Re:Ade-the securitisation banker London

...Ladies and gentlemen,can you not almost 'feel' the desperation in this mans posting.
It whiffs of fear!!

antony Graham, southport, England

The party is not over and will never be over. Mark my words, property prices will fall by a maximum of 10%, no more!!
Contrary to popular belief this is a very good time to buy property as any buyer with a good deposit and good credit can get a good discount on asking price, get a variable rate mortgage at the bank (which will be a positive as interest rates and LIBOR reduce over the next 9 months or so) before then locking on a fixed rate mortgage at a low(er) rate.
A known fact is 2008 will be SLOW but by Q2 09 things will be on the 'up' again - perhaps not as quickly as we have seen over the last few years.
In summary, fear not; buy now if you can especially if in zones 1,2 or (good) 3 of london; 09 will be a better year!

Ade, Securitisation Banker, London, London

i own a 7 bedroom four storey house set in 7000 m2 of land 35 minutes drive from the centre of Paris .. it is currently valued at 500 000 € ( £ 390 000 ) .. despite the gloomy talk of house prices falling in the UK ... you have a long , long way to go before your houses represent their true value.

andy , Lardieres, France

refreshing honesty from Michael in Islington. Suggest you follow your instincts and get out while you can still get a half decent price..

ian hall, london,

"...As long as the rental income is ... close to the cost of borrowing this is the true value of property. Nothing else is important anymore, Clearly there has to be someone to rent the property ... and you cannot fail. There will never be a crash while there are people able to rent...."

simon, london,

SIMON, SIMON...

Voids? An average of 2 months p.a.? Maintaining the property? Even more expensive the pickier the tenants (say in the City) and the more properties that come onto the market (thus the more spread of rents)? Legal fees? Administrative fees (if you don't want to or cannot do this yourself)? All set against slowly (at first) falling prices. So who is first to jump? You, or the landlord down the road who just sold for 20% more?

And Simon, even a mildly left wing govt. could move rental back towards Rent Act 1977 secure / protected tenancy status for tenants (becoming sitting) particularly if they don't want to pay Housing Benefit or if there are votes...

Austin Tassletine, South West, UK

"I have bought over 30 properties over the last 10 years based purely on yield and you cannot fail. .... There wil never be a crash while there are people able to rent...simon, london"

Two points to counter this Simon

1) Though its unpalatable, read last weekend's Guardian (yes, hard, I know) - guy just like you bought 30 buy-to-let properties and he's now in the poo to the tune of 3 MILLION POUNDS.

2) Are you suggesting that in every previous crash no-one was renting ? That clearly WASN'T the case. Just because people are willing to rent, doesn't mean they're wiling to pay some figure you have dreamt up.

I'm currently renting. The previous place I rented was on a yield of less than 4 percent, and I suspect this house is also. Without capital growth, landlords are subsidising me - great !

Clive, Surrey,

House prices will not crash. The oil price will fall sharply in the next couple of months owing to market forces. This will free up billions in the UK economy and restore the feel-good factor. UK banks will soon start lending to each other - they will have to, otherwise half of those employed in the financial sector will lose their jobs ! There are not enough empty houses or flats to satisfy the demands of our population and all we are seeing at the moment is a temporary blip.

John, Edinburgh,

simon, london said "you cannot fail"

I'd love to know where you studied economics. Let's say I've borrowed 1m to buy 5 properties. My yield is 5%, but in the current climate my mortgage costs and other overheads equate to 7%. I'm therefore subsidising my tenants to the tune of 20k pa. Now, property prices fall by 20% so I owe 200k more that my properties are worth. Along with falling property prices goes an economic downturn, so those Eastern European tenants of mine begin to return home and I'm left with longer and longer voids. What a fantastic business model - if there are others like you out there I'm off to retrain as a bailiff to make my fortune!!

Graham, Oxford, UK

Simon, London,

You are right to say that rental yield is very important in valuing a house however i can't believe you use a rule of thumb against a nominal interest rate figure.

Your rental return must exceed the cost of borrowing which by coincidence has been 5.5% recently. As you can see from recent bank announcements mortgage rates are going up therefore rental yields should go up to compensate.

Realistically as individuals become more squeezed i can't see rents going up that significantly (30%) and so house prices must fall. As it is they are falling and banks keep tightening.

For your sake i hope you have low loan to value across your portfolio.

Howard, London,

Opportunism is alive and well in the form of the banks. The purpose of raising UK mortgage rates is not to limit new entry into the market. The raising of mortgage rates is an opportunity to fleece existing mortgage holders. It has the added benefit of driving house prices down. What will it cost you? Well, what do you have? You will have to make some sort of arrangement with your bank when your rate expires. They will take a view about whether you are worth more dead or alive. If you looked down your nose at those who overdraw their current accounts and get stung with userous penalties, you are about to experience it on a much larger scale. If you think that your equity will protect you, you are wrong. Your equity is their opportunity. If you have no equity, the question is still the same. What can you pay? If interest was fixed over the life of the mortgage as it is for the majority of mortgages in the US, you could simply ride this out. Unfortunately, you can't.

Larry, Stratford,

I hear that one leading economist has advised that prices may well fall by 35 to 40% over the next 2 years . On top of that a well known financial adviser is advising people to sell their houses now before the crunch comes. Hmm, what happened to the good old days ?.

Julian, London, UK