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Debate House Prices
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An entire generation locked out of property ownership
Comments
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Graham_Devon wrote: »A
The argument that we should allow only some inflation, but keep the savings on 3% is stupid.
Unlike other I have tried to avoid words like stupid etc so perhaps you can tell me why it is stupid to keep interest at 3% when there is inflation. Inflation is over 4% now but you try and get no risk savings than are better than 3% after tax.
And what £30k have I mislaid0 -
The point is ever if it does cost me more in total (which I doubt) I will have a house I can truely call home.
I agree. It's supposed to be the "bulls" who see houses as investments but with threads like this I'm not so sure.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
Graham_Devon wrote: »I'm not sure why we have to assume that the renter would use savings to pay their rent and the mortgagee would use earned income.
Lot of bias going into that calculation.
I used to think it was chucky but I'm beginning to wonder you accused me of being biased all I did was point out that things on both sides of argument had not been included.0 -
Unlike other I have tried to avoid words like stupid etc so perhaps you can tell me why it is stupid to keep interest at 3% when there is inflation. Inflation is over 4% now but you try and get no risk savings than are better than 3% after tax.
And what £30k have I mislaid
In FORTY YEARS TIME interest on savings is BOUND ot have changed.
The 30k you lost was explained to you. Compounded interest. But you insisted on adding unknown inflation again to rent to bring this figure down, and didn't add any extra interest fluctuations to the 40 year mortgage. Therefore leaving the renter at a disadvantage in your calculations as they suffered inflation, but the mortgagee didn't suffer any higher interest rates on their mortgage.
You are complaining I haven't allowed for HPI over the timeframe. Yet you cannot seem to grasp that I'm not complaining of the savings interest you have used. I'm simply accepting it.
YOU are complaining that I haven't accepted unknown HPI. Therefore I'm stating I haven't factored in unknown higher savings rates either. Therefore I'm not being biased.
God damn this is hard work.
If anyones got the time, or indeed, inclination, please work it out properly.
Average house price £160k.
Average mortgage cost (for new mortgages today)
Average rental cost (I believe £692)
Average maintanance costs.....enough information here to digest and figure out http://www.statistics.gov.uk/pdfdir/efsh0107.pdf so no one can complain of bias.
Average savings rate 0.8% (but I shall be nice as that figure is silly and includes loads of non paying accounts, 2-3%)
Average deposit, 27%. (I think?)
Forget unknown inflation, unknown interest rates, unknown rental increase / decreases. Its an impossible calculation. If you absolutely insist on using inflation etc, please, use the last 20-30 years of data as a rough baseline. That would be interest rates on mortgages at 8% plus. Interest rates on savings much higher than 3% etc etc etc.
It's all a bit pointless though, as as said, it's already been worked out. And even with dodgy inflation on rents and no change on mortgage interest rates ans the loss of 30k therefore to the renter, the renter still only came out 17k down. Sure, hasn't got the house. But that was never the actual issue.0 -
Let forget about everything both buyer and renter have no money rent £692 £160k interest only at 5% £666 add in maintenance and insurance better to rent. Do you think there will be no inflation over the next 40 years?0
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Let forget about everything both buyer and renter have no money rent £692 £160k interest only at 5% £666 add in maintenance and insurance better to rent. Do you think there will be no inflation over the next 40 years?
That's just going to the other end of the scale and again is an unfair comparison. Throwing toys slightly too with the last line.0 -
Look Graham I'm not arguing that in the short term it is better to buy I'm saying that in the long term it will always be cheaper to buy.0
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Graham_Devon wrote: »If anyones got the time, or indeed, inclination, please work it out properly.
Average house price £160k.
Average mortgage cost (for new mortgages today)
Average rental cost (I believe £692)
Average maintanance costs.....enough information here to digest and figure out http://www.statistics.gov.uk/pdfdir/efsh0107.pdf so no one can complain of bias.
Average savings rate 0.8% (but I shall be nice as that figure is silly and includes loads of non paying accounts, 2-3%)
Average deposit, 27%. (I think?)
BUYER: £160K house minus £43.2 deposit (27%). Nationwide will do a first time buyer 3.99% mortgage with no fee for this. Cost of mortgage over 40 years is £234K. At the end of the term they've spent £234K and have a £160K house. Total cost: £74K
RENTER: 40 years at £692 is £332K. They had £43.2K at the start - at 3% interest this will be worth £140K. Total cost: £192K.
That's a difference of £118K. Forget the initial valuation and maintenance - I can afford it.0 -
Sorry Everyone I have just notice I have made a mistake on spread sheet and only used 1 payment a year. Total mortgage payments should be £372k total rent should be £575k oops renter £200k less £44k down.0
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I’ll give you a practical example my house on which I has just finished a 25-year mortgage.
If I had put down 20% I would have put down £12k, back then it cost me less that £3k to buy so lets say I had £15k to invest at 8% compound I would have £103k now.
At 8% my mortgage payments would be £375 a month.
Don’t know what rent was 25 years ago but lets say it was £200 a month it is now a least £1200 it would require a rent increase of 7.5% a year to get from £200 to £1200 so using those figures total rent would have been just under £178k
Total mortgage payments would have been £112.5k. I have spent less that £3k on buildings insurance in that time and I have spent about £25k on maintenance and improvements.
So my total expenditure is £140.5k compared to £180k rent.
So if I had rented instead of buying I would have £103k in bank I have a house worth at least £250k and spent £40k less in mortgage payments than I would have done in rent.0
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