Beginning of the end

[AtW]

For the relatively small difference in mortgage/rent, I think it's a better risk than putting it in a pension for Gordo to dip into whenever he feels like it.

How is it small difference? The whole issue is that the difference ain't small, example: my rent is £600 per month or £7200 pa. The property is worth over £200000, so even at 5% interest alone will be £10,000 - that's almost 30% higher already and surely actual interest will be 6-7%, plus need to repay main capital means that monthly payments will be at least double. And I will run risk of house price actually going down, no chance I say unless I have a few spare mils, which I don't, yet.

[tim123]

Well if you're disciplined enough, that may work. But most of us are not and property is a kind of enforced saving. If I had not invested in property I would have nothing now. Because I put a 2 or 3 small deposits down at the right time, I am now mortgage free AND can spend that money investing

Oh, so the only reason to buy a house is because the capital repayment part of the mortgage is 'enforced' saving?

Doesn't seem a good enough reason for me.

Nope. The reason to buy a house is because the TCO is less than the alternative. It is likely to be this, the paying less for your living expenses, that gives most people some savings, not the fact that they were forced to save (the capital part of a mortgage in the first 10 years is bugger all). For all of the 20th century, buying was cheaper than renting, so it's what people aspired to do, for good economic reasons.

Of course, the secondary reason to buy a house is because, historically, the value apprciates.

And here we have the problem The second reason has taken over from the first. For some reason, house prices started to appreciate faster than they naturally would and have reached the point where the normal economic reason to buy is no longer true.

But these rising prices created a feeding freezie. People see the rising prices and want a part of the action. They fall over themselves to buy into the rising market and continue to do so when the current price is far beyond the sustainable economic price. The only thing holding up the market is the number of people wanting to get into the market because of their belief that prices will rise even further. Such a system cannot be sustained forever.

Why buy in the current market when the TCO of renting is (and I am sure that it is) cheaper.

Anyone like to buy this nice tulip bulb that I have here?

tim

[wonderwaif]

How is it small difference? The whole issue is that the difference ain't small, example: my rent is £600 per month or £7200 pa. The property is worth over £200000, so even at 5% interest alone will be £10,000 - that's almost 30% higher already and surely actual interest will be 6-7%, plus need to repay main capital means that monthly payments will be at least double. And I will run risk of house price actually going down, no chance I say unless I have a few spare mils, which I don't, yet.

That's fine AtW. I understand your worries.
I had a mortgage in the early nineties when interest rates went through the roof, property prices fell, I lost my job and had a house worth less than my mortgage that I couldn't sell anyway.
That's why I did it right this time.
Been there, done that, still think it's better to buy.
(By the way, paid my mortgage by taking any work I could get - black market, joined a temping agency etc, weathered the storm and eventually sold at a nice little profit when the market improved.Property is always good in the long term).

ps it is small difference to me. As I said, I did it right this time.

[lws]

That's what property investment is all about. The right property at the right price. It can still be done, and is still being done.
You keep renting if it works for you, just don't keep trying to justify it by saying it doesn't make sense to buy.
It clearly does.

Property has gone up 300% over the last 7 years. If I can rent our place for £500 a month less for what it would cost to buy (not including insurance or maintenance, which is covered by our landlord), I don't see why that doesn't make sense

[AtW]

That's fine AtW. I understand your worries.

I wanted to have cash to be able to take risky SKA route, if I had morgage or a wife chained to my wallet then I would be much like you lot - now that's a scary thought

[tim123]

That's what property investment is all about. The right property at the right price. It can still be done, and is still being done.

Only by developer-investors.

I will wager that there is no-one who buys a house at today's (UK) prices, for themself to live in, who comes out ahead of the cost of renting over a 10 or 15 year period (including all the aggravation costs on both sides of the equation).

I agree with AtW, buying in the current market is not economically sensible (there may be other reasons for doing so).

tim

[wonderwaif]

Property has gone up 300% over the last 7 years. If I can rent our place for £500 a month less for what it would cost to buy (not including insurance or maintenance, which is covered by our landlord), I don't see why that doesn't make sense

Fine if it works for you. I just told AtW not to keep justifying his fears be saying home ownership is a bad deal.
It's a very nice deal for me thank you very much.
I'm only continuing this so I can get to 100 posts.

[AtW]

I'm only continuing this so I can get to 100 posts.

Now now, don't be a pig!

Home ownership is the right way, but not at any price - if more people had brains rather than money and herd mentality, this and many other bubbles would not have happened and the same very people would not have suffered consequences of their stupid actions.

[lws]

Fine if it works for you. I just told AtW not to keep justifying his fears be saying home ownership is a bad deal.
It's a very nice deal for me thank you very much.
I'm only continuing this so I can get to 100 posts.

You say you lost your job and interest rates went crazy overnight, but wouldn't have you been better off waiting then, as we are doing now?

There's nothing wrong with ownership but there's a time and a place, and that isn't at the peak of the current boom.

[wonderwaif]

Only by developer-investors.

I will wager that there is no-one who buys a house at today's (UK) prices, for themself to live in, who comes out ahead of the cost of renting over a 10 or 15 year period (including all the aggravation costs on both sides of the equation).

I agree with AtW, buying in the current market is not economically sensible (there may be other reasons for doing so).

tim

But what about the time after the 10-15 years. Rent free, saleable asset. (And rent free for your kids - add that saving in rent to your equation, even after taking off inheritance tax it's a huge saving for them.)
The media is highlighting how existing and future mass immigration is creating grave housing shortgages. Even if you can't sell the house you are protected against your rent going through the roof as there are'nt enough houses to meet demand.
That should be 97 now.