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Today's hot news: invest in bargain bricks and mortar
Janice Morley, Editor of Homes & Property10.11.08
THE sensible response to the Bank of England's shock 1.5 per cent base rate cut is to take your savings out of the banks and building societies and put it into property.
Interest rates on your hard-earned savings have now crashed. So why not be in the vanguard with the clever investors and buy property, get the market moving, and begin to feel confident that when the market comes back you will be sitting on a nice little earner.
Negotiating on property prices is the new blood sport across London. Estate agents are already reporting more interest.
If we are going to take advantage of anyone's pain it should be the new homes builders. If we have a Mr Nasty moment remember how many fat years they had at your expense.
Our property expert David Spittles went on a tour of new homes on offer and discovered staggering reductions. Central London apartments last year costing £342,000 are now selling for £250,000.
A 10 per cent reduction of £50,000 is just the starting point on any negotiation for a new home of £500,000.
Barratt is making no bones about offering a fire-sale of properties. Managing director Adam Laurance said: "We want everyone to know they can buy at today's prices, not last year's prices."
House builders are making no secret of their plight. Taylor-Wimpey is promoting a "one day only, change your life", deal across the Home Counties.
At the Edge, in Edgware, Bryant Homes is offering a special half-price deal to first time buyers who have a minimum of five per cent deposit.
A £189,000 one-bedroom flat has been cut to £89,975. That is a remarkable piece of evidence that house builders have been brought to their knees.
Fire sales are fine sales for Londoners. With no houses being built, your profit on your property will be even more substantial, even in the medium-term investment bracket of five years.
A lot of people saw this crash coming. They rented to wait for the property freefall. But you can wait too long. Now is the time to buy.
Reader views (25)
I can see it now, Barratt, Taylor-Wimpey, Bryant all calling Janice with sob stories about how their expensive advertising hasn't worked, how their unsold housing stock is killing them and how it would be a good idea to move things along a bit by writing a headline news story to suck in the last few gullible punters with any money left.
Nice one Janice.
- Steve, Australia
There is nothing to say that property will continue their rapid fall.
Bethany, Nottingham
Yes there is Bethany; common sense!
- David H, London
I think UK government should invest more in infrastructure of coming Olympic. As for the empty houses (which can't sell at that time 2012.), Government can rent them all from the Bank, for athletes rest house.(Just to reduce Bank lack of cash problem.) I hope that our world's market comes back before that time.
- Kim, Singapore
Now could be the right to time to invest in bricks and mortar but it is a very risky gamble. There is nothing to say that property will continue their rapid fall.
- Bethany, Nottingham
Why buy now when property is going to fall even further?? I would say it will bottom out towards the end of 2009, but it is nowhere near where it needs to be which is the average house price should equal 2.5 times the average salary.
- David H, London
One of the crazier aspects of the UK property market is that people insist on pricing a 25+ year asset off a 3 month mortgage rate. China has just announced a $600 billion Dollar investment in infrastructure. To over-simplify somewhat, if that does not work, the world will be in a very deep recession and the UK's negative interest rates will be as (in)effective as Japan's negative rates have been over the last 15 years. If it does work, the demand for, and therefore price of oil, copper, etc. will soar and inflation will return to the UK, and (barring further political interference) rates will have to rise again. For the last 20 years, westerners have learned to "buy the dips" to make money, Japanese have learned to sell the rallies. Who knows who will be right this time, but it makes you think, doesn't it?
- Tim, London, UK
Glad you sensible folks do not suffer fools gladly, looks like Janice has come under some stick .. I will agree with you all that prices will fall more and this kind of news will only do one thing. Janice you are nearly right in your story but ( hoping you wil read this )
You want to start taking the line of this :
" In 1990 - the last reccession took two or three years in real terms before the market rallied... then a period of 3 years of level pricing. This time the buyers have been made aware of forth coming drops right now and for next year. ( I must laugh at the banks 1.5% drops each month, in real day to day life the market id dropping that a day) Buyers are nowing doing a double deal where they are now asking for 15% off now + another 15% for the forecast of next years drop. Buyers beware - if this is happening - big drops will happen now , but there will be a point when prices will stop dropping. You will hear about large drops in the next coming weeks of such speed it will catch people out. So dont be to frieghtned to go out and get the best deal you can now .. it will be ok as by next spring we might have had substanial drops where buyers may come back in. Prices wont rise but the bargins might be gone. Be clever and get the best deal you can between now and March .. It wont drag for 5 years or so like last time as we are to well informed and want it now. Good luck Janice, you were nearly right but make this your next story and we will all will be happy.
- William Of Orange, London
HA!! How sad! Prices are going to plumme a lot, lot further. It is amazing how long it's taken for the media to admit that the prices 1 year ago were utterly insane. They will still be insane even when they've fallen another 30%.
- Ian, London
It would seem that Janet has allowed her own interests to supersede those of others. This kind of craven spin smacks of desperation, perhaps she is concerned that with no one buying housed no one will buy her magazine leading to her redundancy forcing her to sell her home for the faction of the price she paid. On the other hand she may be a genius with the foresight of Nostradamus, having said that he talked a load of bull too.
- Gary, London
Ermm, seems all the companies mentioned advertise in her supplement
- Jack Thompson, London
This sort of "advice" would get a financial adviser fined!
- R James, Bristol
The banks are on the brink of bankruptcy, as the result of lending excessively to an over-priced housing market. We have a golden opportunity to get away from the British obsession with houses as an investment and yet estate agents, egged on by the government, continue to encourage poeple to take on debts they cannot afford to repay. As a factor of disposable incomes, house prices remain high and will continue to fall until there are signs of economic recovery. This will not happen for some time - possible a couple of years - and the suggestion that houses are a bargain is totally irresponsible.
- Simon, london
I have estate agents phoning me up to tell me about this article, saying this article signals the bottom of the market!! I wonder how much Janice is being paid.. and why her view is of more value than the top economists views that there is along way to go yet with house price falls... Unbelievable!
- Rh, London
Just been on the Bryant website.
The 89k property mentioned in the article is for 50%!
- Paul, Worthing,UK
Pathetic VI attempts to justify this disgusting and immoral house price boom.
Homes should be just that, homes to live in, not some parasite's path to riches.
These people would try and make money out of oxygen if they could
- Lb, London
In response to Mike's comment. Life goes on, survival of the fittest. The recession, now gives low earners like me a chance to own my property. There are jobs out there, it's just people don't like to try something different.
- Triffidqueen, Desk in London
The credit crunch has only begun to impact the wider economy and there are still fools clinging to the belief that they can make a fast buck from property. Unemployment is only a fraction of what it will become
- Zady, London
I just bought a 2 bed flat in west london for £148K, which was a repocession and my first morgage payment of £680.00pm will be reduced to £510.00 in December!
- Raminder Bhalla, Isleworth
Why do I keep reading articles which are trying to re-boom the housing market? The over-concentration on this sector over the last ten years is directly responsible for the financial problems the UK is having now, and will still be having in 10 years. Additionally, the focus on the property 'industry' has created a depressing sociological shift: people no longer aspire to be scientists, engineers (i.e. jobs which create real value in the economy), instead feeling there is a serious future in doing half baked renovations to rubbish properties.
- James, London
Are you crazy? Properties are dropping people are losing their jobs, and you're asking them to take out a mortgage? Crazy.
- Mike, London
Nah I'll wait a couple of years when prices have gone down another 40%. Thanks all the same.
- Donald, Greenock, Inverclyde
I'm sorry, is this an advert for desperate agents or a proper newspaper commentary? A shameful attempt to persuade people to invest in a loser. The UK is broke and no desperate attempt to further inflate already far too high house prices/bubble with further cheap debt is going to avoid the inevitable downward spiral. The world is now deflationary with the UK attempting to inflate. Look to Japan for what is in your future for the next decade plus. I'll tell you what Ms. Morley, I assume you are purchasing like crazy these days - if I buy a property with my cash this weekend will you put your money where your mouth is and guarantee "now is the time to buy" with no further decreases in prices and a profit in 2-3 years? I'll wait for your reply...
- Kr, Cap Ferrat France
Ha!
Buy now and feel sad at the 25% you'll have lost on your investment this time next year. These "experts" are chasing the market down more than unrealistic sellers.
Did I say - ha!
- Matt, London
Hmmm, with house prices predicted by the most optimistic of commentators to fall another 10% next year this is staggeringly bad advice.
There is an argument for buying at a big discount for a home as opposed to an investment but certainly property isn't better than savings.
- David, Ealing, London
Houses are falling in value at the fastest rate in history so now is a good time to leverage yourself up and buy some? I know that money in the bank is losing some value but, compared with what anyone who owns property is losing right now, it's a pretty small amount. Something tells me the author of this piece of utter nonsense may have over-indulged in the credit boom and is now trying to offload some horrible buy to let shoe-boxes onto some greater fool.
- Derek, London
