be that BTL has had its day.

    It would obviously be an affront to the market economy but ideology could force such changes.

    One hopes that what you have suggested may never come to pass.

    But so hated are the small LL class then it makes you think about how an exit plan might work.

    LL only bother being in the game as they and lenders currently know the BTL assets may be sold into an open market.

    Remove that possibility and leveraged BTL is dead!!

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    My view is that for long term view for capital growth should be that is in line with inflation.

    This is probably the worst case scenario over a long period( say 30 years) when you consider rising popularions, lack of homes being built.

    At 2% a year over 30 years, 100k becomes 181k.

    75k loan goes from 75% ltv to 40% ltv.

    If looked at as a ROI calculation. 25k turns into 106k so 424% return.

    Not a bad worst case scenario.



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    The Past is pie in the sky

    I know I invest for Cashflow and long term Capital Growth

    I can see both happening in the NE and that's all I care about to be honest

    The Huddles I see Is only the Govt Pricking my bubble  with more taxation and regulation

    The principles of Bricks and Mortar are as good today as it was 50 years ago

     


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    Learn Change and Adapt ?????