I Cannot See Value

Graham_Devon

HAMISH_MCTAVISH wrote: »

And that was excluding HPI, and maintanance, and costs of moving, and insurance and the 25 or 30 years of saving the buyer could do once the mortgage ended. WHen you include those, its back up around 70%.

Oh, the shiny thing comment.

I know I'm near the winning line now!

As you edited my quote, I edited yours too

I'm not sure if you missed the same thing being said the previous 19 times, or just turned a usual blind eye to the elephant.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Can I ask you a question then? Why are you not buying more houses? If your assumptions are correct, you will make an absolute fortune. You obviously have the means to do so, you have told us so many times. So why not buying?

Graham, you can spread bet on house prices.

If you or any of the other bears are so sure that you are right, and that prices will fall, then why have you not sold your house, taken all your savings and/or deposit fund, and bet the lot on prices falling?

If your assumptions are correct, you will make an absolute fortune.

You just spend all day telling the rest of us how good an investment it is?

No, I just like to argue, and I like to be right.

And given the overwhelming shortage of houses, and the fundamental laws of supply and demand, house prices are an easy win....;)

Graham_Devon

HAMISH_MCTAVISH wrote: »

Graham, you can spread bet on house prices.

If you or any of the other bears are so sure that you are right, and that prices will fall, then why have you not sold your house, taken all your savings and/or deposit fund, and bet the lot on prices falling?;)

But I haven't assumed anything.

I think there will be prices lowering. But I am not simply assuming there will be.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Oh look, a shiny thing.

Explain how the average person living in the average £160,000 house (used in the example) will spend £18,000 moving house.

And then explain why you have left out the costs of the 20 or 30 or 40 moves a person renting on AST's would likely have to do in 60 years......

HAMISH_MCTAVISH

Graham_Devon wrote: »

I think there will be prices lowering. But I am not simply assuming there will be.

Oh dear.....

ukcarper

Graham_Devon wrote: »

Now this is more like it.

None of that 30% rubbish.

What HAS been missed, however, is the average cost of moving, at the average moves per homeowner.

That, was something like 54k wasn't it?

Also what has been missed, is insurance for the person who has bought their home. Now, thats say £120 per year, without any inflation, just buildings insurance.

We won't go down the road of mortgage protection insurance, income insurance, life insurance etc, as this is all optional, but something many a mortgaged person will have for security.

We have also missed out maintenance of the property, of which is difficult to assume over 60 years, but nevertheless, even at minimum maintanance, it's doubtful the boiler, roof, brickwork, heating, water, electrics, windows and interior etc will not need some kind of maintance over 60 years. And I haven't even suggested a new kitchen over 60 years.

So, lets add just the first two up.

Buildings insurance, £120 per year x 60 years = £7200
Average cost for the average amount of moves, as research by Abbey = £54,000.

Take those costs OFF the buyers 300k = buyer has £238,000

So, renter has 275k, buyer has 238k + house. Based on your last sentence, which I think is slightly more realistic.

Shall we take 30k out for maintanance over 60 years? Thats £500 per year? Not too far out considering a new boiler could cost £2000 in itself pretty easily. Windows 4k pretty easily.

So, 275k pot for the renter
£208k pot for the buyer, plus asset wealth of £160k.

It has therefore cost the buyer 26% less, INCLUDING asset wealth. (excluding any type of new kitchen / bathroom and any type of optional, but normal, mortgage / life insurance).

No where near 30% of the cost for the buyer compared to the renter.

Now, I realise HPI is the clear forerunner here when it comes to the asset wealth for the buyer. BUT, HPI can also work in the favour of the renter, due to interest rates on their savings. It's the only thing we cannot really work out without taking the average savings vs average HPI rate over the last 60 years.

My figures are based on 50 years yours 60 so if I add in another 10 years of £775 compounded that’s another £100k + asset value was £175k. Therefore buyer £308k + house renter will have £335K

Total cost of renting = £775 X 12 X 60 = £558k - £335k = £223k
Total cost of buying = £558k - £483k = £75k

Graham_Devon

HAMISH_MCTAVISH wrote: »

Explain how the average person living in the average £160,000 house (used in the example) will spend £18,000 moving house.

And then explain why you have left out the costs of the 20 or 30 or 40 moves a person renting on AST's would likely have to do in 60 years......

I explained it already. Abbey did the research.

However, it's £15,800 each time, on average, based on 3.4x.

Easily achieveable, on average, when factoring in stamp duty, HIPS, legal costs of buying and selling, and removal costs.

The renter will just have removal costs.

HAMISH_MCTAVISH

Graham_Devon wrote: »

I explained it already. Abbey did the research.

However, it's £15,800 each time, on average, based on 3.4x.

Easily achieveable, on average, when factoring in stamp duty, HIPS, legal costs of buying and selling, and removal costs.

The renter will just have removal costs.

Yes, but 10 times as often. The amount is going to be very similar.

And you still have not explained how you can spend £15,000 per move.

I've never spent that much on a move. Not even when moving between different continents !!!!!!, let alone across town.

And I note you still have not included the other elephant in the room, of HPI at the long term average of inflation plus 2.9% per year......;)

Nor the 25 years of saving a buyer can do with the full mortgage amount once they stop paying the mortgage.

Give up Graham.....

The cost side of the equation is clear. A buyer spends less than 30% of a renter in actual costs. 25 years of mortgage interest, versus 60 years of rent.

The gain side of the equation involves comparing savings return for the renter, against 25 years of savings return for the buyer, PLUS the gain of the asset of the house, PLUS HPI on that asset for 60 years.

Buyer wins hands down again.

Graham_Devon

I shall give up Hamish, as it's just going round in circles.

You are right in your mind, and thats all that matters.

Charterhouse

The mortgage rate we used was 5%, 7.1% is what it goes up to with repayments. Otherwise the buyer doesn't end up with his house. Just clarifiying since as usual Hamish is changing the story.