I also do not subscribe to the big crash theory! It may flatten out, perhaps decline for a while, but nothing too dramatic. It's not such a bad thing anyway, the market naturally fluctuates, but inevitably goes up overall, and usually quite rapidly after a dip, meaning potentially large ROI's for many!

I read a recent survey stating 93% of BTL investors have no intention of selling, with over half looking to invest further. The large majority of serious investors I encounter are in it for the long term, looking to pick up the odd bargain, and are far from panicking!

I doesn't seem to me that there are many bargains around - not yet anyway. Maybe the repossession / auction stuff is the way to go.

We have been invested in UK property for 16 years. Back in 1992, yields on corporate or multilet property were about 16% per year, and cost of borrowing was about 12% per year, and 75% LTV was pretty much the norm.

Fast forward 15 years to 2007, and yields were 6% and cost of borrowing was 6% (effective).

Here's some stats for those who think of being in this business for more than 10 years:

3 bed terraced in Ashton u Lyne - 1972 £3,250, 2006 £160,000
4 bed semi in Gatley - 1980 £28,000, 2007 £215,000
4 bed detached in Wilmslow - 1998 £190,000 2007 £575,000
2 bed terraced in Denton - 2002 £36,500, 2007 £102,000

Yes, it's true that we may be entering a period of stability or price drops, but investment in property is the sum of two components - net income from rentals, and capital growth from price increases.

Rent for a 2 bed terraced in Denton - 1998 £290 per month, 2007 £450 per month.

So much is dependent on the medium term interest rates, I don't think it matters if properties go up or down. In the longer term, they always go up just as inflation goes up. In 1972 a wage was £20 per week - now it's £500 per week. That's a 25 times increase.

Certainly inceasing opportunities in repossesion/auctions on the way.

...and more tennants to play with too (that wasn't supposed to sound sinister!)

With a good independent mortgage advisor, investors are still able to find a variety of mortgage products. Today's interest rate hold should not affect the buy to let mortgage products too dramatically.

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Michele Andrew
Editor of Square Foot Magazine

Doom shmoom! It looks like an overall slow down in prices, but not a stall. Whilst the specifics vary across the country, Savills, the chartered surveyors recently forecast an average 3% growth - Higher than the 1% from the Council of Mortgage Lenders and Hometrack, but still a growth. Keep the old peckers up folks!

More downbeat expectations in the newspapers and general sentiment that a crash has now started...

Telegraph: Property returns plunge to IPD all-time low

Property returns plunge to IPD all-time low - Telegraph

Guardian: Housing market closest to slump for 15 years, say chartered surveyors

Housing market closest to slump for 15 years, say chartered surveyors | Money | The Guardian

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Hi again,

Not sure if the market has softened, or there's just less competition in buying, but I've just concluded this deal in the UK:

OMV £72K
PP £65K
Sale and rent back at £100 pw on AST
One year rent in advance on completion

I'm not exactly your experienced BMV investor, but on paper this ranks with the best deals I've done here to date.

Keep this lovely information coming, and get rid of the million property investors, I say.

Extract from article:
This takes the total drop in returns (capital values plus rental income) since the property market turned last summer to 9.5pc

My business planning model for UK property investment:

Low stochastic is 3% capital growth and net rental income
Medium stochastic is 5% capital growth and net rental income
High stochastic is 7% capital growth and net rental income

If this is the worst it gets, it's still way above my highest stochastic, which means (for our portfolio) a return on invested capital of 18% per year. Roll on the retirement.

The article says that there has been a drop in returns of 9.5% since June 2007. I read this as -9.5%.

For example, a commercial property had a value of £100,000 in June 2007 and it had rental income of £500 per month. Between June and December 2007, the property generated £3,500 in rental income but lost £13,000 in market value. So by December 2007 the property was worth £87,000. Hence a 9.5% drop.

Is that right? I don't think it can be as that is an almighty crash in just 6 months. So what does this 8.5% figure actually indicate?

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