Reply to: House prices 'to fall off cliff'

[DimPrawn]

Why house prices can go up forever.


In the past, when taking out a mortgage, you were expected to pay off the capital and pay the interest. Banks and BS insisted on this.

Hence, even if interest rates were very low, massive house price rises would be limited by the ability to pay off the capital.

Then came along the free and easy concept of interest only.

What this means is that prices can rise to almost any level as long as interest rates are held artificially low. Infact, if banks gave people interest free mortgages and based the lending figure on "affordability", house prices would become infinite.

The idea now is you buy on interest only (say at £500K for your bedsit) and in 20 years time you sell up at £5M, pay the £500K off and walk away with £4.5M

Sorted.

So with interest only loans and low interest rates and lending based on "affordability" there really is no limit to the price of a house.

To infinity, and beyond!

[bogeyman]

You sound like his ex now.

ha ha

[AtW]

He's only a problem when he sneaks under the dining table and 'lets one off' during the pudding course.

You sound like his ex now.

[Doggy Styles]

But I do like Churchill !!

He's fine if you keep him outside in garden. He's only a problem when he sneaks under the dining table and 'lets one off' during the pudding course.

I do that.

[bogeyman]

Is this why you don't like Churchill?!?!

Sorry Spod - just joking here

But I do like Churchill !!

He's fine if you keep him outside in garden. He's only a problem when he sneaks under the dining table and 'lets one off' during the pudding course.

[AtW]

I'm pretty tolerant regarding pets (unlike a lot of landlords). Cats and small dogs are ok. Big smelly dogs that bark incessantly and crap all over the place are NOT ok and are indicative of the sort if tenant I don't want.

Is this why you don't like Churchill?!?!

Sorry Spod - just joking here

[bogeyman]

Surely you can see the contradiction in terms here You are a landlord of "a few properties" which you are renting out to tenants who are paying off your mortages for you. But you are advocating that people should not buy but rent. Maybe you should post on here your properties to people when they become vacant so that they can assist you in paying the mortgages.

And as regards to everyone in the US of A renting, then you must have been to a different country to me. Didn't you see the flagpoles outside ?

I said if I was starting again, NOW, I would rent.

You assume a lot of things too. For example: "tenants who are paying off your mortages for you".

FYI, I have no mortgages.

[bogeyman]

Tenant's rights in this country are ****. That's a good reason to buy - especially if you like pets that most landlords don't.

I don't mind buying, but I do mind paying over the odds and saddling (sp?) myself with a risky debt that can bankrupt me.

I'm pretty tolerant regarding pets (unlike a lot of landlords). Cats and small dogs are ok. Big smelly dogs that bark incessantly and crap all over the place are NOT ok and are indicative of the sort if tenant I don't want.

You can sort of judge a person by the pets they keep.

[Ruse]

I don't think it's a strange question at all.

Having lived in mainland Europe, and metropolitan Canada for quite a few years, where almost nobody actually buys their house/apartment, I wonder why it is considered the epitome of success here, to own a bundle of bricks and mortar.

Surely you can see the contradiction in terms here You are a landlord of "a few properties" which you are renting out to tenants who are paying off your mortages for you. But you are advocating that people should not buy but rent. Maybe you should post on here your properties to people when they become vacant so that they can assist you in paying the mortgages.

And as regards to everyone in the US of A renting, then you must have been to a different country to me. Didn't you see the flagpoles outside ?

[AtW]

Having lived in mainland Europe, and metropolitan Canada for quite a few years, where almost nobody actually buys their house/apartment, I wonder why it is considered the epitome of success here, to own a bundle of bricks and mortar.

Tenant's rights in this country are ****. That's a good reason to buy - especially if you like pets that most landlords don't.

I don't mind buying, but I do mind paying over the odds and saddling (sp?) myself with a risky debt that can bankrupt me.

[bogeyman]

Strange question, the obvious aim of buying is so that one day, hopefully sooner than later, you pay off your mortgage and have a much greater degree of financial independence without the major outgoing of a large monthly payment to a landlord or bank/buliding society. In your case you are getting someone else to do it for you and presumably getting a nice little income as well.

Personally I have the equity from the sale of a previous house sitting in an account earning very little interest. So I'm just trying to time somewhere close to within 10% of the bottom of the market before jumping back in.

I don't think it's a strange question at all.

Having lived in mainland Europe, and metropolitan Canada for quite a few years, where almost nobody actually buys their house/apartment, I wonder why it is considered the epitome of success here, to own a bundle of bricks and mortar.

[Ruse]

Why not just rent?

What is the obsession in the UK with buying houses?

Strange question, the obvious aim of buying is so that one day, hopefully sooner than later, you pay off your mortgage and have a much greater degree of financial independence without the major outgoing of a large monthly payment to a landlord or bank/buliding society. In your case you are getting someone else to do it for you and presumably getting a nice little income as well.

Personally I have the equity from the sale of a previous house sitting in an account earning very little interest. So I'm just trying to time somewhere close to within 10% of the bottom of the market before jumping back in.

[AtW]

Bad luck. I think you're right to stick with rental though. Especially if you're working hard getting your business off the ground. The last thing you need is a mortgage.

Indeed - with a morgage I would not be able to quit working for someone else.

I should have bought in 2000 or so, but back then I did not have permanent residency, so it was too risky from my point of view.

Current prices for real estate too high - either them or pound will have to fall, or some serious inflation (after £ falls).

[bogeyman]

Nope, invested all my money into SKA

One house nearby that did not sell / get rented for the last 3 year is now gone - ******s, I was thinking to move into it (renting) before Xmas

Bad luck. I think you're right to stick with rental though. Especially if you're working hard getting your business off the ground. The last thing you need is a mortgage.

[AtW]

Still no property in your investment portfolio then?

Nope, invested all my money into SKA

One house nearby that did not sell / get rented for the last 3 year is now gone - ******s, I was thinking to move into it (renting) before Xmas