The worst is still to come / House prices

Today I looked back at an old post of mine from April 2007. Here is the link and an excerpt:

 

Anyone not agree that these are the signs of the hype coming to an end?

Buyers camp out to secure a home”

“Share to buy a joint mortgage for young professionals”

17 day queue for MOD home

Please use common sense!!! Please!!! price in Cambridge (only one example) the picture looks dodgy (scruffy horrible house)

Cherry Hinton (near Cambridge) – 3 Bed Terrace House offers around £235,000

Rent in Cherry Hinton for a 3 Bed House (near Cambridge): £ 10,800 per year

So lets do the maths, shall we? The return on the £235,000 is an astonishing 4.6 %!!! BUT: What about things breaking or repairs? Did you know you receive about 5% on a savings account from ING (as an example).

Picture from Metro article: 17 day queue for MOD home

The “real” crash has not yet happened but is sure to come. Unfortunately we are heading in to a recession with full steam. People will start loosing their jobs, defaulting on their mortgage payments. Houses will be repossessed but there will not be enough buyers as first time buyers wont receive mortgages and others will not be willing to invest in a falling market. Renters might get less as many immigrants are leaving the country some evidence here and here. So if you have some cash / hold on to it and wait for the bubble to burst. This might be an opportunity to buy a house on the cheap..

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