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  • Property Prices

    Property prices double every ten years - will we see this again?

    Hi All,

    Having only been invested in the property industry for the last 4 years, I'm struggling to get my head round the fact that property prices double every year! Will my current residential property double to £800k in circa 10 years time, will my investment flat double to £210k in the same time period? I just can't see it!

    I'd be interested in hearing the thoughts of people who have monitored the property industry for longer than I have, and have seen it all happen before.

    Cheers
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    In my area of Yorkshire the 10 yr cycle is well and truly busted.

    I've been monitoring 2 bed terraces in my area and some at around £120k have been on the market for over a year. The ones that do sell go for around £95-£105k.

    Recently I looked at the previous selling prices on Zoopla of the houses that are not selling and they all were bought in 2006/7 for the same price - £120k. So I assume the vendors are tied into mortgages for that amount and that's why they can't lower them.

    If house prices have fallen by about 15-20% in 7 years, they've got a hell of a way to go in the next 3 years to meet the magic doubling.
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    Regards Freelancer
    I've bought a couple of houses this year in Newcastle at 2004 prices !
    Ok, I bought at a little below market value but, still, pretty much 10 years with zero growth.

    Additionally, with low inflation and low/no wage increases, I can't see prices increasing much in the short/medium term either.

    On the up side though, I'm mainly on tracker mortgages and the rates are amazing.
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    Mike,


    Which areas are you buying in Newcastle? Im in the process of buying my first up there (kenton), cheers. Dave

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    I see nothing substantive in government policy to prevent boom and bust. A parliament is for 5 years so there is no real incentive to fix the problem ( if it is a problem)

    So historically in some 10 year periods prices in some areas have doubled.
    But in some 10 year periods especially recently prices have not doubled.
    But yes I believe at some point they could double again in a 10 year period but not every 10 year period

    So....

    1996 to 2006 yes
    2004 to 2014 no
    2008 to 2018 quite possibly
    2009 to 2019 quite possibly
    2010 to 2020 quite possibly
    2014 to 2024 your guess is as good as mine

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


    As others have alluded to, the story can vary widely depending on area when we discuss the UK figures - with London often outpacing everywhere; then there's "the north-south divide" (although I do seem to recall at some stages the north beating the south??!)

    Overall though, I can understand your incredulity Nathan. I've found whenever I've bought a property, the market price seems 'right', 'logical' and 'fair'. When you look back years later, it seems 'crazy', 'weird' and 'unimaginable' - but true - how prices have moved.

    We bought our first investment flat in Horsham (one bed) in 1995 for £33,500 a sum which seems laughable now, as its current value is around £125,000 at least... so yeh, it will (probably) by September 2015 have doubled and doubled again in each 10 year period that we've owned it.

    The first investment house we bought in 1999 for £70,000 (in Crawley). Those now go for around £210,000... so that has tripled in value so far. It still seems unbelievable for those houses to be selling at £280,000 by 2019 - but not soo unbelievable now!

    I think it's true in many areas that property has become more unaffordable for 'like' buyers - in terms of their incomes / jobs; perhaps that's what makes it seem natural to assume this can't go on? However, it has gone on for years so far and how that works is that more people have to settle for renting instead of buying, I'm afraid - hence generation rent.

    Angela
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    "It is the small decisions you and I make every day which shape our destinies." Anthony Robbins


    Here we go with the crystal ball. I think house prices may well increase around 60% over the next ten years. I doubt we will see doubling of numbers for sometime.

    There are pockets that I think depending on local infrastructure may well progress quicker. Government policy will change as will the party in charge that may allow inflation and wage increases and this will obviously affect what happens.

    The first house I bought for investment cost £4,750 in 1999 and after repairs stood me at £10,000. We still own this property and it is worth around £60K now although because they will be building a lot of new houses around it soon and the great transport links to the city centre I expect it to increase in value by 50% over the next 2/3 years

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    [Image: New-logo2.png] Manchester based investor. I buy, sell, renovate and rent investment property in East/North Manchester Wink email: mike@brentwoodinvestments.co.uk Call: 0161 681 3724


    (07-11-2014 10:40 AM)Michael_Brown Wrote:  The first house I bought for investment cost £4,750 in 1999 and after repairs stood me at £10,000. We still own this property and it is worth around £60K now although because they will be building a lot of new houses around it soon and the great transport links to the city centre I expect it to increase in value by 50% over the next 2/3 years

    Wow, how many of them do you wish you bought Michael?! Or how many did you buy!? You must be able to enlighten us... wasn't there a time when prices in the north doubled within a very short space of time?? It seems the north always lags behind the south but then every so often everyone realises how ridiculously cheap it is and prices surge??

    Angela
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    "It is the small decisions you and I make every day which shape our destinies." Anthony Robbins


    At the time I started I bought 2 house for £9500 cash hence the £4750 each. One has since been CPO'd.

    We renovated them with the remaining cash and they stood us at £20,000 for the two. We then continued using bridging finance (as mortgages under £25k in value were not available) using these as security reaching a total of 14 properties and £140k on bridging. We returned to carrying out building works for others returning twelve months later amazed at the properties we had been purchasing for up to £8k were now £23/£25k. We could now remortgage and pay of the bridging finance. We then used this to continue rapid growth.

    In November 2006 we purchased £1 million pounds worth of property at a auction. This wasn't the best decision considering this was followed by the famous crash. We are one of many landlords using MX amongst others to leverage up.

    We now own around 130 properties and although the LTV isn't great the rent against mortgage is. We have had a excellent living from property and continue to work hard having a letting agency that manages mainly LHA tenants and around 450 houses We remain up beat and hopefully either with the rise in the housing or rental income we will continue to flourish We are aware interest rates will rise we are still buying property with cash instead of stock piling money. We will sell these properties should we need the cash in the future.

    I feel we are at least in the same position we was before the crash if not better and because of our location to Manchester with the new Metro and other improvements that values will continue to rise.

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    [Image: New-logo2.png] Manchester based investor. I buy, sell, renovate and rent investment property in East/North Manchester Wink email: mike@brentwoodinvestments.co.uk Call: 0161 681 3724


    (07-11-2014 05:27 PM)Michael_Brown Wrote:  ... We returned to carrying out building works for others returning twelve months later amazed at the properties we had been purchasing for up to £8k were now £23/£25k.

    The whole story of your success is great Michael - well done. This part I've quoted is amazing though, isn't it? So prices practically trebled in 12 months!! So strange how that happened!

    You've done well managing through the highs and lows over a long period.

    I wonder if this stalling and surging will recur again in the north?! It seems as though the north-south divide is elastic - getting further & further apart and then periodically pinging back!

    Mind you, I suppose the other side of the coin is that perhaps that's why the north has found it more tricky to recover since the credit crunch - because perhaps prices had 'over-shot' before then by a long shot?!

    Interesting anyway!

    Angela
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    "It is the small decisions you and I make every day which shape our destinies." Anthony Robbins

    Interesting tweet to rejuvenate this thread!



    See also - Where next for house prices?

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