Is buying a house a good investment?

FrugaiMacDugal

Thinking of a move, I don't buy to make money, oh, and I'm not up market posh, as you will see with house prices.

Just need quietness, good neighbours, and no hassle over whose fence is it, when it blows down, arguments over 1 inch boundary dispute, etc.

Anyway, had a look at my previous house moves,

Bought	Price	Fees	Sold	Price	Fees	Balance	!!!!!!
14/06/83	6355	240	31/07/98	31000	943	23462	23462
08/05/98	38500	558	09/07/99	41000	1168	775	24236
09/07/99	29750	419	24/04/09	55000	1287	23545	47781
07/11/08	72222	746	28/03/18	73000	1587	-1555	46226
21/11/17	70000	840				-70840	-24614

maybe worth 75 now, so in 42 years £50k profit?

user1977

You should view it as primarily a place to live, not an "investment". 

Bookworm105

as above, you buy a place to live in
how much you spend has an influence on how nice the place is to live, but it is not an investment decision

FrugaiMacDugal

user1977 said:

You should view it as primarily a place to live, not an "investment". 

Thanks, aye, that's me, my wee but 'n' ben, though no ootside cludgie.now.

The Sunday Post lasted all week in there.

Bigphil1474

It's not £50k profit. As others have said, you have to live somewhere. You've saved not having to pay rent by buying a house. But you've also had to pay mortgages (presumably) so have had that cost. You will also have paid interest on the loan plus maintenance costs on the property. Can't remember seeing a house that was cheaper to rent than an equivalent house would be to buy - usually the owner has a mortgage, adds something on top for any costs and some profit and that's your rent value, and even if they don't have a mortgage, market rate is usually more than a mortgage alone. It's not like you can take the money you pay for a mortgage and invest it in stocks and shares to make more money, because you still have to live somewhere. So yes, if you need somewhere to live, buying a house is a good investment, especially if you retire and the mortgage is paid off.

We bought our house in '96 for £45k, and sold it last year for £180k. Paid about £100k in mortgage over 25 years (with a little re-mortgage in the middle), so still well ahead. We'll never see that profit obviously.

silvercar

 if you downsize you will see the profit.

ButterCheese

No it is not a good investment financially, unless you compare it to renting, in which case it might be but there are a lot of variables to consider.  What the house sold for in previous decades is not much use either.  As soon as you sell a house and make a profit, you then lose all that money buying another house which has vastly inflated in price since it was built.  The only people who see real profit are those who build/develop houses for sale, or those who sell a very high end property and move into a much cheaper one.

Tabieth

Depends what you mean by investment. I’ve just bought again after a (too long) period of renting, I move out of my rental flat and into my house on Friday. The house is lovely, but needed a replastering (done), a new kitchen (done), and a new bathroom (being done in April). It’s a lovely little terrace house in a very nice area and it’s perfect for me. (It’s certainly nicer than the rental flat which, while very expensive and in a nice area, is soulless and horrible). 

My mortgage is £500 a month cheaper than my rent. My council tax band has dropped several bands, my utility bills will be significantly cheaper (the rental flat is electric only with a dreadful boiler). And I’m paying into my mortgage / owning my home, not into someone else’s mortgage. 

I consider all of that a very good investment. My house may or may not appreciate in value over the years. I suspect that it will but that’s not my focus. My focus is having a safe, nice, comfortable, happy place to live that I’ll eventually own outright / be mortgage free. The thought of renting after retirement is a scary one. That’s my idea of investment - not buying and flipping. 

RelievedSheff

Can only really echo what others have said, view your house as your home not as an investment.

We bought our current home in 2019 for £210k, it is currently worth around £260k. Our mortgage costs us £1.6k a month but only £280 of that is interest, the rest is being paid off and becoming equity so really it is costing us £280 a month to live here.

In 6 years we will be mortgage free and that is the real key for us. A home that is ours with no rent or mortgage to pay going forwards. The house value is irrelevant, we have no plans to sell it.

Bigphil1474

ButterCheese said:

No it is not a good investment financially, unless you compare it to renting, in which case it might be but there are a lot of variables to consider.  What the house sold for in previous decades is not much use either.  As soon as you sell a house and make a profit, you then lose all that money buying another house which has vastly inflated in price since it was built.  The only people who see real profit are those who build/develop houses for sale, or those who sell a very high end property and move into a much cheaper one.

Is there a third option between owning and renting to compare against? Of course it's a good investment if you need somewhere to live. Second properties is a different question. 

newsgroupmonkey_

Bigphil1474 said:

It's not £50k profit. As others have said, you have to live somewhere. You've saved not having to pay rent by buying a house. But you've also had to pay mortgages (presumably) so have had that cost. You will also have paid interest on the loan plus maintenance costs on the property. Can't remember seeing a house that was cheaper to rent than an equivalent house would be to buy - usually the owner has a mortgage, adds something on top for any costs and some profit and that's your rent value, and even if they don't have a mortgage, market rate is usually more than a mortgage alone. It's not like you can take the money you pay for a mortgage and invest it in stocks and shares to make more money, because you still have to live somewhere. So yes, if you need somewhere to live, buying a house is a good investment, especially if you retire and the mortgage is paid off.

We bought our house in '96 for £45k, and sold it last year for £180k. Paid about £100k in mortgage over 25 years (with a little re-mortgage in the middle), so still well ahead. We'll never see that profit obviously.

Whilst I'm not anywhere near the Crashy school of thought in terms of renting somewhere then investing some additional money and then not actually owning anything......

For logistical and financial reasons, we decided to buy rather than rent from 2013 to 2019 in Beds/Bucks/Herts area.

We were the first people to move in and the house had cost the landlord had just bought the house for £227,000 cash.

Now had we bought it ourselves in 2013 with a 95% mortgage, the best we could have hoped for was around 4% (yes, base rates were 0.5%, but mortgage rates weren't) on a 5 year fixed.

The monthly mortgage payments would have been around £1150.
As it was, we rented initially for £900. By the time we moved out 5 years later, it was £1050.