Cheaper to buy than to rent

mrginge

Callie22 wrote: »

I'm really, really sick of this tired old argument that's trotted out every time there's a debate on house prices. How stupid of me, I never realised that the main reason my partner and I can't afford a house is because we have Sky (which we don't - we don't even have a TV), because we smoke and drink (although actually OH and I do neither) and because our house is full of new technology (nope, looking round can't see any of that either - I can see a £17.99 PAYG mobile phone and a laptop from 2004, but if someone could tell me where I've hidden my ipad, iphone etc etc then I'd be ever so grateful ...) and because we spend all of our money going out (so I'm not sure what I was doing last night cooking a meal from scratch so it fits within my food budget, and then doing the ironing ...)

However, if it makes people feel all smug and superior to spout the standard, pointless argument then they can go for it. God forbid anyone accepts that it is virtually impossible for ordinary,working people to save the huge deposits needed to buy when you're renting - rents are too high, and then any savings you do manage to achieve get swallowed up every time you end up having to move. Maybe I'll buy myself an iPhone (ooo, I'll do it on credit too!!) just to make other people feel like they're right ...

I am right. You have choices. You want to buy a house. Houses at the moment are very expensive compared to incomes. If you choose to wait you may find that houses become more affordable in the next five years. Or they may not. I assume that no-one is forcing you to buy a house?

If you're telling me that you can't afford to save any money while renting then how do you expect to afford a mortgage and running costs? What if interest rates go back to 3%?

HAMISH_MCTAVISH

mrginge wrote: »

What if interest rates go back to 3%?

If you think that's a problem, take a 25 year fix at 5.24% today.

I think you'd be mad to personally, but the choice is there and it's still cheaper than rent.

The problem is of course saving the 20% deposit....

Coopdivi

mrginge wrote: »

I heard that some young people who wanted to get on the housing ladder were having to resort to measures such as - cancelling sky, not having an ipad, stopping smoking. Surely this is a breach of their human rights.

If they were earning 35K a year like you claim to they'd be able to have all that and more.

HAMISH_MCTAVISH

mrginge wrote: »

Houses at the moment are very expensive compared to incomes.

No they're not.

Houses are currently 4.3 times full time male, mean, average income, compared to the long term average of 4.3 times full time male, mean, average income.

But the long term average was set during a time when rates were often 10% to 15% or more, versus today when it's unlikely we'll see 5% base rates until the peak of the next cycle in another 15 years or so. If ever again.

So the percentage of after tax income paid for a mortgage has fallen to just 28% of income, versus the long term average of 38% of income.

It has almost never been cheaper to buy a house than it is today.

And anyone out of the market just now has been missing a once in a lifetime chance to pay off their mortgage in a decade while rates are this low.

Callie22

mrginge wrote: »

I am right. You have choices. You want to buy a house. Houses at the moment are very expensive compared to incomes. If you choose to wait you may find that houses become more affordable in the next five years. Or they may not. I assume that no-one is forcing you to buy a house?

If you're telling me that you can't afford to save any money while renting then how do you expect to afford a mortgage and running costs? What if interest rates go back to 3%?

I can and do save - like any sensible person I aim to save at least a third of my salary every month. However, it's going to take me a long, long time to save up the £25k + that I'm likely to need as a deposit and that's not helped by the insecurity of the rental market. My partner and I moved last year and in total, it cost us over £3k - we've *had* to move pretty much every year for the last eight years due to a combination of jobs and bad landlords so every time we do, the savings take a hit.

And no, of course no-one is forcing me to buy a house. But anyone who tries to claim that renting in this country is anything other than a b****y miserable series of humiliations at the hands of unqualified, unregulated amateurs is fooling themselves, so of course people aspire to owning somewhere of their own.

katejo

HAMISH_MCTAVISH wrote: »

No they're not.

Houses are currently 4.3 times full time male, mean, average income, compared to the long term average of 4.3 times full time male, mean, average income.

But the long term average was set during a time when rates were often 10% to 15% or more, versus today when it's unlikely we'll see 5% base rates until the peak of the next cycle in another 15 years or so. If ever again.

So the percentage of after tax income paid for a mortgage has fallen to just 28% of income, versus the long term average of 38% of income.

It has almost never been cheaper to buy a house than it is today.

And anyone out of the market just now has been missing a once in a lifetime chance to pay off their mortgage in a decade while rates are this low.

Yes they are still expensive. I bought my first place in East London in 1993. It cost 41 K and i was earning 14K which gave me a mortgage up to 42K. If i had left buying until now, I would get nothing. My max mortgage would be about 90 K and I would be spending approx 1K a month on renting a small flat (66% of take home pay). My current mortgage is around £300 a month

EmmaHerts

It's nice to see the people who were able to live rent free with their parents' for years looking down on the people who did not and do not have that luxury.

demontfort

In some case it may be cheaper to buy than to rent however in many cases including mine it isn't. The Halifax calculation doesn't factor in declining house prices, future increases in mortgage interest rates or the potential returns gained from investing your deposit money in other more profitable asset classes.

Yes renting is money down the drain but so is mortgage interest & arrangement fees and so is paying over the odds for a house that is likely to fall in value over the coming years. :rotfl:

mrginge

HAMISH_MCTAVISH wrote: »

No they're not.

Houses are currently 4.3 times full time male, mean, average income, compared to the long term average of 4.3 times full time male, mean, average income.

I'm sure you have the figures to back that up. As far as i recall average house price is around the 160k mark? That would make the average full time male income equal to....

Ellie83

It helps when you're part of a couple. We would live on my husband's wage and put mine in the savings account.

But we were also helped by the fact that I inherited some money which was ear marked for a house purchase.