House prices are now back to 2002 levels.

ukcarper

Jegersmart wrote: »

What is this? Mortgages?

J

http://www.bsa.org.uk/docs/statisticspdfs/mortgages/mortgage_interest_rates.pdf
Yes

paulmapp8306

I think the point here, is that in "real terms" - ie what housing costs in relation to other things - houses ar ethe same now as 10 years ago. That IMO is how it should be. By that I mean it doesnt cost more than it did then - and it doesnt cost less.

Obviously thats rubbish as an investment - but then Ive lost track how often Ive said houses are homes not investments. In fact the investment market has a lot to do with how high prices went (and in fact still are I guess) - though thats a different (also over done) argument.

Ultimately its a home - and it really doesnt matter whether you may a mortgage, or rent. Cost wise, by the time you work out maintenance, interest etc its pretty much of a muchness until the house is paid for. Once that happens ownership is a no brainer.

What the OP is pointing to here - is that in these "real terms" and compared to everything else we have to pay for - buying a home is neither more or less expensive than 10- yars ago. A Status Quo in fact - which from a pure ownership POV is ideal.

MrAuthor

ukcarper wrote: »

and his wages probably haven't keep up with inflation.

Wages round my way are far less than real inflation. I do not know which inflation figures most go on these days, but looking at how much utilities and travel cost have inflated, no way wages can keep up.

IveSeenTheLight

paulmapp8306 wrote: »

Obviously thats rubbish as an investment - .

Ahem, are you forgetting the 10 years rent received.

Generali

IveSeenTheLight wrote: »

Ahem, are you forgetting the 10 years rent received.

I don't know about the rest of the country but for the period 2002-2008 at least, renting was considerably than buying so yields were considerably less than the cost of borrowing. It is an offsetting factor though of course.

IveSeenTheLight

Generali wrote: »

I don't know about the rest of the country but for the period 2002-2008 at least, renting was considerably than buying so yields were considerably less than the cost of borrowing. It is an offsetting factor though of course.

That's nothing to do with the context of the point though, is it.

According to the OP, there has been 35% inflation from 2002 - 2012.
According to the LR, the average property in England and Wales in Oct 2002 was £115,856 and in Oct 2012 it's £161,605 (39.49%)

Therefore in real terms prices have effectively maintained their REAL TERM value, whilst also taking in a rental return from the investment.

The FTSE 100 between Oct 2002 and Oct 2012 was 43%, so no huge discrepency
The FTSE 100 shares are also down 18% from their Dec 1999 peak.

Would you get the same returns from shares as you have from rent?
Also, equity qould potentially have increased in the investment as the capital is paid off, further advancing the investment value of the property investment

Sampong

Anyway, what will happen to house prices when the government start building on greenbelt and filling then full of Eastern Europeans?

IveSeenTheLight

Sampong wrote: »

Anyway, what will happen to house prices when the government start building on greenbelt and filling then full of Eastern Europeans?

Were attempting to discuss the cause and effects of building 1.5 million homes by August 2014 on this thread
https://forums.moneysavingexpert.com/discussion/4326037

Were a long way from getting to the impact on house prices

robmatic

IveSeenTheLight wrote: »

That's nothing to do with the context of the point though, is it.

According to the OP, there has been 35% inflation from 2002 - 2012.
According to the LR, the average property in England and Wales in Oct 2002 was £115,856 and in Oct 2012 it's £161,605 (39.49%)

Therefore in real terms prices have effectively maintained their REAL TERM value, whilst also taking in a rental return from the investment.

The FTSE 100 between Oct 2002 and Oct 2012 was 43%, so no huge discrepency
The FTSE 100 shares are also down 18% from their Dec 1999 peak.

Would you get the same returns from shares as you have from rent?
Also, equity qould potentially have increased in the investment as the capital is paid off, further advancing the investment value of the property investment

I don't think there's a massive difference between the FTSE100 dividend yield and average rental yields to be honest.

IveSeenTheLight

robmatic wrote: »

I don't think there's a massive difference between the FTSE100 dividend yield and average rental yields to be honest.

It'd be interesting to see the data.
I know the profits I achieve from a flat where I have invested £30k, is valued approx £150k and achieves a monthly rental of £850

It would be interesting to knwo what the dividends would be on a 30k FTSE 100 investment.

I'd also be evaluating the risk where my investment from 2007 is now valued higher than when I bought whilst the FTSE 100 is lower than when I bought.