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Debate House Prices
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Risk
Comments
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HAMISH_MCTAVISH wrote: »If you needed to buy a house, which is the greatest risk, and how do you perceive that risk applying to you?
Buy now, and risk prices falling before recovering in the future..... You could perhaps have bought cheaper if you waited.
OR
Delay purchase, and risk prices going up and out of your reach forever.... You risk not being able to buy a house ever again.
Surely those are really the only choices facing potential buyers today?
Isn't the second option the greater risk with the worst consequences? Or am I missing something.
Hamish - the guy with such a scarily high interest in getting EVERYONE buying houses it is becoming quite creepy.
There is far more to life than spending every waking moment trying to raise the price of your house. :rolleyes:0 -
HAMISH_MCTAVISH wrote: »Monkeyman, your figures are a joke. Either explain your calculations or go away.
Are my numbers valid based on the assumptions given?
Yes (more or less), by all means set up a spreadsheet yourself
Is it likely that my assumptions are wrong?
Definitely. The only thing we can be certain of is that my assumptions are wrong. The input data relates to events which have not yet taken place.
So what is the point of the example?
The point of the example was to show that property is not by default a low risk investment. Like all investments it has strengths and weaknesses. Timing remains an important factor. Piling into property when interest rates are at historical lows and house prices remain within striking distance of historical highs suggests caution might be wise. If you then reflect on the prospects for incomes, unemployment and tax, the 'property beach' turns into a sea of red flags.0 -
HAMISH_MCTAVISH wrote: »And you still haven't addressed the demographics, housing supply and increased household density points from earlier.
Still, best not let logic get in the way when you want to believe something, eh?:rolleyes:
I didn't addressed your points because I couldn't be arsed. That's my reason. I do have a life and like to go out and do things on sunday afternoon.
Anyway, the wind is picking up and it's getting colder so I am back inside and I may as well give my opinion on the subject.
There is nearly a million empty properties in the UK.
I don't know anybody struggling to find a house or flat lo live mainly because there is plenty of empty places out there and plenty of choice too.
There is no shortage of properties, just a shortage of affordable properties. Remove the easy credit and prices fall back to a more reasonable level.
The End.More bearish than bullish at the moment0 -
Thank you for attending Macaque's advice clinic. Clearly your arrival is not a moment too soon. etc etc etc
The simplistic example that you provide only works when applying your heavily biased assumptions and simple mistakes (e.g. since when was stamp duty 2.8% on a 250k house).
Your central assertion seems to be based on property as an investment... perhaps you meant to post this on a completely different thread as neither the OP nor I spoke about property as an investment.0 -
Excellent point! I have now included for house price inflation.
Net capital loss/gain after 25 years
Home owner - £375,000 loss
Renter - £454,000 profit
Nest egg after 25 years
Home owner - £402,000 in the bank
Renter - £1,154,000 in the bank
Great, we can all be a millionaire in 25 years time!This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
Great, we can all be a millionaire in 25 years time!
:rotfl:
You could, if it wasn't for the fact that monkeyman plucked the numbers out of thin air.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
I'm thankful that it only took 3 pages to revert to drivel0
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Buy now risks
1) interest rates go up and i lose my deposit which needs to be about 20% of the house price these days.
2) I am trapped in a location i dont like because it is all i could afford or was ok at the time untill prices recover
3) i cant get a better job/reltionship/whatever because i'm stuck, opertunity cost is a real cost.
{other stuff i havent thought of as i recently started enjoying whiskey but am a total lightweight on the stuff and am several.measures in.}
buy later risks
prices go up to a point where i cant afford to buy, nobody else can either so the youth all p!ss off to countries where a family home doesnt need a lottery win to afford. Assuming im not one of the folkes who leave i then need to live in a country where i support more and more old rich retired old people till the russians/arabs/chinese buy the whole country as a ventriloquists dummy to the EU.
opton three,
zombie apocalypse, we are all stuffed as nobody owns a decent semi auto shotgun/ high call rifle to splat heads.
FYI you cant even hunt deer with a crossbow in scotland according to the the sports shop monkey i talked to about it !!!!!!.0 -
Thank you for attending Macaque's advice clinic. Clearly your arrival is not a moment too soon.
The first thing to bear in mind is that you don't acquire unecumbered ownership of a property until you have repaid the capital debt. The lender does not give you the deeds just for keeping up with interest payments over 25 years.
Secondly, you need to be more rigorous in your analysis to get to the truth. Here is an example by way of illustration:
EXAMPLE
Imagine a home owner buys a property and sells it after 25 years. He pays £250k with a 100% mortgage. If we see a repeat of the Japanese experience, the value of the home may only be £150,000 at the end of 25 years.
Costs to the home owner
Stamp duty (3%) - £7000
Estate agent (2%) - £5000
Legal fees - £3,000
Maintenance (1% per annum) - £62,500
Mortgage costs (repayment mortgage at 6.5% interest) - £525,000
Total cost of ownership = £602,000
Money left after sale of property = £150,000
Net loss after sale of property = £452,000
Someone else however decides to rent and invest the difference. He can rent a comparable property for about £800 leaving him £950 a month to invest. If the renter gets compound growth of 6.5%, he will have a nest egg (after tax) of about £500,000.
So here is the summary:
Net capital loss after 25 years
Home owner - £452,000 loss
Renter - £24,000 loss
Nest egg after 25 years
Home owner - £150,000 in the bank
Renter - £500,000 in the bank
In other words, the home owner would have one house and no savings at the end of 25 years. The renter by constrast could buy three similar properties and put £50k in the bank.
Macaques tip of the day: Property is not the only option for investment.
And why would he want to buy 3 properties if they're such a bad investment?
This post of yours should be made into a sticky on the Joke thread! It's utterly insane! You cannot be serious!
Are you seriously saying that in 25 years time a property worth £250know will only fetch £150k???:rotfl: Sounds like your calculator's playing up!:D
Twenty five years ago you could have picked up a place now worth £500k for £50k!
And savings, investments, shares etc are no guarantee of growth! You only have to look at how much people have lost on their savings now to see that!
I think you need to go and complain to your primary school teacher for not teaching you the basics.0 -
I'm sure the Japanese found their experience a great joke too. Absolutely hilarious.
Apparently.0
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