Will there be a correction?

Graham_Devon

The above will work ONLY for those who face the decision and HAVE THE FUNDS to buy.

It's a bit like saying that 1 year old car will probably last you longer than the 20 year old car, so. But if all you can afford is the 20 year old car, it's utterly irrelevant.

And thats what basic maths nad charts is to most "wanabee" FTB's. Irrelevant. If they can't buy for a multitude of reasons, a chart isn't going to fix that.

chewmylegoff

HAMISH_MCTAVISH wrote: »

If I buy a house, the only two prices that are relevant is the price on the day I buy and the price on the day I sell.

The fluctuations over the course of ownership are of no relevance, and do not result in either a "loss" or a "gain".

Given that the duration of ownership for a house is more likely to be measured in decades rather than days, short term fluctuations should be of little concern. The long term trajectory for UK housing can only go one way, and it isn't down....

surely fluctuations over the course of ownership are relevant, given that they are likely to have a direct impact on your mortgage rate.

HAMISH_MCTAVISH

Graham_Devon wrote: »

If they can't buy for a multitude of reasons, a chart isn't going to fix that.

For most there is only one reason.

The mortgage famine, and the resultant absurd deposit requirements banks have put in place to deter most people that could otherwise afford a mortgage just fine.

It's how they are shrinking demand for mortgages until it meets the limited supply of funding.

HAMISH_MCTAVISH

chewmylegoff wrote: »

surely fluctuations over the course of ownership are relevant, given that they are likely to have a direct impact on your mortgage rate.

Yes, theoretically.

But it's really only a concern if you have a short term deal.

In fairness, there are a lot of longer term products on the market now.

N1AK

Loughton_Monkey wrote: »

But if we are talking of a younger person (couple) wondering whether to buy now, then he is spot on. Mainly because we are talking of 40+ years. Over such a period, it is inconceivable there could be a 'loss' [compared to renting].

I set you, and anyone else for that matter a challenge.

I'll pass on your challenge because frankly it's way too much work to be worth doing for a debate and because I think buying (your own property) is very likely worth doing.

But here is a scenario where buying now (which is what you and Hamish say is a guaranteed great choice) would be a mistake. Someone buys now, house prices fall 10% in nominal terms over the next 12 months; they would have been better renting for an additional year and buying later.

I'm extremely glad that I didn't buy back in 2006 when I was first in a position where I could and instead waited until early 2011. I ended up getting a 3 bed-semi for the price I could have gotten a 2 bed flat, didn't have to maintain the property and was able to move twice, easily and at low cost, due to job opportunities.

Percy1983

HAMISH_MCTAVISH wrote: »

For most there is only one reason.

The mortgage famine, and the resultant absurd deposit requirements banks have put in place to deter most people that could otherwise afford a mortgage just fine.

It's how they are shrinking demand for mortgages until it meets the limited supply of funding.

I don't know how I managed to raise my 'absurd' 10% deposit.

I am confused, you say that deposits are stopping those who could afford a mortgage, but surely by definition if you can't afford the deposit you can't afford the mortgage.

Loughton_Monkey

Graham_Devon wrote: »

The above will work ONLY for those who face the decision and HAVE THE FUNDS to buy.

Well that's pretty obvious, I would have thought. This thread was started by someone who gave a pretty good indication that he's in a position to buy should he choose to do so. So that's what I assumed. You can assume what you like.

But in passing, the exercise would also be of value, though, even for those who do not have the funds. This is because many people who rent (at today's high rental costs) might well be able to afford the monthly cost of buying. It's just the deposit/fees that are the sticking point.

Are you saying that even these people shouldn't bother to identify how 'urgent' (financially) it is to save up the money and buy as an alternative to renting?

Loughton_Monkey

N1AK wrote: »

I'll pass on your challenge because frankly it's way too much work to be worth doing for a debate and because I think buying (your own property) is very likely worth doing.

But here is a scenario where buying now (which is what you and Hamish say is a guaranteed great choice) would be a mistake. Someone buys now, house prices fall 10% in nominal terms over the next 12 months; they would have been better renting for an additional year and buying later.

I'm extremely glad that I didn't buy back in 2006 when I was first in a position where I could and instead waited until early 2011. I ended up getting a 3 bed-semi for the price I could have gotten a 2 bed flat, didn't have to maintain the property and was able to move twice, easily and at low cost, due to job opportunities.

Well done. I've never denied it makes a small difference, but I think you understand the point I'm making. Just dreaming up figures... If you passed on £250K house, paid £10K a year rent, then bought similar house for £220, then wonderful. But in 40+ years time, it will be worth (say) £1,500,000. So you still would have made £1,250,000. In practice, you've now made £1,280,000 less any difference between rental cost and mortgage repayment. Not astronomic.

Graham_Devon

Loughton_Monkey wrote: »

Well done. I've never denied it makes a small difference, but I think you understand the point I'm making. Just dreaming up figures... If you passed on £250K house, paid £10K a year rent, then bought similar house for £220, then wonderful. But in 40+ years time, it will be worth (say) £1,500,000. So you still would have made £1,250,000. In practice, you've now made £1,280,000 less any difference between rental cost and mortgage repayment. Not astronomic.

What can you do with that money you have made though?

Ignoring the living rent / mortgage free argument for a minute, which is obvious the biggest benefit....you are just sitting on the wealth. You can't use it.

Percy1983

Even if prices drop I am on a winner, after another 24.5 I will be payment free, rent would never stop (as well as go up over time).