Bulls and Bears don't exist

IveSeenTheLight

the_ash_and_the_oak wrote: »

My interest isn't vested! I'm just a person. I don't go on tv or write press releases or act as an advisor to anyone!

Let's not wander off topic.
Vested interest is not the ability to manipulate events
http://en.wikipedia.org/wiki/Vested_interest

In other words, if an attitude object is deemed to have important perceived personal consequences, then that object is of high vested interest. For example, a 30 year old individual is told that the legal driving age is being raised from 16 to 17 in his state. While he may not agree with this law, it does not affect him as much as the 15 year old prospective vehicle operator. This example illustrates the point that highly vested attitudes concerning issues are related to an individual’s point of view of the situation.

StevieJ

the_ash_and_the_oak wrote: »

My interest isn't vested! I'm just a person. I don't go on tv or write press releases or act as an advisor to anyone!

Nothing to do with those things.
Vested interest =
A special interest in protecting or promoting that which is to one's own personal advantage.

MiserlyMartin

IveSeenTheLight wrote: »

There are not many people that STR as in your case of buying ans selling the same property.
If they time it perfectly then they can win, often they don;t time it so well.

Better example is buy for £100k with 10% deposit.
Lets say prices drop 20%, so the property is now only worth £80k
You've borrowed £90k and repayed £8,500 in capital
so in effect are in NE by £1,500.
The property you want to buy was £200k, but has also dropped 20% so is now £160k.
Granted the renter is better off as they are not in NE for £1,500 and have not lost their £10k deposit (or interest over the 5 years)
So roughly £14k better off, if prices drop 20%

If prices stay the same, then the owner has £18,500 in equity, while the renter has only the initials deposit plus interest, roughly £12,500.
Therefore if prices are the same, the buyer is better off

If prices rise 20%, the new property is now £240k.
The owner has £38,500 in equity, the renter still only has the £12,500
The £38,500 goes much better towards the deposit than the £12,500
The owner is better off

In short, as an owner, you are still likely to be able to afford the bigger propertys if prices fall.
As a renter, you may not be able to afford the bigger property if prices rise.

In my opinion you are reducing the risk of being able to buy the larger property by owning a smaller property instead of renting.

You have forgotten to take into account the interest payments of the house buyers mortgage and the renters interest earned on their savings?

IveSeenTheLight

MiserlyMartin wrote: »

You have forgotten to take into account the interest payments of the house buyers mortgage and the renters interest earned on their savings?

No I didn't, the mortgage interest is comparable with renting.

The renters deposit grew from £10k to £12.5k

the_ash_and_the_oak

IveSeenTheLight wrote: »

If prices stay the same, then the owner has £18,500 in equity, while the renter has only the initials deposit plus interest, roughly £12,500.
Therefore if prices are the same, the buyer is better off

Hang on a sec - the owner paid off 8.5k capital - the renter threw his equivalent 8.5k in the bin?

In short, as an owner, you are still likely to be able to afford the bigger propertys if prices fall.
As a renter, you may not be able to afford the bigger property if prices rise.

In my opinion you are reducing the risk of being able to buy the larger property by owning a smaller property instead of renting.

Yes but this is a different argument to the one upthread. And a much better one!

The argument upthread was over a 25 year time period. This is now a win/lose debate based on the likely timeframe of the period of ownership of house/flat#1 - and cost/benefit analysis should be performed on that basis imo

the_ash_and_the_oak

StevieJ wrote: »

Nothing to do with those things.
Vested interest =
A special interest in protecting or promoting that which is to one's own personal advantage.

oopsie! (tho Im hardly promoting. Its not a v good platform to use for promotion!)

And I don't have an interest in prices falling imo

IveSeenTheLight

the_ash_and_the_oak wrote: »

Hang on a sec - the owner paid off 8.5k capital - the renter threw his equivalent 8.5k in the bin?

Well that depends where you are renting doesn't it.
It would seem in London, renting may be cheaper, elsewhere in the country, buying is cheaper.

Maybe the person in London saved it, maybe they went out every weekend
Elsewhere in the country, where it's cheaper to buy, they definately have built up the equity in the property and not wasted it on rent :rolleyes:

NOTE I'm being pedantic here but I've lost count recently the rent v's buying debate wi=hich this is turning out to be again

the_ash_and_the_oak wrote: »

Yes but this is a different argument to the one upthread. And a much better one!

The argument upthread was over a 25 year time period. This is now a win/lose debate based on the likely timeframe of the period of ownership of house/flat#1 - and cost/benefit analysis should be performed on that basis imo

It's the same argument really.
If people upgrade their property, they are essentially starting again over the 25 year term (in general)
The discussion here has changed into whether they are better renting for five years or buying for five year, then start on the 25 year larger property.

The point I made at the start is whether anyone thinks priced will be bullish over the term of the property i.e. whether you buy for 5 years and then restart for 25 or whether you wait renting for 5 years then start the 25 year mortgage.

the_ash_and_the_oak

IveSeenTheLight wrote: »

Maybe the person in London saved it, maybe they went out every weekend
Elsewhere in the country, where it's cheaper to buy, they definately have built up the equity in the property and not wasted it on rent :rolleyes:

tbf you did have rent and mortgage interest as being equivalent in your example. If one is higher than the other then yes that should be factored in (also you didn't include the costs of buying and selling property#1 in your example which would take some of the extra 8.5k away imo)

The point I made at the start is whether anyone thinks priced will be bullish over the term of the property i.e. whether you buy for 5 years and then restart for 25 or whether you wait renting for 5 years then start the 25 year mortgage.

Ah in that case if I was buying a detached house then I think I would be bullish and if I was buying a flat I think I would be bearish (given the likely differing timeframes of ownership)

StevieJ

the_ash_and_the_oak wrote: »

oopsie! (tho Im hardly promoting. Its not a v good platform to use for promotion!)

And I don't have an interest in prices falling imo

So you don't wish prices to fall to buy a cheaper house, fair enough I was merely pointing out what vested interest can mean.

IveSeenTheLight

the_ash_and_the_oak wrote: »

Ah in that case if I was buying a detached house then I think I would be bullish and if I was buying a flat I think I would be bearish (given the likely differing timeframes of ownership)

Thank goodness for that.

So you believe flats in London (where you have been looking recently) will be lower in 5 years time. Ok.