I'm better off renting - or am I?

zar

keeko wrote:

The positives:

I'm a First Time Buyer.
I earn nearly £30K per year.
I am debt free.
My rent is £290 per month (less than £3500 per year).
I don't live very extravagantly and so I've been saving for the 3 years I've been in my current job (I earnt much less before and have been disciplined enough to save much of my excess income). I have approx £25K saved plus around £10K in shares (mainly Building Soc "windfalls")
My monthly outgoings mean I have around £800 left to save each month.
I live in a nice flat (I share with 3 nice people)

I'm nearly 33 years old, perhaps it's time to get a place of my own.
I live in South East England and the property prices are very high.
£150K for a 1 bed flat - which wouldn't be as nice as the flat I'm living in now.
A £160k mortgage (less a £25K deposit) would cost me about £860 per month.

And (this is the big one)

I'm sure property prices are going up faster than my savings despite my best efforts!

It's funny, when I read your post I thought - of course he should carry on renting, it would be madness not to! - And yet I too worry about whether I should carry on renting and my own situation is not very dissimilar. Even though I spend a lot of time reading posts on here and HPC/GHPC that are reminding me that it does make more sense to rent if the rent is less than the I/O mortgage (not even considering maintenance) as long as prices aren't rising fast, in the real world the sentiment from friends and family is always that buying is best so I guess its just confusing having conflicting brainwashing.

Why spend more money on somewhere to live that isn't as nice as where you are living now? The only reason is if you think it will make you lots of money.

I'm 25 and I only have one friend (in my age group) who has bought a flat out of all my aquaintenace - and she's got an interest rate mortgage and is hoping for price rises so she can move somewhere bigger as she has since acquired a partner and a dog. I've looked into trends in that area, and I doubt she'll have made much, probably not enough to pay the fees/costs (she's been there 2 years). So I've gone from a slight feeling of jealousy to relief that its not me taking the risk, although I wish her well of course.

My advice to you, and indeed to myself, is to keep a close eye on overall local and national trends in prices in the type of property you are after. You say you are "sure" prices are going up faster than your savings - have you done the research? Maps like the yahoo ones are good fun though unfortunately not very up to date.

Have you considered your future earnings - on average apparantly you stay at your current salary (plus inflation) from your early 30s onwards (obviously this isn't true for everyone). So you might not be able to afford to move "up the ladder" in the future if you stretch yourself for a flat now. If your savings are earning about 5% and houseprices are increasing by not much more, or less, then you aren't losing anything by waiting. You may even gain something if prices dropped. In the meantime enjoy your current property! Who cares if you are renting off the bank via a BTLer rather than directly?


lowis - sorry I do think you're a bit mad But as long as you think its right for you and your goals then that is all that matters as you say.

lowis

i know zar - but i can buy it for £92k - it's in EC1 (VERY sought after post code) and the cheapest 1 bed flat currently listed in that area is for sale at about £160k and is not as nice as mine or as well located. i could also rent it out for atleast £900 a month. so yes, actually living in it is possibly not very financially savvy :-)

i don't know about anyone else here but almost everyone in my age group (and older) who I know and who still aren't home owners always say something along the lines of "I wish I had bought property when I was younger"

MiserlyMartin

Jim_B wrote:

Is the correction coming? The Beeb never used to say things like this. http://news.bbc.co.uk/1/hi/business/5153140.stm

No surprise there. The halifax has been far more optimistic than nationwide. Halifax have the annual rate as 9.4% whereas nationwide make it 5%.They are correcting themselves for they are looking a bit stupid. By the way, breaking those figures down they have the quarterly figures for Scotland up 5.7%, South West 3.4%, East Anglia, 3.5%, North West 0.2%, North 0.9% and Wales, down 0.8%