I Was Totally Wrong About Flat Prices

I Was Totally Wrong About Flat Prices – there, I said it. I’m always Mr. Doom & Gloom predicting disaster & Flat price crash, I’ve been out of step for 2 years now, arguing against the crowd that now isn’t the time to buy, that the crash wasn’t the real one, that the worst is yet to come. So now is the time to hold my hands up & say I was wrong.

I was wrong that it doesn’t matter

I’ve often said that Flat Prices don’t really matter:

• If you are a home owner it really doesn’t matter what value your home has unless you are either a first time buyer, or you are dead. The rest of the time you just swap one home for another at whatever the the going price is.
• If you are Property Investor the what, where and how of what you buy are far more important than the when. I have demonstrated time and again that that investing in the wrong part of the country (recently Scotland), or the wrong type of property (recently non-London city centre flats), has far more effect on the price that you pay than whether you time the market.
• The reason that I am wrong about it not mattering is a simple word – insolvency. If you lose your job you can’t pay the mortgage. If you have a Property Portfolio which relies on the rent to pay the mortgage interest, and your tenant loses their job, and you have to sell at below the mortgage price ……..

These are unusual financial circumstances, but we are entering unusual financial times.

I was wrong that you can’t predict the Market

I’ve always had the view that media articles and predictions look at the past. I based this view on the fact that I always know which direction rents are going to go – I am fairly unique in having a large number of similar flats in one location, this gives me a unique view of the Central London Rental Market and prices movements that I see often get reported in the media 2 months later. Consequently I have learned to value my own opinion above what I read in the media. However the RICS survey is also that kind of view writ large. It’s a Nationwide report of the “gut feel” of Estate Agents. Frankly I’ve always ignored it as something that is opinion not fact, however Moneyweek have completely changed my attitude on the basis of this graph:

Clearly the RICS survey has value, and most importantly it has predictive value. Anyone can tell you what Flat prices have done, what we all need to know is what are they going to do?  This graph gives us all a very clear picture as to where House Prices will be in 6 months time.

I was wrong. Flat Prices DO matter and we CAN tell what they are going to be.

If you have a view please express it at Property Price Predictions Week where expert views are summarised, but YOUR view is valued.