House Prices to rise 27% in just 3 years.....

Dan:_4

Cannon_Fodder wrote: »

no prob.

Its Hamish who needs to explain why a 7.5% return after 8 years investment is a such good deal...

You get to live in your investment instead of wasting money on rent. At the end of the 8 years regardless of how much money you may have made, you are now only 17 years away from living rent free.

HAMISH_MCTAVISH

Cannon_Fodder wrote: »

no prob.

Its Hamish who needs to explain why a 7.5% return after 8 years investment is a such good deal...

Don't you mean 47.5%?????

The 7.5% return, plus the 40% you saved from lifetime housing costs by not paying rent for those 8 years.....:D As you're now 8 years closer to living rent or mortgage free.

the_ash_and_the_oak

you have to pay a little mortgage interest along the way imo

HAMISH_MCTAVISH

the_ash_and_the_oak wrote: »

you have to pay a little mortgage interest along the way imo

You have to pay that anyway, whether you buy in 2007 at 100K, or in 2015 at 107.5K.

But in terms of lifetime housing costs, every year of rent is a straight addition.

It only makes sense if prices are falling by more than the cost of rent, 5% or so a year. Which they did for 18 months, but are not doing now, and certainly won't over that 8 year period. Stagnation or even small price rises are bad news for delayed purchasers in terms of lifetime housing costs.

the_ash_and_the_oak

HAMISH_MCTAVISH wrote: »

You have to pay that anyway, whether you buy in 2007 at 100K, or in 2015 at 107.5K.

But in terms of lifetime housing costs, every year of rent is a straight addition.

It only makes sense if prices are falling by more than the cost of rent, 5% or so a year. Which they did for 18 months, but are not doing now, and certainly won't over that 8 year period. Stagnation or even small price rises are bad news for delayed purchasers in terms of lifetime housing costs.

don't really agree w this tbh. in the above scenario you wouldn't really be looking at a 25 year mortgage in 2015, you'd be looking at a 17 year mortgage imo

HAMISH_MCTAVISH

the_ash_and_the_oak wrote: »

don't really agree w this tbh. in the above scenario you wouldn't really be looking at a 25 year mortgage in 2015, you'd be looking at a 17 year mortgage imo

How? When paying rent at 5%, most people can't save enough to significantly shorten the term of a mortgage. And if they could, then they could just as easily overpay a mortgage and shorten the term that way, and save paying the extra 7.5% on the price.

Cannon_Fodder

Suppose a rental is the price of the interest on the same house - i.e. the rent pays the landlords IO mortgage...(check out the other forums for examples where landlords are subsidising their BTL mortgage, if you think that's unlikely)...

So, the money that would go towards repayment, if you had bought instead, can go towards savings/ISAs for a deposit.

In those 6-8 years (as you might aim for trough/stagnation rather than the peak again), that is a hell of a decent deposit, that will reduce your LTV, obtain you a better mortgage deal, and lead to much reduced lifetime purchasing costs.

And starting with a 20% lower price later, can make up for being later...1/5th of the time needed...

I agree that over a lifetime, buying can outdo renting overall. But there are good and bad and borderline timings.

If this report is accurate, there are two years of borderline at worst, possibly substantially for the good.

Those who are hinting at or openly pushing the "don't miss the boat" argument are being disingeuous, at best.

the_ash_and_the_oak

HAMISH_MCTAVISH wrote: »

How? When paying rent at 5%, most people can't save enough to significantly shorten the term of a mortgage. And if they could, then they could just as easily overpay a mortgage and shorten the term that way, and save paying the extra 7.5% on the price.

A person taking out a 25 year mortgage in 2007 will have only 17 years left to run in 2015

If rent is equivalent to mortgage interest (or, as in London, cheaper) then a renter is able to save an equivalent amount during that period - (ie if prices don't really move in 8 years and you can't save anything reallyu you prob shouldn't be buying in the first place)

If the rent isn't cheaper than mortgage interest well thats a different matter

Agree that the buyer could overpay the mortgage and shorten is term. Also think renter on equiv salary could put similar amount into investments/savings during that 8 year period (ie they'll both get a pay rise at some point imo)

HAMISH_MCTAVISH

Cannon_Fodder wrote: »

Those who are hinting at or openly pushing the "don't miss the boat" argument are being disingeuous, at best.

From Oct 2007 til Feb 2009, waiting obviously paid off.

Since then it's cost the average potential housebuyer 14K, plus 7 months rent, say another 5K or so.

As it stands today, delaying purchase since just February of this year will have cost some people buying modest houses an extra £19K or more.

How many of them have managed to save an extra £19,000 in 7 months do you think? Waiting can pay off..... But it can also cost you a bundle VERY quickly.

skap7309

Savills, the upmarket estate agent, anticipates.............................

I stopped reading at this point. Clutchingatstraws.com.