Any other home buyers in NI?

marathonic

qwert_yuiop wrote: »

All right. Hat in the drawer. Get back to me.

No problem. It's interesting that this week marks the 1-year anniversary of our last tuffle over expected movements in house prices:

http://forums.moneysavingexpert.com/showpost.php?p=59482927&postcount=14

qwert_yuiop

marathonic wrote: »

No problem. It's interesting that this weeks marks the 1-year anniversary of our last tuffle over expected movements in house prices:

http://forums.moneysavingexpert.com/showpost.php?p=59482927&postcount=14

So 2013 inflation 2%, prices supposedly up 4%. Still too early to say if this is a pause on another leg down, a flattening out or a meaningful significant rise.

New normal.

marathonic

qwert_yuiop wrote: »

So 2013 inflation 2%, prices supposedly up 4%. Still too early to say if this is a pause on another leg down, a flattening out or a meaningful significant rise.

New normal.

In other words, buying over renting cost me less over the year.

In addition, my property value has rose by 2% in excess of inflation, and the rates available on most savings accounts today.

In addition my outstanding mortgage balance has decreased by a little over 2%.

In addition, my remaining mortgage balance could be considered to be worth 2% less due to the effect of inflation.

Yet all this didn't have a positive impact on my balance sheet? Explain yourself.

Also, if you are dismissing a rise of 2% over inflation in property values, what rise over inflation do you need before you finally admit that prices are rising?

tara747

motorguy wrote: »

Oh dear.

Loving your maths there - you're assuming Taras savings matches the value of the house...

Assuming a house price of £150,000 and with a 3.3% increase

http://www.belfasttelegraph.co.uk/business/news/house-prices-in-northern-ireland-up-33-first-yearonyear-rise-in-six-29918944.html

thats £5000 more expensive than this time last year.

Assuming 3% on £50,000 thats £1500.

So £3500 down.

Also, if she'd bought this time last year, the say, £500 a month of rent would be going to pay of the mortgage, so, sadly, thats £6,000 down too.

So theres £9,500 down compared to this time last year. :eek:

Hold off for another year and with house prices predicted to rise another 4% that will be another £10,000 down.

Painful.

You do know that most of a mortgage payment in the early years is interest? Don't you?

motorguy wrote: »

Those calculations are based on "a" report saying prices went down last year. Most are saying prices rose. Also most are predicting increases again this year, based on recovery in the economy in general.

Its very easy to find a single report and justify your own position based on this, but the bottom line is there are people here who werent buying because they were waiting for the market to bottom out before buying a property, and they were quite gleeful at every sign the market was continuing to drop. And of course they were justified in not buying.

There is now every sign that has bottomed out and most are saying its on the rise, but they're now finding other justifications why now is not the right time to buy. Which of course means they are justified in not buying now either.

Makes you wonder if these people were ever in the position to buy in the first place - either because of financial constraints, borrowing limitations or personal constraints.

It just seems odd to me that people with very sizeable lump sums sitting around and prices as cheap as they are as likely to be are finding all these excuses not to buy. Just doesnt stack up to me.

Again, each to their own. I'm renting out our previous house to a guy who has always rented houses, always intended to. Great long term tenant, and hes paying my mortgage for me. So i'm happy.

From his perspective hes had none of the worries or concerns of the housing market. So hes happy.

I don't feel the need to justify my decision not to buy yet. I'm just not buying yet. It's you who is looking for reasons why others are not buying. It seems to baffle you that some people are not buying.

Why does it seem odd to you that people with very sizeable lump sums sitting around (and I assume that you include me in that category) are not buying? As I said, I'm just minding my own business. We all have our own opinions, and mine is that now is not the time for me to buy a house. Clearly, I'm no financial slouch, so I trust my own judgment.

marathonic wrote: »

Another over-simplified way of looking at it is:

Rent: £7,800 (£650 monthly)

House Cost: £160,000
Repayment Mortgage: £6,100 (75% LTV, 5-year fix at 3% over 30 years)
Rates: £1,000
Maintenance/Other Costs: £1,600
Annual Costs: £8,700.


So you're paying an extra £900 per year and losing £640 interest on your deposit - for a total extra cost of about £130 per month.

In return, after 30 years, your expenses are £2,600 instead of £7,800 and you own the house fully.

That means that, in retirement, you'll have £5,200 less in annual expenses, or £100 per week. You'll also have a house to leave to your children, if any.

Several things:

1. You've left out transaction costs.
2. Do you think that maintenance costs, repair costs, buildings/contents insurance and rates will remain the same for 30 years??
3. Interest rates may rise during the lifetime of the mortgage - your calculation relies on a 5-year fix at record low rates.
4. I don't intend to have a mortgage anywhere NEAR 30 years long. 10-15 years max is my aim.

qwert_yuiop

marathonic wrote: »

In other words, buying over renting cost me less over the year.

In addition, my property value has rose by 2% in excess of inflation, and the rates available on most savings accounts today.

In addition my outstanding mortgage balance has decreased by a little over 2%.

In addition, my remaining mortgage balance could be considered to be worth 2% less due to the effect of inflation.

Yet all this didn't have a positive impact on my balance sheet? Explain yourself.

Also, if you are dismissing a rise of 2% over inflation in property values, what rise over inflation do you need before you finally admit that prices are rising?

Fair enough if you exclude transaction costs which are going to have to be faced by anyone buying at some stage anyway. It's just not very much.

What constitutes a real "recovery"? Probably 8 or 9 % excludes statistical noise. What we hear bandied about these days certainly doesn't. As I said, we won't know for another year or so.

marathonic

tara747 wrote: »

Several things:

1. You've left out transaction costs. Add £3,000 to the house price or buy a £157,000 house with £3,000 transaction costs. Either way, transaction costs aren't going to skew the figures that much unless you are buying and selling every few years.


2. Do you think that maintenance costs, repair costs, buildings/contents insurance and rates will remain the same for 30 years?? Do you think that rents aren't going to increase to cover these increased costs?

3. Interest rates may rise during the lifetime of the mortgage - your calculation relies on a 5-year fix at record low rates.
10-year fixed rates are available below 4%. These include the banks premium/profit for taking the risk that rates will rise beyond this. The chance of rates rising to 6%+ is overblown by a lot of people without any sound arguments for why they expect this will happen.

4. I don't intend to have a mortgage anywhere NEAR 30 years long. 10-15 years max is my aim.
This is your own personal choice, despite the lack of logic that many would see behind it. I'd rather buying with a 30 year mortgage at what many people would consider the bottom than renting over the next 5-10 years, at a higher cost, whilst saving for a deposit and, potentially, watching house price rises outstrip my rate of savings.

Some pretty sound points for you to consider. I think anyone who didn't have a vested interest in property prices, one way or another, would see the sound argument for prices rising over the short-medium term. The problem is, there are very few people without a vested interest.

qwert_yuiop

marathonic wrote: »

Some pretty sound points for you to consider. I think anyone who didn't have a vested interest in property prices, one way or another, would see the sound argument for prices rising over the short-medium term. The problem is, there are very few people without a vested interest.

Point 4 - my feeling is pay the mortgage off as soon as you can. Avoid debt hanging over you into later life. Even retirement, bad health, who knows. The horror.

marathonic

qwert_yuiop wrote: »

Point 4 - my feeling is pay the mortgage off as soon as you can. Avoid debt hanging over you into later life. Even retirement, bad health, who knows. The horror.

If this is the case, why not buy now and start paying it off sooner rather than pay extra money to rent now just so you can, eventually, have a shorter term mortgage?

Cut out the landlords profit and all that (whilst landlords who bought at the peak aren't, for the most part, running a profitable business, those buying today are).

By buying now, the money that was going to be saved for a deposit is being paid off the mortgage and the profits that the landlord would have been making is, instead, also going towards paying down the mortgage.

The big thing is where house prices are going and, to me, the only way appears to be up.

Now, after so much discussion on this thread, I've nearly persuaded myself to buy another house or upsize.....

qwert_yuiop

marathonic wrote: »

If this is the case, why not buy now and start paying it off sooner rather than pay extra money to rent now just so you can, eventually, have a shorter term mortgage?

Cut out the landlords profit and all that (whilst landlords who bought at the peak aren't, for the most part, running a profitable business, those buying today are).

By buying now, the money that was going to be saved for a deposit is being paid off the mortgage and the profits that the landlord would have been making is, instead, also going towards paying down the mortgage.

The big thing is where house prices are going and, to me, the only way appears to be up.

Now, after so much discussion on this thread, I've nearly persuaded myself to buy another house or upsize.....

'Cause I'm waiting for a particular type and place of property. Why buy somewhere I don't want to live? Buying now to avoid some putative rise and then sell would be plain daft. And my savings are doing quite well elsewhere. I can wait a while.
I'm not particularly demanding, and we're both averse to debt.

Sorry - I'm anything but Mr Gloom - but I can't see any significant meaningful rise the way things are.

My landlord is subsidizing our saving.

marathonic

Here is an example of something available locally to me:

http://www.propertypal.com/145-ivy-mead-londonderry/264928

For someone with a £25,000 deposit, the figures would be as follows:

House Cost: £99,950
Transaction Costs: £1,000
Total: £100,950

Annual Mortgage Repayment: £5,000 (5-year fix at 3% over 20 year term)
Rates: £850
Maintenance and Other Costs: £1,500
Lost Interest on £26,000 deposit and buying costs: £450
Total Cost of Owning: £7,800

Rental Cost: £7,800 (£600 per month as quoted on listing)
Total Annual cost of renting: £7,800

Even with the above figures, a lot of work colleagues don't appear to be willing to buy.

After 5 years, they'd have had the same outgoings as the renter, assuming no rent increases, and would only have a mortgage of £60,000 remaining.

Now, assume that renter is saving £1,000 per month whilst renting in order to buy with cash. They wouldn't manage to save the additional £75,000 needed to buy in 5 years unless interest rates rise in the meantime. And this is assumming static property prices.

However, if they bought now, the £12,000 in annual savings, put together with the figures quoted above, but paid off the mortgage instead of put in a savings account, would leave money to spare every month if they opted for a 5-year fixed rate mortgage over a term of 5 years.