Housing market continues to slow....

deemy2004

The problem is economics don't work....

A trader betting his own cash on the markets would soon go broke if he applied economic theory... rather than sentiment and trend..... As all the news available to the market be it housing or anything else is already OLD and reflected in the price.

Take the US BOND PRICES ! For the last 12 months they have moved in the OPPOSITE direction to what they should have moved given economic theory as expoused by 100% of experts a year ago.

Yes I studied economics and soon realised that given market movements, it is worthless !!!

Good for explaining what has transpired in hindsight but worthless in what is to follow next... a bit like elliot waves

Pheno

deemy2004 wrote:

Yes I studied economics and soon realised that given market movements, it is worthless !!!

Obviously you didn't study it to the level where sentiment starts being modelled

deemy2004

No........

To tell you the truth it was hard keeping awake in classes

Much prefer studying psychology of trading and risk management.

meanmachine_2

NickMidgley wrote:

, year 3 = £9834.54 and so on.

Sure, at first the renter will have £200 pcm extra to spend, but that will gradually erode as the annual rent increases.

Will it?

I'm assuming that my wage will also be going up at some point during this long period.

Also, I'm guessing I'm not moving anywhere, won't be remortgaging, won't have any problems with my property, won't have to pay EA fees etc etc.

I rented in S London back in the mid 90s. I recently checked how much I'd have to pay, and noticed that rents are about £50 pcm higher. That doesn't sound like 3% compounded to me.

Still, rents DO increase over time, and the one big advantage of buying is that my £950 mortgage payment will always be £950, even in 25 years....unless int rates rise of course...

I'm not going to be renting till I'm 80 - I hope - I'm just thinking about timing my entry into the housing market.

Right about now seems crazy. But as I don't know what the market is going to do next, it's a gamble either way.

Sput2001

I'm assuming that my wage will also be going up at some point during this long period.

Indeed it probably will, but then so will the buyer's.

KrazyFool

going to change from sole agency to dual agency. What are the fees generally for this at the moment? The agent will be talking to the other agent we are going for and are sorting some 60/40 fee and getting back to us with a figure, i think maybe because theyve come quickly with an initiative to get more money they will ask a higher price than if i just said im going with you each at x%.
is this normal or am i wrong to be suspicious that theres some underlying sceme going on here...

Pheno

NickMidgley wrote:

Take an annual rent of £9,000, apply 3% annual compound interest to it over a fifty year period, then add the rent for each of those 50 years together.

e.g. Year 1 = £9,000, year 2 = £9548.10, year 3 = £9834.54 and so on.

Sure, at first the renter will have £200 pcm extra to spend, but that will gradually erode as the annual rent increases. In fact, after about 10 years the buyer will be better off on a month by month basis than the renter - assuming a 3% p/a rent increase. AND after 25 years, the buyer has no monthly outgoings at all, unlike the renter.

You compounded twice for the 1st year.

OK, if you want to increase the level of sophistication to include compounding then you might as well do the same to the £2400/year the renter saves (at whatever interest rate you think you could save at.)

John_M_Business

meanmachine wrote:

I rented in S London back in the mid 90s. I recently checked how much I'd have to pay, and noticed that rents are about £50 pcm higher. That doesn't sound like 3% compounded to me.

What did you rent... a dustbin?

Rave

I think he means it sounds like a lot less than 3% compounded. Rents haven't risen at all in my area of SE London in the last two years, if anything they're lower now.

Sput2001

OK, if you want to increase the level of sophistication to include compounding then you might as well do the same to the £2400/year the renter saves (at whatever interest rate you think you could save at.)

I could do, but remember that each year the amount saved by the renter (compared to the buyer) gradually decreases, until year 9 when the buyer becomes the person saving money, not the renter. The gap between the two then gradually increases until year 25, whereupon the buyer's saving ALL his money while the renter still pays more every year. So, for 42 of the 50 years in the example, the buyer's the one with lower monthly outgoings. Think about the compound interest on all that!