An entire generation locked out of property ownership

Cleaver

Graham_Devon wrote: »

We can, and probably should.

Only thing I will say is that I said from the start, renting NOW compared to taking on a 40 year mortgage NOW is the issue.

Taking a 40 year mortgage when house prices have fallen another 15% is a different thing altogether, and the sums will have changed.

My 3% assumed that we'll have booms and busts over the next forty years. So periods where we see 20% falls and maybe 50% rises. And vice versa.

As I say, let's stop this now. It's cool to have different views.

Thrugelmir

Cleaver wrote: »

So wage inflation has outstriped house prices if you look at the period between 1952 and now. Obviously that figure would look very different if you looked at the last ten or twenty years.

But in summary, you'd have to have a pretty wild theory as to why 3% inflation is seen as an excessive figure.

Found some figures that made interesting reading (although slightly out of date).

Average Salary 1982 £7,117 2007 £23,307
Average House Price 1982 £23.644 2007 £194,362

Little direct correlation between an increase in average salaries and house prices in this 25 year period.

Percy1983

chucky wrote: »

when house prices are low or are falling, interest rates are always higher or it's harder to get a mortgage. if property fell 15% you wouldn't get a cheap mortgage rate so you would end up paying more due the higher interest rate.

I would rather have a lower price and a few years of high interest rates than a high high and low interest rates.

If interest rates are high the only way they can go is down, when they do I have lessor capital to pay.

If interest rates are low they can only go up, to which if I have a massive amount of capital to pay it would be a disaster.

wotsthat

Graham_Devon wrote: »

Only thing I will say is that I said from the start, renting NOW compared to taking on a 40 year mortgage NOW is the issue.

Taking a 40 year mortgage when house prices have fallen another 15% is a different thing altogether, and the sums will have changed.

You seemed to be generally rubbishing the idea that it was cheaper to buy even with a 40 year mortgage. Then, based on your own figures, a number of posters demonstrated, beyond reasonable doubt, that even this unlikely buyer was up on the renter.

When it was explained that a more normal 25 year mortgagee would be streets ahead after 40 years you said that you accepted that , in financial terms mortgages were likely to be better than the renter.

Now your points been made because all along what you meant was that a 40 year mortgage taken today would look very different? We won't know if you're right until 2051!

I said earlier that people read this stuff. MSE posts regularly come up in google searches. I just hope anyone reading up about renting vs buying can see just how hard it is to make the figures look good for the renter.

JonnyBravo

Why is it the majority of people extolling the virtues of renting are desperate for house prices to drop so they can buy one? It's almost like they don't believe what they say deep down....

wotsthat

JonnyBravo wrote: »

Why is it the majority of people extolling the virtues of renting are desperate for house prices to drop so they can buy one? It's almost like they don't believe what they say deep down....

What's crazy is that as soon as someone takes a longer term view any argument that renting is cheaper is simply blown out of the water. The irony is that the longer the view the less relevant the initial price paid.

Percy1983

wotsthat wrote: »

What's crazy is that as soon as someone takes a longer term view any argument that renting is cheaper is simply blown out of the water. The irony is that the longer the view the less relevant the initial price paid.

This is very true, to me personally I will be getting rid of my mortgage asap to which actual price is very relevant. To which I will probably be paying more than I would be renting. On the flip side my rent/mortgage free days will come a lot sooner.

ukcarper

I know the whole argument is a bit academic as hardly anyone would have a 40-year mortgage and let it run the full term. But the total cost of a £160k mortgage at 5% over 40 years s £373,960, which is an extra £89k more than a 25 year, so it obviously makes sense to avoid it if you can. But you will be paying that in 25 years time when it will have been subject to whatever inflation we have so it is not as bad as it first appears.

PasturesNew

A place on my radar's just dropped again. Not going to buy it, just watching it. 2007 price £125k, today's price £60k. To rent it would be £450/month.

So, round this way, for somebody who wanted to be in that particular village and desperate, they could probably afford it as a single person if they had a deposit and a job. It's not a 1-bed flat either....

That's why I'm watching it - surprised it's not been "snapped up".... on the other hand, I could buy it rather than renting somewhere and I've not snapped it up either. Maybe £49k is the right price for it.

nicko33

PasturesNew wrote: »

Maybe £49k is the right price for it.

Make them an offer and find out