Is buying a house a good idea?

Crashy_Time

westernpromise wrote: »

There's a discussion of this matter here:
https://forums.moneysavingexpert.com/discussion/5398321/breakeven-crash-requirement

Essentially the longer you rent for while waiting for a crash, the bigger the crash has to be. Eventually you will need a price crash of more than 100% in order to come out ahead through having rented.

Crashy sold to rent 22 years ago, and as far as we can tell, he needs prices to fall by about 130%. That is, he rents a place in Edinburgh that's worth about £50k. He has done so for so long that for renting rather than buying it to make sense now, he needs its price to fall to -£15,000. Put another way, he needs it to fall to £0, and for the seller to leave a brown envelope with £15,000 in cash inside in the house as part of the sale at £0. If he could buy it on those terms he would be at par with what he's spent on rent.

That's without considering that as a renter, he is still looking at a lifetime of rent - another 30 years or so. As a buyer, once the property is paid for, it's paid for, and you live in it for nothing.

You don`t, you have to maintain it, and pay any future property taxes that the government can dream up to appease all the priced-out voters. With where we are on interest rates and the political climate on home ownership it is probably one of the worst times in history to buy. The time to buy might have been 1996 when you started spending every day on property forums?

Filo25

Crashy_Time wrote: »

You don`t, you have to maintain it, and pay any future property taxes that the government can dream up to appease all the priced-out voters. With where we are on interest rates and the political climate on home ownership it is probably one of the worst times in history to buy. The time to buy might have been 1996 when you started spending every day on property forums?

You are aware I presume that there are still more people living in owner occupied households than not?

Even ignoring the collateral damage in the wider economy, crashing house prices by the sort of numbers which would be required to satisfy the more evangelical of the HPC crowd would not be electorally popular.

I suppose then again for the true believers it has always been "one of the worst times in history to buy".

My suspicion in terms of government policy will be more of what we have seen so far, more hurdles for BTL buyers more help for FTBs, as they attempt to tilt the market back in favour of owner occupiers, it also makes more electoral sense for the Tories to do that, OOs are a lot more likely to vote Tory than Renters I would imagine.

MobileSaver

Crashy_Time wrote: »

you want to sell and move in five years?

This is just another example of your misguided HPC brainwashed thinking; you pick up on an extreme example and somehow try to kid yourself and everyone else that the end of the world is nigh as a result...

On average people move home every 23 years and so only a tiny proportion of people would be affected by moving in just five years.

shirlgirl2004

Crashy_Time wrote: »

Say there is a crash, and someone has a fixed rate, and interest rates have gone up to protect the currency, or to follow the U.S, or because countries want to leave the euro, or for another reason, and you want to sell and move in five years? Can you tell us how that works?[/QUOTE

Wow some punctuation would have made that easier to understand!

What you mean is what happens if someone has a 10 yr fixed rate mortgage and they want to sell after 5? Well they'll have to pay a penalty or rent it out (under those circumstances most lenders would give consent to let). I very much doubt there'll be a crash in the next 5 years; even JC can't ruin the economy in 12 months.

buggy_boy

Crashy_Time wrote: »

You don`t, you have to maintain it, and pay any future property taxes that the government can dream up to appease all the priced-out voters. With where we are on interest rates and the political climate on home ownership it is probably one of the worst times in history to buy. The time to buy might have been 1996 when you started spending every day on property forums?

Renting does not make you immune to future property taxes, renters pay council tax and any extra taxes on BTL will see rents rise... We saw as soon as GO announced S24 rents rose, with more landlords selling ive never had so many people asking if I have properties to rent.

Potentially it could be a bad time to buy but some people like you were saying the same thing 10years ago... The problem with trying to be clever and predict the peak is you will never know when the peak is until well after the event, its like trying to guess lottery numbers. It still remains the fact its better to buy if you can afford it in the long term, just be cautious.

Crashy_Time

shirlgirl2004 wrote: »

Crashy_Time wrote: »

Say there is a crash, and someone has a fixed rate, and interest rates have gone up to protect the currency, or to follow the U.S, or because countries want to leave the euro, or for another reason, and you want to sell and move in five years? Can you tell us how that works?[/QUOTE

Wow some punctuation would have made that easier to understand!

What you mean is what happens if someone has a 10 yr fixed rate mortgage and they want to sell after 5? Well they'll have to pay a penalty or rent it out (under those circumstances most lenders would give consent to let). I very much doubt there'll be a crash in the next 5 years; even JC can't ruin the economy in 12 months.

No, what I mean is that there won`t be many mugs around in five years willing to match the bubble price someone buying now is paying if they can`t get a cheap fix. Low rates are all that is keeping it afloat now.


https://www.newstatesman.com/politics/economy/2018/04/global-recession-around-corner

Crashy_Time

buggy_boy wrote: »

Renting does not make you immune to future property taxes, renters pay council tax and any extra taxes on BTL will see rents rise... We saw as soon as GO announced S24 rents rose, with more landlords selling ive never had so many people asking if I have properties to rent.

Potentially it could be a bad time to buy but some people like you were saying the same thing 10years ago... The problem with trying to be clever and predict the peak is you will never know when the peak is until well after the event, its like trying to guess lottery numbers. It still remains the fact its better to buy if you can afford it in the long term, just be cautious.

Why would more landlords be selling if they could just raise rents like you say?

buggy_boy

Crashy_Time wrote: »

Why would more landlords be selling if they could just raise rents like you say?

Because they are consolidating, for some landlords the extra tax is a huge problem as they are highly leveraged, even rent rises cannot save them..

I raised rents soon after the announcement and have reduced the debt and that small rent rise will cover all the extra cost caused by section 24. I would have not raised the rents otherwise.

I now see an opportunity and there are ways to structure finances to get around section 24.

buggy_boy

Crashy_Time wrote: »

shirlgirl2004 wrote: »

No, what I mean is that there won`t be many mugs around in five years willing to match the bubble price someone buying now is paying if they can`t get a cheap fix. Low rates are all that is keeping it afloat now.


https://www.newstatesman.com/politics/economy/2018/04/global-recession-around-corner

Actually one of the reasons house prices have done so well in the down turn is property has been seen as a safer place for your money. The same is true of gold.

Rates used to be at around 5-6% we didnt have a crash then, in fact when rates were at the highest 13%+ there was not a crash, your logic is fanciful, its a hpc mentality of everything revolving around house prices and low rates tantamount to fraud.

Your link is just another link from the ilk of hpc, you can go back for 10 years and they have bleated the same thing.

House prices may rise, house prices may fall, don't congratulate yourself on your house price going up but don't try to be too clever and predict the market or you will get burnt (Thats you Crashy).

At the end of the day you made a decision years ago not to buy, you were saying the same thing then as you are now, in hindsight though do you think you would have been better off buying years ago?

getmore4less

Crashy_Time wrote: »

Buying at peak (are we there yet? :rotfl:) and getting caught out as interest rates start rising will be a far far bigger headache than renting:eek:

The reality they are a fantasy scenario for most people.

Having had houses for a long time lived through 16% rates and more than a couple of crashes what actually happens is very few get "hit" most just carry on living in the place still paying less interest on the debt than equivalent rent.

In the mean time they eat away at the capital reducing their future rent on the money down to Zero*


Very few people HAVE to move, want to upsize wait, some because they move jobs in the bigger picture that happens less once you are established.

As long as you get in before
30 easy *rent free by 60 worst case.
40 gets a bit harder,
50 abandon all hope and resign to renting for the rest of your life

lottery/inheritance or all that money saved by paying rent because it is cheaper are the only solutions.

You must have a massive deposit by now.


In the last 40 years how many times have rents crashed in line with house price crashes?