House Price Crash Discussion Thread

Vincenzo

!!!!!!? wrote: »

You assume that the typical model is that someone buys a house and then lives in it for 25 years. That isn't the case for most people today.

You will almost certainly find yourself moving through 2 or more properties on your trip up the ladder. In that case, you should look very carefully at the current state of the market before buying. If you buy at or near the peak then you potentially face a medium-term period of negative equity, effectively turning your house into a ball and chain for anything from 5 to 10 years.

Renting may not only prove cheaper but puts you into a better position for buying later on - you can enter the market when prices are at the bottom of the cycle and you have a lot of cash for the deposit and are chain free. This puts you into a great position later on when it comes time to trade up to a bigger/ better house.

As I said it is a complex calculation as you have to factor in house moves and it would depend when, how often and how far up the notional 'ladder' you move each time. I did toy with the idea of putting together a model to show how it would work but there are too many variables. But my point was that it can still make sense to buy rather than rent in the current climate and I stand by that.

carolt

Vincenzo wrote: »

But my point was that it can still make sense to buy rather than rent in the current climate and I stand by that.

Yes, it CAN, but in 9 out of 10 cases, it clearly doesn't.

Don't mislead by pointing out the exception that proves the rule.

Vincenzo

carolt wrote: »

Yes, it CAN, but in 9 out of 10 cases, it clearly doesn't.

Don't mislead by pointing out the exception that proves the rule.

Sorry, I thought this was a balanced discussion (or did I?). So by your reckoning we should forget the 10% of people that COULD benefit from doing other than what you would recommend?

And tell me, how was what I said misleading?

mr.broderick

Vincenzo wrote: »

Because most people do not have £370k in cash to earn interest on.

The average person starting out will have a monthly budget to put towards living costs. If it is a choice between renting and paying off a mortgage over 25 years, at least they will own their house outright at the end of the term.

If someone could rent a home for say £800 per month or buy with a repayment mortgage and other regular costs at £1,200 a month, the 'saving' monthly by renting would be £400. Over 25 years they will have put away £120,000 (assuming they are disciplined!). Factor in compund interest and offset that against inflation (yes - including HPI!) and do you think they would be able to buy the equivalent property then?

To work this out properly would be quite complex as you would have to factor in potential house moves, rental inflation and so on (anyone fancy having a go???).

Most people on here dont have £370 quid.

pickledpink

neverdespairgirl wrote: »

HA HA HA!!

It will certainly not, in real terms, be worth double. It might well be worth less (as was the case from 1989 to 1999).

HA HA HA to you too!!:rotfl:

Check out these figures from the Land Registry and tell me property doesn't double,triple or quadraple!!!!!!:p

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Average house prices for All properties

QuarterSW12England & Wales average© Crown Copyright2007 (oct-dec)£460,909 (143)£220,8922007 (jul-sep)£524,739 (231)£229,7722007 (apr-jun)£488,001 (183)£215,3122007 (jan-mar)£424,491 (162)£210,0012006 (oct-dec)£431,529 (215)£207,0682006 (jul-sep)£422,470 (239)£211,1682006 (apr-jun)£386,375 (215)£198,5712006 (jan-mar)£386,321 (178)£190,5292005 (oct-dec)£347,171 (193)£190,9762005 (jul-sep)£393,112 (232)£193,7342005 (apr-jun)£319,536 (168)£182,9642005 (jan-mar)£353,811 (110)£181,2582004 (oct-dec)£316,557 (151)£181,6472004 (jul-sep)£385,829 (268)£187,5102004 (apr-jun)£338,107 (220)£174,6602004 (jan-mar)£349,175 (191)£165,5622003 (oct-dec)£310,819 (186)£162,7812003 (jul-sep)£355,975 (240)£160,5162003 (apr-jun)£280,633 (128)£148,4552003 (jan-mar)£302,381 (302)£155,2842002 (oct-dec)£277,098 (179)£144,5932002 (jul-sep)£325,528 (254)£145,3882002 (apr-jun)£282,167 (207)£132,3422002 (jan-mar)£275,434 (165)£120,8762001 (oct-dec)£251,908 (178)£118,1952001 (jul-sep)£255,400 (273)£123,2262001 (apr-jun)£265,409 (238)£116,1322001 (jan-mar)£279,181 (157)£108,4652000 (oct-dec)£248,934 (135)£107,2072000 (jul-sep)£282,894 (152)£108,0802000 (apr-jun)£231,798 (157)£103,9752000 (jan-mar)£230,866 (157)£99,4491999 (oct-dec)£210,724 (188)£95,8271999 (jul-sep)£214,510 (286)£97,1541999 (apr-jun)£178,633 (151)£89,3561999 (jan-mar)£166,904 (110)£83,8851998 (oct-dec)£142,993 (175)£82,7831998 (jul-sep)£171,330 (189)£87,3511998 (apr-jun)£170,147 (139)£83,5361998 (jan-mar)£148,405 (125)£80,1081997 (oct-dec)£147,295 (203)£77,0291997 (jul-sep)£146,180 (266)£77,0391997 (apr-jun)£138,435 (233)£72,9111997 (jan-mar)£114,883 (209)£69,3601996 (oct-dec)£121,915 (241)£68,8521996 (jul-sep)£134,927 (231)£70,3811996 (apr-jun)£105,894 (154)£62,9441996 (jan-mar)£105,894 (154)£62,9441995 (oct-dec)£102,930 (148)£63,6151995 (jul-sep)£113,375 (177)£66,5861995 (apr-jun)£109,989 (156)£64,6951995 (jan-mar)£90,520 (116)£63,514

pickledpink

OK, I'll send the link instead.

pickledpink

Here's the link

http://www.upmystreet.com/property-prices/trends/l/sw12.html

From there you will see how property soars in value. You're all just jealous!!

mr.broderick

pickledpink wrote: »

Here's the link

http://www.upmystreet.com/property-prices/trends/l/sw12.html

From there you will see how property soars in value. You're all just jealous!!

Do you have some sort of vested interest pinky to keep feeding the crash loonies?

wolvoman

carolt wrote: »

Yes, it CAN, but in 9 out of 10 cases, it clearly doesn't.

Don't mislead by pointing out the exception that proves the rule.

Financially perhaps but not emotionally.
People here on this MSE board seem to forget that for many people, the security and knowledge of owning your own home is impossible to financially quantify.

dannyboycey

wolvoman wrote: »

Financially perhaps but not emotionally.
People here on this MSE board seem to forget that for many people, the security and knowledge of owning your own home is impossible to financially quantify.

I think you mean 'emotionally quantify'. Financially quantifying that security is easy.

*EDIT* - sorry if I'm being pedantic!