Posted by jdavis on December 17, 2014
It seems that many retirees are getting excited at the thought of taking out all their pension fund and buying a property or two (as you do).
It's true. From April next year - though we don't have the details yet - you can cash in your pension and do with it what you like.
Of course, you'll have to pay tax on most of it, which will help the Government, in the short term as they'll get your tax in one go as opposed to over perhaps decades.
Then, you can put down your deposits. After all no-one loses with property. And THAT is the problem.
One of the definitions of a bubble is 'the belief that prices will rise because prices will rise'. Well, we have shown often that prices, outside of Greater London are no higher than 2004, prices have been up and up for 30+ years and interest rates are at all time lows.
We cannot be comfortable with this asset class given the wider economic conditions and the history.
We accept that 200k+ new residents annually probably has a positive effect on house prices in some parts. However, there are, to us, too many risks to this asset class, in the medium term.
We hope you are not caught out in the biggest ponzi in history. Unfortunately, we feel you will be, whoever you are.
By the way, are prices low or high:
You tell us.