How many people here have sold to rent (anticipating a crash)?

roswell

Good to hear, sounds like you have done the research and are making the choices fully aware of all posibilities which is a lot better than the rest of the population in my view.

Thanks for a excellent debate.

franklee

roswell wrote:

Good to hear, sounds like you have done the research and are making the choices fully aware of all posibilities which is a lot better than the rest of the population in my view.

Yes I've done a fair bit of research.

roswell wrote:

Thanks for a excellent debate.

Thank you too, it's been very interesting

Alan_M_2

franklee wrote:

Wanting a home now and being prepared to pay over the odds for it is a perfectly good reason for buying now. It's the "it's OK if you are in it for the long haul" that I'm objecting to as that implies the buyer won't be losing financially when of course they will. That prices will recover after any drop makes no difference, buying low is still a financial advantage buying high a financial disadvantage.



Of course we don't *know* we are at the top. That's for each of us to make our own minds up about. I am willing to put my money down and say we are. If others aren't then that's fine. At least the "I want to buy now and am prepared to take the risk of paying over the odds" is being honest whereas the "it's OK to buy now if you are in it for the long haul" is just a way of disguising the issue. Just like the renting is dead money mantra is. Basically people use such things to delude themselves that it's safe and sensible to buy now without having to think it through and see the risks they are taking. And before you say STR is a risk, of course it is, and it doesn't have any silly mantras to disguise it!

What you are doing here is applying you personal perspective and understanding to what's happening with the housing market, and that's just fine because we're all entitled to a point of view.

But understand (and I've said this numerous times on this forum) you'd be surprised how oblivious to economics the general populous are, I'm not saying people are stupid, I'm saying they simply chose not to take an interest.

Also, your scenario is an issue for First time buyers only, as anyone who has been in property over the last 5 years or so has benefited from the very gains that you're suggesting precludes them from selling, if they want to cash in and liberate some cash on the off chance prices fall substantially then that's just fine. But they will be gambling with more than an investment, they'll be gambling with the roof over their head at the same time. To most people this creates more stress due to how we perceive our homes as British Citizens.

My point being, if you've "made" £100,000 in equity in the last few years, it's totally irrelevant if you lose £100,000 in equity over the next 5 years, beacuse until you sell an asset to realise any capital gain, you've effectively made nothing other than a paper gain.

Your argument is however very strong for a FTB, however the OP and here OH own a property each, which I assume have benefited from an increase in capital value over the past five years or so, which actually makes the argument mute.

bloomsberg78

I sold to rent. Main reason for me is that personel circumstances changed and I needed to move from where I had my property.

But I have a long term goal, I want to retire at 55 and to do this I worked out I need to grow my annual worth by 10% each year, and I'm currently on track. (I started this about 5 years ago)

In my judgement tying my £ up in property at the moment is not the best option for me to acheive my goal. So I'm renting at the mo and have my money tied up in various investments(mainly lots of unit trusts) and they have turned a healthy 10% profit since June (when I sold my house).

The reason for my conclusion is that in my circumstances, house prices would have to continue to rise at over 10% per year for the next 5 years for me to be worse off and even then I wouldn't be that much worse off. In balance I see my money safer in equities, bonds and Cash than property.

When I feel the housing market is ready to start turning decent profits again, i'll have no issues in going back in and hopefully at that point would have enough to buy outright without a mortgage.

I have to stress what I am doing is what I feel is best for me!, to STR in the way I am doing it, you have to have a fairly high degree of financial control and pretty good budgeting skills. If you're someone who itches to spend every last £, just because it's there, then in my view this is not for you. I have strict annual targets, which really help me control my spending, and I always stick to them.

I also subscribe to the view that if you're looking at a property to live in, longterm(i.e 15 years), then I personally wouldn;t worry too much about a house price crash, although I would have resevations about buying at this precise moment in time.

Gorgeous_George

If everyone sold to rent, we'd have millions of BTL LLs. What a wonderful world it would be.



GG

franklee

Alan_M wrote:

What you are doing here is applying you personal perspective and understanding to what's happening with the housing market, and that's just fine because we're all entitled to a point of view.

What are any of us doing other than applying our personal perspective and understanding when we post here? Do you have some hot line to somewhere we should know about and if so what does it say

Alan_M wrote:

But understand (and I've said this numerous times on this forum) you'd be surprised how oblivious to economics the general populous are, I'm not saying people are stupid, I'm saying they simply chose not to take an interest.

I agree the masses are oblivious, but not the OP in this case who has after all taken enough interest to ask about it. I think we can assume all on this thread take an interest.

Alan_M wrote:

Also, your scenario is an issue for First time buyers only, as anyone who has been in property over the last 5 years or so has benefited from the very gains that you're suggesting precludes them from selling,

My scenario is most certainly not for first time buyers only. But yes of course many people have gained over the last 5 years but what have I suggested precludes who from selling and why? I don't recall saying any such thing! In fact as an STR haven't I sold and pocketed the gains, it's rather what my accounts say....

Alan_M wrote:

if they want to cash in and liberate some cash on the off chance prices fall substantially then that's just fine. But they will be gambling with more than an investment, they'll be gambling with the roof over their head at the same time. To most people this creates more stress due to how we perceive our homes as British Citizens.

The OP had said that they would have to stretch themselves to buy the house they want and that they are risk adverse. Given the market as it is now I would say stretching to buy is pretty risky, more so than selling and renting for a bit, so which is really the gamble?

Alan_M wrote:

My point being, if you've "made" £100,000 in equity in the last few years, it's totally irrelevant if you lose £100,000 in equity over the next 5 years, because until you sell an asset to realise any capital gain, you've effectively made nothing other than a paper gain.

Well I have made £100,000+ in equity and it would be totally relevant to me if I lost it so I sold up and banked it But the OP if they stretch to buy could well have a bigger debt than if they'd waited so from that point of view they could gain from waiting just like the FTB.

Alan_M wrote:

Your argument is however very strong for a FTB, however the OP and here OH own a property each, which I assume have benefited from an increase in capital value over the past five years or so, which actually makes the argument mute.

Why? Just because the money they will get from selling their two properties will be a windfall from house price rises? The OPs need that money to buy the new house and it will still be a stretch. It is all real money that makes a real difference to their lives.

For anyone wanting to move anyway, as the OP does, then it is worth at the very least running the STR sums. For anyone happily ensconced in the family home then of course they should stay put.

Frankly I don't think I've a lot to lose but plenty to gain. Unless Gordon cheats on inflation and get interest rates cut too low.

If prices remind stagnant then I'll win as I'll at least have broken the chain an put myself in a better negotiating position for buying.

If prices fall I'll do very well.

If prices take off again I'll lose. Now who really thinks they'll do that? If you do then obviously don't STR.

roswell

But if we had hyper inflation then house prices wouldnt need to come down wages woudl just need to catch up.

franklee

roswell wrote:

But if we had hyper inflation then house prices wouldnt need to come down wages woudl just need to catch up.

But then what would happen to interest rates? What would happen to debts? No one would want to be lending money if that money when it's paid back is worthless... You would need high interest rates or to call in all your debts pronto so you could spend your cash before it becomes so much waste paper... Strikes me that lenders would be anxious to repossess before things get out of hand.

bloomsberg78

franklee wrote:

.
If prices remind stagnant then I'll win as I'll at least have broken the chain an put myself in a better negotiating position for buying.

If prices fall I'll do very well.

If prices take off again I'll lose. Now who really thinks they'll do that? If you do then obviously don't STR.

These are my thoughts exaxctly. I'll only lose out as a STRer if house prices continue to grow at the pace they have over the last 5 years, and even then I wouldn't get left behind, I would still be able to afford to get a foot back on the ladder if and when I feel I'm ready.

I've done my sums 1000+ times, even some of my close family think i'm crazy, but the problem with the country is that it has been ingrained into nearly every brit that buying is always better than renting. But actually, if you do the sums yourself, you'll find that, this isn't always the case.

lynzpower

These are my thoughts exaxctly. I'll only lose out as a STRer if house prices continue to grow at the pace they have over the last 5 years, and even then I wouldn't get left behind, I would still be able to afford to get a foot back on the ladder if and when I feel I'm ready

exactly how I feel. However, Id go as far to say that ifg the property market keeps rising in the next 5 years in the areas we mighr want to buy in the way they have over the last 5 years, then this mug will probalby keep my money and swan off to the carribbean and buy a bit of land with it. Im certainly not getting into this race to own "anything" if its getting more expensive if its something I dont NEED ( ie a mortgage)