House price crash-don't make me laugh

Woby_Tide

dannyboycey wrote: »

Yep. Factor inflation into that and prices are still falling nicely.

Inflation is over 9.4%? Has someone let Mervyn know?

IveSeenTheLight

Lavendyr wrote: »

2) is certainly a good thing, but if you have done the maths and have worked out that by buying *later* you can save up a bigger deposit, thereby borrowing less, thereby actually *saving* money overall, why is it better to buy now than to buy in a few years time? I know, I know, "because house prices will keep going up" - well, maybe, but it's a gamble we all take, isn't it.

Hmmm......
I see how you make sense of it as paying a larger deposit and borrowing less, means you would pay less interest.
Add to this however the money you throw away each month renting while saving up for that larger profit and I think your figures will come out differently.

Personally, I have two properties I rent out.
The rent I receive from both of these properties combined is approx 400 pounds per month more than the mortgage payments are

These are two examples of people who are renting for more than the mortgage is.

Now dont get me wrong, there is always a case for people renting and why I can make a profit from that.

People who choose to rent because they think it makes financial sense for me just dont realise yet the whole bigger picture.

Please don't take offence to this, one day you too will see the light

IveSeenTheLight

Turnbull2000 wrote: »

Rent: £500pm, fully furnished and excellent maintenance from landlord.

To Buy (going by other listings in area - Tynemouth): 135K, 25 years @ 6.5% IR £922pm

Using the figures you have quoted, 135K, 25 years Interest Only mortgage would cost you 731.25 per month, so less than the 922pm you state.

This also does not cater for the actual rate you would get on a mortgage.
there are many flexible

Running a mortgage of 135K through a spreadsheet I run would mean monthly payments of 870 pounds over a 25 year period at an interest rate of 6.01 per cent (easily obtained from current mortgages).

Any deposit you have towards the mortgage would either reduce the payments or mean you are actually owning a property of higher value than 135K

I don't know where you are renting, but I know properties of around 135K in my area which rent for 850 pounds which for BTLers is reasonable as they have either paid a larger deposit to reduce the mortgage or in time the capital is reduced.
Either way, renters are paying the landlords mortgage for them

tr3mor

IveSeenTheLight wrote: »

Any deposit you have towards the mortgage would either reduce the payments or mean you are actually owning a property of higher value than 135K

You also have to take into account the loss of interest on savings used to fund the deposit.

IveSeenTheLight wrote: »

I don't know where you are renting, but I know properties of around 135K in my area which rent for 850 pounds which for BTLers is reasonable as they have either paid a larger deposit to reduce the mortgage or in time the capital is reduced.
Either way, renters are paying the landlords mortgage for them

I'm paying £800pcm for my house. It's worth over £250k. There is no way you can argue that it would be better for me to buy.

IveSeenTheLight

tr3mor wrote: »

I'm paying £800pcm for my house. It's worth over £250k. There is no way you can argue that it would be better for me to buy.

so you pay £9,600 per year.
Where does this money go?
Will you ever see it again, or even part of it?

I suggest you keep on renting for 25 years in someone elses £250,000 valued house. (P.S. if its valued at 250k, I bet they bought it before for much cheaper)
I'm sure they will love you for it

It seems to me renters are hung up on what they are renting for a property worth much more.
The reason is that landlords have but much earlier when the valuation was lower and your money is still paying their mortgage regardless of the property value.

Generali

It's not simple working out the reletive financial merits of renting vs buying.

To do it properly, you'd need to work out the net present value of all the rent that you'd pay over the course of your life.

You'd compare that to the net present value of all the mortgage costs (and other associated ownership costs like stamp and repair bills) and subtract from that the net present value of the value of the property when you come to sell it.

You'd then subtract some notional sum from the total value of renting being the value you'd ascribe to the conivenience and freedom of renting. You'd then add somehing on to the value you'd ascribe to the hassles of renting.

Similarly, you'd add and subtract amts from the ownership costs reflecting benefits and hassles of ownership.

You then compare the 2 amounts.

In practical terms this is completely impossible, all you can do is take a snapshot of where you are now and what makes you happier I guess.

zag2me

fimonkey wrote: »

I'm with Carolt and I'm a FTB. There are other FTB's who I know who agree with me, we think house prices are going to stagnate (not crash or drop significantly however) and it's ultimately cheaper to rent (when taking into account maintenance etc). Hence for the moment we're going to continue to save a better deposit to be able to afford the place we really do want to buy.

Don't rents go up in a period of house price deflation? I would be very carefull about waiting. I waited 3 years to buy a place, it was a really bad decision on my part.

tr3mor

IveSeenTheLight wrote: »

so you pay £9,600 per year.
Where does this money go?
Will you ever see it again, or even part of it?

Considering interest at 6% on £250k interest-only would be £15,000 per year. Will I ever see any of this again?

I could pay £800pcm to my landlord or £1250pcm to a bank. Neither of which I will ever see again.

IveSeenTheLight wrote: »

I suggest you keep on renting for 25 years in someone elses £250,000 valued house. (P.S. if its valued at 250k, I bet they bought it before for much cheaper)

They bought it for £170k. Since I've moved house 5 times in the past 5 years whilst at university there's not much I could have done about this.

IveSeenTheLight wrote: »

It seems to me renters are hung up on what they are renting for a property worth much more.
The reason is that landlords have but much earlier when the valuation was lower and your money is still paying their mortgage regardless of the property value.

I'm well aware of the reason, unfortunately I don't have a time machine to go back 5 years to buy when my landlord did.

As a maths graduate I think I'm quite capable of working out what a good deal is.

Turnbull2000

IveSeenTheLight wrote: »

Either way, renters are paying the landlords mortgage for them

My landlord is mortgage free.

Hopefuly I'll buy eventually, but right now it doesn't make sense. I'll be paying a fortune for a property and location that is much worse. I'll be existing to simply pay the mortgage and nothing else. And with global uncertainty, prices at historic levels and salary growth subdued, I can't rely in inflation to come to the rescue after a couple of years like it has for prior generations.

Right now, I'm living in a gorgeous Georgion terrace with direct sea views from my living room and bedroom. It's beautifully furnished with a Barker & Stonehouse leather 2-piece suite, ensuite shower and massive bed.

Why should I 'buy' interest only whilst incurring all the other insurance and maintenance expenses at a much greater cost than renting? There's also a chance I'll be tied down to a home I don't want to live in, greatly hindering my life and job prospects.

obsessed_saver

Unless you can come up with a large deposit, your mortgage interest payment will always be bigger than the rent at this point in time.

IveSeenTheLight wrote: »

Personally, I have two properties I rent out.
The rent I receive from both of these properties combined is approx 400 pounds per month more than the mortgage payments are

These are two examples of people who are renting for more than the mortgage is.

Let's put some figures to this claim:
1) When did you buy the properties?
2) How much were they when you bought them?
3) How much did you put down as deposit?