So with the shares performing badly over the last 10 days with big losses (corrections) over a short period of time and the concern over the mis-management and performance of pensions with large companies declaring big deficits in plans is investment property still the safest form of long term investment?

A flaw in your question.
FTSE and other markets down in 10 days.
yet you ask what is safest LONG TERM investment.
FTSE isn't even down 10% from peak. Yet its easier to get 10% off an asking price house if you look around!

It depends on what you call long term?

Houses in general at the end of a 25 year mortgage will always show a profit. If you buy now for £250K and sell in 10 years it might be worth £175K. No profit and this is long term. If you waited the full 25 years then it may be worth £400K.

You can only realise profits/losses when you come to have the transaction sell/buy.

In short ALL MARKETS are open to rises and falls.


Nothing RISES forever!

Another point. You can also short the markets and make money from falling stock prices. Can you make money from falling house prices?

quote:

Originally posted by Simulcra:
Nothing RISES forever!

Good Quote

quote:

Originally posted by reverand:

quote:

Originally posted by Simulcra:
Nothing RISES forever!

Good Quote

What doesn't rise over a long enough time period though?

Inflation
House prices
Stock indexes
etc.

quote:

Originally posted by slapmatt:
Inflation
House prices
Stock indexes
etc.

Anything rising at the same rate as inflation is stagnant though in real terms.

quote:

Originally posted by reverand:

quote:

Originally posted by Simulcra:
Nothing RISES forever!

Good Quote

Excellent, I look forward to a reduction in my Council Tax next year.

quote:

Originally posted by stateofplay:
Excellent, I look forward to a reduction in my Council Tax next year.

Maybe you've found the new paradigm!

quote:

Originally posted by reverand:

quote:

Originally posted by stateofplay:
Excellent, I look forward to a reduction in my Council Tax next year.

Maybe you've found the new paradigm!

If I knew what you were getting at, I might agree!

quote:

Originally posted by stateofplay:
If I knew what you were getting at, I might agree!

Council Tax rising forever (well its been rising more than forged inflation rate)

quote:

Originally posted by reverand:

quote:

Originally posted by slapmatt:
Inflation
House prices
Stock indexes
etc.

Anything rising at the same rate as inflation is stagnant though in real terms.

But inflation always goes up (by definition I guess). What I'm getting at is people who bought houses in 2004 and expect 10% rental yield and for their house to have gone up in value compared to today might be in for a shock. However, people who bought houses in 2004 and are happy to hold on to them for 5, 10 or realistically 25 years will always see a profit.

quote:

Originally posted by slapmatt:

quote:

Originally posted by reverand:

quote:

Originally posted by slapmatt:
Inflation
House prices
Stock indexes
etc.

Anything rising at the same rate as inflation is stagnant though in real terms.

But inflation always goes up (by definition I guess). What I'm getting at is people who bought houses in 2004 and expect 10% rental yield and for their house to have gone up in value compared to today might be in for a shock. However, people who bought houses in 2004 and are happy to hold on to them for 5, 10 or realistically 25 years will always see a profit.

What do you mean by profit. If you mean yield, then you could do better in a cash deposit account. If you mean CG then even the most optomistic view sees stagnanation for the next few years. Better to be in other assets markets, although obviously not the Mumbai SE.

We're in the realm of guesswork here but property has shown huge rises over 25 years and done pretty well in as short a period of fifteen. Certain shares have performed as well or better but to say you 'might' show a profit after a quarter century is understating the historical case. Even taking in inflation and other factors a house bought for 30k in 1981 might easily be worth 500k now.

quote:

Originally posted by cakehead:
Even taking in inflation and other factors a house bought for 30k in 1981 might easily be worth 500k now.

Same could be said for Salaries/shares though I guess. Also add on top that houses are ~30% overvalued at present.

Salaries have increased leaps and bounds in the last 25 years, but are unlikely to do so in the next 25 due to globalisation, what will this mean for house prices?? Who knows!

The laws of supply and demand are the biggest drivers of house prices. Britain styles itself as a progressive liberal democracy with laissez faire attitudes to inward investment and immigration.
While ever this is the case housing requirements will be pressurised and prices consequently high. The fastest way to reduce housing costs would to be a net exporter of people and trade, the former East Germany would be a good barometer of such practice. Popularity can be a curse.

I agree Cakehead. Supply and demand of cheap credit had fuelled this. With the likelyhood of this tightening in the next few years the demand may drop off.

Cheap credit is a human right. It powers the engine of industry. Crippling, usuery rates should be consigned to the dustbin of history.

quote:

Originally posted by cakehead:
Cheap credit is a human right.

Have you been on the bottle? What a bizarre claim!

quote:

Originally posted by cakehead:
The laws of supply and demand are the biggest drivers of house prices. Britain styles itself as a progressive liberal democracy with laissez faire attitudes to inward investment and immigration.
While ever this is the case housing requirements will be pressurised and prices consequently high. The fastest way to reduce housing costs would to be a net exporter of people and trade, the former East Germany would be a good barometer of such practice. Popularity can be a curse.

I think this is one of main reasons we wont experience a crash a such. We will be getting much more eastern european workers into this country before the year is out and i cant see there being a sudden drop in asylum seekers coming so this really is helping to keep demand propped up

quote:

Originally posted by cakehead:
The laws of supply and demand are the biggest drivers of house prices.

Including the supply of money to borrow which is ruled by interest rates.

quote:

Originally posted by cakehead:
Britain styles itself as a progressive liberal democracy with laissez faire attitudes to inward investment and immigration. While ever this is the case housing requirements will be pressurised and prices consequently high.

While this may seem plausible at first glance it has two flaws:

1. Immigrants often rent and we haven't seen rents increase in line with house prices which we would expect if there was a shortage of housing stock rather than a shortage of affordable housing to buy.

2. Immigrants provide plenty of cheap labour thus suppressing wage inflation. Lack of wage inflation curtails the price local works have available to buy houses.

I'm with Bootle that the key driver of house price inflation has been low interest rates and that this seems to be changing...

quote:

Originally posted by Mike99:

quote:

Originally posted by cakehead:
The laws of supply and demand are the biggest drivers of house prices. Britain styles itself as a progressive liberal democracy with laissez faire attitudes to inward investment and immigration.
While ever this is the case housing requirements will be pressurised and prices consequently high. The fastest way to reduce housing costs would to be a net exporter of people and trade, the former East Germany would be a good barometer of such practice. Popularity can be a curse.

I think this is one of main reasons we wont experience a crash a such. We will be getting much more eastern european workers into this country before the year is out and i cant see there being a sudden drop in asylum seekers coming so this really is helping to keep demand propped up

Mike this is not aimed at you its open to all, I just used your quote

This statement puzzles me??? If the normal citizen of this country cannot afford basic housing then how can LOW PAID immigrants afford it?

If they are renting the chances are that 30-50% of their wages are going on rent. The rest of the money will probably be sent back home. Is this good for the British Economy? NO!

I TOTALLY DISAGREE with this SUPPLY and DEMAND arguement at this point in time. When we see Rightmove and co saying average of 72 properties per agent, which is a little high, how can this be HIGH DEMAND?

If you all go n rightmove and do a search for your postcode. Pick anyhouse and then click on the agent. Then there is a search facility there for all properties on that agents books. dont put any criteria in and you will get the full list. Then count how many there are.
In my area of the northwest, in my suburb the agents have on average 320 properties PER AGENT! Now I live in a big city but 320 is A LOT of PROPERTIES!!!!
I think there is an abundance of properties on the market now - a lot have been there for many,many months. They are still high priced.... not becuase of demand but because of greed.

It sounds like your property market is different than down here in the South East, where good 3 bed properties are rare and get snapped up in a trice.

Demand for these properties is high, in my town they are on the market for 2 to 3 days before someone snaps them up. They are still greedy though!

quote:

Originally posted by BTLOptingOut:

quote:

Originally posted by cakehead:
Cheap credit is a human right.

Have you been on the bottle? What a bizarre claim!

Nope, I'm stone cold sober. I remember the sixties and seventies when my parents had to buy things on credit and, if they could get it at all, could expect to pay up to a third on top. Such practices are immoral.
Advocates of stemming cheap credit believe people are too stupid to know what to do with their money. It's a patronising, top-down approach. Loans generate industry and employment by supporting entrepreneurship and intellectual properties.