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When will UK property prices return to 2007 prices: 10, 20 or 30 years from now?

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  • When will UK property prices return to 2007 prices: 10, 20 or 30 years from now?

    All of the profit from UK residential property was made in the 10 years to 2007. 6 years on the land registry sold prices are nowhere near the 2007 peak and 10 years from now they still won't be at the 2007 level because the current interest rate bubble that is sustaining the current 20% over valuation of UK residential property wont be sustainable beyond the medium term. Eventually interest rates will be 6 % higher than they are today and house prices will be back on their long term track of 3 x 25000 average salary, i.e. £75000 for a 3 bed semi in in the West Midlands. Currently they are being advertised at £150000 so they are double their long term correct price.

    How many years will it be before the average salary doubles to £50000 to catch up with overpriced 3 bed semis in the West Midlands? It will probably be more than 10 years from now.

    It doesn't matter whether the purchaser is buy to let or first time buyer there is no more money to be made in UK residential property, except, maybe, in London.

    I bought a 3 bed semi for £20000 in 1985. I sold it in 2001 for £67000 and purchased a 5 bed detached for £250000 which I sold for 315000 in 2008. I was offered £360000 for it in 2006 which I sadly refused.

    As I had repeatedly re-mortgaged during the 10 year boom I had sadly fell off the property ladder in 2008 with no deposit to get on it again.

    I refuse to pay more than £75000 for a 3 bed semi so I relocated to Thailand where I bought a nice 75 sq metre 2 bed apartment for £50000 with 2 years interest free credit from the developer.

    My maintenance fee is £30 a month and I pay £30 a month for electric and £20 a month for the broadband and that's it. My total cost of living is £80 a month and I can sell my apartment if I want to.

    I hope this puts in perspective how ridiculously over priced the UK housing market is both in terms of house buying and renting.

    Miles Shipside from Rightmove was talking balderdash earlier this week when he suggested UK property prices had recovered to within a "grand and a half" of their 2007 peak. What he didn't tell you was that the prices his customers advertise their properties at bear no relationship to the prices they sell them at and, indeed, only the ones who advertise at a very low price indeed get viewings and only his customers who get viewings actually sell their properties.

    So lets examine what constitutes a very low price, one that is low enough to create a viewing of the property which is a prerequisite for a sale?

    Well based on the experience of selling my mom's property last year if there are 10 similar properties for sale in a particular area and they are all advertised on Rightmove at £399000 none of them will receive a viewing. These sellers will need to compete with each-other in a Dutch auction of repeated down valuations until one of them steels the market in a particular Rightmove price point which will probably be a good 25% below the 9 unsold properties that Mr Shipside asserts are within a grand and a half of their 2007 price.

    For me leaving country for a decade while the property market returns to its long term average of 3 x average salary for a 3 bed semi in the West Midlands is a matter of principle. I just don't believe in being overcharged to live.

    So if house prices are set to remain at current overvalued levels for at least another decade while interest rates slowly creep back to normal levels, how can buy to let or even buy to own be a good investment?

  • #2
    Re: When will UK property prices return to 2007 prices: 10, 20 or 30 years from now?

    "It doesn't matter whether the purchaser is buy to let or first time buyer there is no more money to be made in UK residential property, except, maybe, in London"

    This is exactly what is wrong with the housing market if not the country. people like you expect to make a "Profit" from owning a home. It is first and foremost a place to "nest in" not "invest in".

    Yes it is nice when prices trickle up and you can see your equity rise. But it shoudl not be the primary purpose. It is thinking like this that creates house price bubbles and crashes!
    BRAND NEW HOMES
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    • #3
      Re: When will UK property prices return to 2007 prices: 10, 20 or 30 years from now?

      If you're investing in property to let, your concern will be making a profit. That said, those who expect large short-term profits are likely to be disappointed.

      Prices trend up over the long term. One shouldn't anticipate a colossal turnover from day one, when you hold no equity and rent just about covers mortgage repayments and expenses.

      I think a younger investor would be better suited to get into BTL post-2007. They have more scope to see their equity rise, and if prices return to a level in line with inflation, are more likely to recoup their losses by retirement.

      As for a return to 2007 prices? I think within the next ten years, easily. With Help to Buy, probably within the next one or two. Whether that will sustain itself is another matter entirely - I personally doubt it.
      TurnKeyLandlords.co.uk
      BTL mortgage broker and free landlord resource

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      • #4
        Re: When will UK property prices return to 2007 prices: 10, 20 or 30 years from now?

        We must all learn from our mistakes. It's like saying after WW2 when will WW3 happen. Hopefully never. The property boom was to blame for the recession. People took mortgagees they couldn't afford from banks who eventually crashed and now so many places across the world like Dubai have half completed buildings and a low population. The good thing about banks not giving out mortgagees is that we won't have that problem until they do it again. Property can increase and decrease still but never should it see that sort of increase.

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        • #5
          Re: When will UK property prices return to 2007 prices: 10, 20 or 30 years from now?

          Well honestly speaking, Critics have slammed the Government's scheme to help buyers on to the ladder.

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