House Price Crash Discussion Thread

merlinthehappypig

OxfordMark wrote: »

It's a very fair point that after the 20 years you do own where you live and don't have to pay anything else, whereas renting you have to carry on paying for ever. Good job we're all going to have to work til we're 90.

I don't think anyone is advocating renting forever. If I had never bought I would have no capital now as I could never have saved as much as the house increased in value. The point is that, with current economic conditions, it is generally cheaper to rent than buy. I'm 44 and can never remember another time that was the case. If that changes, or house prices reduce a lot or, heaven help us, start to climb again I suspect most of us will be buying again.

tr3mor

chriseast wrote: »

The point is that, with current economic conditions, it is generally cheaper to rent than buy. I'm 44 and can never remember another time that was the case.

Does anyone know of a graph of mortgage payments vs rent. I think it would be quite interesting.

Gorgeous_George

In addition to 'no mortgage payments' renting brings the following benefits:

1. No Stamp Duty
2. No EA fees
3. No solicitor fees
4. No high maintenance costs
5. Free gas safety check
6. Simpler/Faster access to housing benefit (if required)
7. Immunity from house price crashes

There must be more (I hoped to reach 10) but, my point is, comparing mortgages to rents is like comparing apples to bananas. They're different.



GG

budget_counsellor_shaz

Gorgeous_George wrote: »

In addition to 'no mortgage payments' renting brings the following benefits:

1. No Stamp Duty
2. No EA fees
3. No solicitor fees
4. No high maintenance costs
5. Free gas safety check
6. Simpler/Faster access to housing benefit (if required)
7. Immunity from house price crashes

There must be more (I hoped to reach 10) but, my point is, comparing mortgages to rents is like comparing apples to bananas. They're different.



GG

another 3......

8. Mortgage fee
9. Surveys
10. Buildings insurance

There you go GG:rotfl:

benood

And another - not being a bore at dinner parties

beingjdc

tr3mor wrote: »

Does anyone know of a graph of mortgage payments vs rent. I think it would be quite interesting.

No, but if you tell me what it is you want I'm happy to make one - it just depends what you believe about general inflation and asset price inflation.

Renting is cheaper over the short-term than buying, so definitely sensible if you want to move or if you'd struggle to make repayments, or have an insecure job.

In the long-term buying is better the higher inflation is as you buy at 'today's' price forever, whereas you rent at the going rate each year (generally).

I think the crossover tends to come in present circumstances at about the eight-year point, but it's hard to argue that we are not at the top of the buying market at the moment, whereas renting is (relatively) excellent value.

The main factor for me then is the size of deposit and the interest rate available, and what else you can do with that deposit. At the moment my potential deposit is earning me nice fat interest. If interest rates fall I may decide it's time to become a borrower again rather than a saver. Otherwise I'll probably hang on until I become a higher rate taxpayer, which also affects the equation.

merlinthehappypig

Exactly. The interest on my deposit is paying my rent. The instant I decide to buy again I start losing money, unless I can buy outright without a mortgage which is unlikely where I live. Even then I attract all the other costs outlined in previous posts. Like beingjdc I will review this decision if circumstances change regarding interest rates, HPI and so on (though not the higher rate tax bit, can't see that happening!)

WTF?_2

chriseast wrote: »

Exactly. The interest on my deposit is paying my rent. The instant I decide to buy again I start losing money, unless I can buy outright without a mortgage which is unlikely where I live. Even then I attract all the other costs outlined in previous posts. Like beingjdc I will review this decision if circumstances change regarding interest rates, HPI and so on (though not the higher rate tax bit, can't see that happening!)

Well actually your money is devaluing due to inflation and the interest is supposed to compensate that.

However, a substantial sum in the bank with the interest paying the rent is a pretty good place to be right now as the market wavers and looks to be heading down. You can easily afford to bide your time for a year or two and move in once prices are looking sensible.

I think a lot of people would like to be in your shoes as they see their 'equity' disappear yet their mortgage payments are as high, if not higher, than ever.

merlinthehappypig

!!!!!!? wrote: »

Well actually your money is devaluing due to inflation and the interest is supposed to compensate that.

However, a substantial sum in the bank with the interest paying the rent is a pretty good place to be right now as the market wavers and looks to be heading down. You can easily afford to bide your time for a year or two and move in once prices are looking sensible.

I think a lot of people would like to be in your shoes as they see their 'equity' disappear yet their mortgage payments are as high, if not higher, than ever.

Partly true, though I actually have 2% left after paying the mortgage so just about keeping place with inflation (that is if anyone actually believes it to be under 2% - doesn't feel like it when paying council tax and filling the car!).

If I spent it all on a house I wouldn't have any left to worry about inflation or not......

Austin_Allegro

budget_counsellor_shaz wrote: »

another 3......

8. Mortgage fee
9. Surveys
10. Buildings insurance

There you go GG:rotfl:

Also

11. The ability to move quickly if necessary