anyone else want a CRASH...?

meanmachine_2

cwcw wrote:

I find it hilarious that you would think that's what I meant. I'm not talking about a newish boiler blowing up and needing replacing. But obviously if your house has a 25 year old heating system, if you replaced it then at least some of the cost would be recouped when selling the property as it is an improvement that adds value and attractiveness to buyers.

It's more the mindset that anything related to the house is "investment", whereas anything else is expense.

An IO mortgage is an "investment". Rent is dead money.

The eagerness to "invest" in housing will quickly die should the speculative froth blow away.

In truth most internal changes are costs that get ignored or explained away when a property goes up in value due to inflation and inflation alone.

cwcw

meanmachine wrote:

It's more the mindset that anything related to the house is "investment", whereas anything else is expense.

An IO mortgage is an "investment". Rent is dead money.

The eagerness to "invest" in housing will quickly die should the speculative froth blow away.

In truth most internal changes are costs that get ignored or explained away when a property goes up in value due to inflation and inflation alone.

I agree that an interest only mortgage is as much dead money as rent, although it can still be very useful (e.g. if you wanted lower monthly repayments, you were confident house prices will keep increasing, and you expected a large inheritence to pay off the capital). It's when the interest element of a mortgage is less than the rent that would be paid for the property which is when I think buying makes more sense. It's a situation which is true for the property I'm buying.

tomstickland

sheraz2 wrote:

You live in a capitalist society, yet to see it working in it's true glory, creates a feling of resentment? MAybe that is the problem here.

And no, it's not selfish to want a place to live for you and your family. But to view it throug rose-tinted specs and want a crash without taking in to consideration the problems everyone will face is selfish, to want to win, is human nature, to want the other mans downfall in order for you to get your foot in and win, is selfish. And selfishness is motivated by that desire to get something on the cheap and ease!

No I don't have a problem because I bought a flat 6 months ago for sensible money and I'm very happy with it. I paid the going rate for the flat, which is about twice what it was 6 years ago. I accepted that that was the market rate for it; I didn't get involved in any "it's only worth £40K in historical terms" arguments.

However, I still think you labelling would be FTBers as being motivated by greed is wrong. They are motivated by a desire for starter properties to fall to an affordable price.

tomstickland

Life is as much about working smart as it is about working hard.

Have you turned your friend on to matched betting etc so they can make a big deposit?

Also, if your friend is serious, they should expect to have to borrow more than 3x salary these days. Tough but true i'm afraid.

What have you suggested to help them out?

I've told him to stay living at home for as long as possible, meanwhile clear all debts and start saving. Since house prices are already out of his reach there's no problem if they keep on rising and there's a good chance that they'll come back down in the next 4-5 years.
That's what I say to the many 20-30 year olds I know at work.

The current trend for high borrowing is going to keep going until the lenders finally hit the risk buffers. Even then a market-share madness will continue for a while I believe.

I also say that buying is OK providing you have the funds and can weather a fall in prices and rise in interest rates.

It's like buying a 2nd hand car; it's always a risk, but you don't just walk everywhere saying "I could have bought a car but it might have gone wrong". You do a risk-benefit sort of analysis and get on with it.


My description was more based on how it's sad that someone who works in an average sort of job cannot afford anything whereas ten years ago they would have been OK.

Snow_Dog

One of the most amusing and oft repeated conversations of the last few years is listening to people tell me how clever they are because they bought a place, slopped some paint over the walls and cleverly made £30K in six months.

There is absolutely no point in pointing out to them that if they had smeared the walls with dung they stood a good chance of still making the £30K profit (probably by selling to someone else who wanted to paint the walls and make a profit).

The same conversations recently have been more along the lines of them saying "I dont understand why its not selling, and the daffodil white is sooooo nice", trying to explain they need to ask the price they paid or maybe less isnt worth the effort or indeed the heartache.


As for wanting a crash, well thats just mad, because as has already been pointed out, almost no one sits pretty in a crash. Job losses, rampant inflation, rising interest rates, devaluing currency, falling stock markets, failing businesses.

PoorDave

sm9ai wrote:

Well most places the rent is cheaper than interest only mortgages. And by quite a margin.

I

Don't assume the whole country is like where you live! Do you have any actual evidence to back up what you've said here?

meanmachine_2

How about this one:

2 bedroom flat in N London. On sale for £349,000.

To buy it interest only at a modest 5% would cos you £1450.

You can rent it for 1200pcm.

Personally I think both the rent and the purchase price are insane. But that's because I'm clearly a nutter, right?

But there you go. Oh, and let's not forget the £2000 (!!!) annual maintenance charge, oh and the £20,000 needed to extend the lease back to 99 years.

I kid you not.

Happy now?

Alan_M_2

I rent a two bed semi in Surrey for £800 a month (not cheap - the going rate) nice area, neighbours house is up for sale at £250,000.

IO mortgage @ 5% = £1,050
IO mortgage @ 5.5% = £1,150
IO mortgage @ 6% = £1,250
IO mortage @ 7% = £1,450

The owner of my property cannot afford to live in it and my rent deosn't quite cover her existing mortgage.

cwcw

I think what some people seem to forget is that, outside of the south east of England, there's a whole world out there!

Alan_M_2

cwcw wrote:

I think what some people seem to forget is that, outside of the south east of England, there's a whole world out there!

I agree so in the interst of fairness, and a little market research, are there any renters outside the south east that can provide figures?