Starting the (house) apartment hunt..

O.k. folks sorry no pictures right now but I will post some pictures of our weekend later. Liz and I have started our house apartment hunt. We are very much interested in buying. The strange thing for a European. The house prices are NOT published in the local currency CLP but in Unidad de Fomento (UF). As a buyer I HATE this. Why? Well the UF is changed on a daily basis. It should reflect the level of Inflation (if I understood correctly). We found some flats which are ready in June of next year. The Estate agent told us we could secure the price now and pay in June. Sounds good? Uhmm / not really / we can secure the price in UF / which means we sign the contract now for lets say 100,000,000 CLP but we probably need to add another 6% by the time of completion in June. There is a good website which lists the historical pricing of UF here.

In the past weeks we have seen about 14 to 16 apartments 80 % of them new with swimming pool. Liz is keeping track in an Excel spreadsheet. The Estate agents are offering us discounts (without even being asked) ranging from 6 % to 20 % (!!!!) We are not ready to buy yet as we are expecting prices to come down. Why? UM* / The amount of newly built empty properties we found was astonishing. Liz developed a good set of questions and the one that I liked most was: “What is the percentage of sold versus unsold?” The answer clearly favours the buyers. One of the really nice Buildings was completed about a month ago and they have only sold 1/3 of the apartments (!?!?!) As far as I know in Austria the projects are only started if about 1/3 has been sold off plan. So you can see that they will be a little desperate in about 6 months. The apartments we have seen were in the Las Condes area and priced between (I will use real money now) CLP 60,000,000 to 120,000,000 in EUR in USD in GBP and in MXN  The apartments we saw ranged between 60 m2 to 130 m2 (for the English folks 2 bedrooms to 3 bedrooms although in England you would call it 3 to 4 as the Chileans dont count the small room for the house keeper which also has a bed and a toilet) We are still to look at the second hand market.

Disclaimer: Even though I called the house price crash in the UK (I started reporting in November 2006, April 2007 and April 2008) I do not know a lot about the Chilean Market and anything stated above is personal believe! Prices may go up or down or move sideways 😉

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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..

The house price crash guarantee – The bubble is about to burst

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 following terminology is taken from the stock market but can be applied to the housing market:

Characteristics of crashes (Source Wikipedia)

A prolonged period of rising stock prices and economic optimism, a market where P/E (price earnings can be related to Price / Rent) ratios exceed long-term averages, and extensive use of margin debt and leverage by market participants.

THE NEXT BIG HOUSE PRICE CRASH – IT WILL COME – THE QUESTION IS NOT IF BUT WHEN – WE ARE PREPARED AND WE ARE WAITING

http://n0comment.wordpress.com with a zeeero instead of the O

Loosing too much with the new House – House Price CRASH

House Prices in the UK since 1975

 

o.k. guys, since I have been living in the UK (around 4 years) I have been warning about the house price. It is never possible to predict a short term direction. But what you can do is to say that the Rents are not high enough to emphasise a house price like the one we are seeing right now in the UK. I still remember discussing NOKIA and almost everybody telling me Nokia doesn’t´ go down in 1999 (since my prediction it first doubled but then crashed down to 10% of its Value). Generally I can only recommend to see the website http://www.housepricecrash.co.uk/ before buying. And don´t expect the mortgage advisor or the estate agent to give you a correct prediction as their business is to SELL SELL and SELL

Have a look at the house Price chart and then watch the rather funny video regarding the house price.