Slum Britain

Generali

Jonbvn wrote: »

G,

Any linky for that info???

Unfortunately not. I keep looking and not finding it.

macaque_2

pinkshoes wrote: »

Actually grandparent B HAD a house, and was not poor, but when moving, decided to rent for a bit (perhaps following rumours that prices would fall...) and then with price rises, and having spent all previous equity on rent, ended up being forced to rent. If she'd held onto her property, she could have been still living in a beautiful mortgage free house, and her pension would pay for home help and prevent her having to go into a care home. There is no way on a pension you can rent privately AND have home help!

Grandparents A had a home AND an investment. Their house can be treated as an investment in their retirement, and should their health fail, they can probably stay in their home, and the money spent on holidays can pay for home help.

I'd say the only difference between my grandparents is that one made the mistake of stepping off the property ladder, and then couldn't get back on, so is now spending her retirement in poverty. Seeing her live like that I find very upsetting, and I NEVER want to find myself in that position. SO regardless of what my HOME is worth when I retire, I will make sure that it is mortgage free, which will give me a much better standard of living in retirement than if I was still having to rent.

Ah! You are now saying that 'grandparent B' did in fact have a house but speculated it on a sell to rent punt. Sadly, she called the market wrong and then foolishly frittered away the proceeds of the sale. That I'm afraid has nothing to do with the merits of home ownership. It is simply a case of poor judgement and human weakness.

If she had called the market right, she could have made a fortune however as a general rule, people on modest fixed incomes should never speculate. By all means sell to rent but make sure that the proceeds of the sale are safely invested and cover the cost of renting (which is relatively easy now given the low cost of renting relative to capital value).

My opening lines of this thread were; "How many people see their property as their pension? The answer is millions." Your 'gandparent B' discovered the folly of this belief the hard way.

pinkshoes

macaque wrote: »

Ah! You are now saying that 'grandparent B' did in fact have a house but speculated it on a sell to rent punt. Sadly, she called the market wrong and then foolishly frittered away the proceeds of the sale. That I'm afraid has nothing to do with the merits of home ownership. It is simply a case of poor judgement and human weakness.

Correct me if I'm wrong, but haven't you now contradicted yourself? You often post that people are foolish to buy now, saying that prices are going to drop, and now I have given you an example of someone who did just that, you're saying they "called the market wrong" thus missed out.

But given that no one can second guess the housing market, you can't tell people one minute not to buy, then the next make comments about someone missing out for not buying?!?!

ps - No it wasn't a sell to rent punt. Her husband died when she was 33, so she needed to sell and buy something smaller. She just never got round to it. The bit about the price drop speculation was sarcasm! The proceeds weren't "frittered", they were spent on rent instead of mortgage.

pps - of course millions of people see their property as a pension!! just this morning on the radio they announce that those without some sort of private pension will live in poverty in their retirement if they rely on a state pension. even if it means selling the property, at least you'll have all that cash, whatever it's worth, on top of your poxy state pension!

Tassotti

Your 'home' is not an investment...it is a liabilty until you have paid off the mortgage.

As Pinkshoes points out, there is a major difference in quality of living if you own your own house. (If you own many, even better)

Its a true story...

The problem is that this forum (which used to be good) has been taken over by the House Price Crash brigade (who have been harping on about this for as long as I remember)

These people are the 'dreamers' which I have been acused of.

Cycles occur, but if you can afford the mortgage, what does negative equity really mean? NOTHING..Hang on till prices increase again...which they will

macaque_2

pinkshoes wrote: »

Correct me if I'm wrong, but haven't you now contradicted yourself? You often post that people are foolish to buy now, saying that prices are going to drop, and now I have given you an example of someone who did just that, you're saying they "called the market wrong" thus missed out.

But given that no one can second guess the housing market, you can't tell people one minute not to buy, then the next make comments about someone missing out for not buying?!?!

ps - No it wasn't a sell to rent punt. Her husband died when she was 33, so she needed to sell and buy something smaller. She just never got round to it. The bit about the price drop speculation was sarcasm! The proceeds weren't "frittered", they were spent on rent instead of mortgage.

pps - of course millions of people see their property as a pension!! just this morning on the radio they announce that those without some sort of private pension will live in poverty in their retirement if they rely on a state pension. even if it means selling the property, at least you'll have all that cash, whatever it's worth, on top of your poxy state pension!

You are wrong and I do correct you. Apart from this you have put words into my mouth. It is true to say that property as an investment does not stack up well at the moment. This is due to low yields and poor risk/reward factors. This does not mean however that people would be foolish to buy a home. When you buy a fridge, you don't weigh up its investment potential.

The real problem is that your grandmother did not have adequate provision for her old age. Owning a property is only one aspect of making such provisions. I would agree however that property owership would have been a screamingly obvious thing for her. Renting used to be very expensive compared to buying. That is no longer true and the mortgage/rent ratio has reversed itself spectacularly in recent years. You have to be more discerning in your analysis. To suggest that a good financial decision for your grandmother must also be a good decision todaya you makes as much sense as giving a healthy person chemotherapy.

generali
A few years back The Economist compared various investments held for a 20 year period starting from 1901-1921, 1902-1922.....1980-2000, 1981-2001 etc.

They found that the single best investment a person could make was to own their own home, then equities, then bonds, then cash and finally renting out property which gave an average annual loss of 0.1% IIRC.

I have produced links to support my assertion that equities outperform property. Until you produce a link, you post has no substance.

Generali

macaque wrote: »

I have produced links to support my assertion that equities outperform property. Until you produce a link, you post has no substance.

It's a question of credibility. If you think I'm a credible poster (as one that normally produces links) then you might believe me. If you don't then you won't. Can't say I'm fussed either way.

itsgototstop

For what its worth, I believe you;)

Generali

itsgototstop wrote: »

For what its worth, I believe you;)

You're very kind.

Oops. Contradicted myself.

Ok, I am bothered if you agree with me but don't care if you don't. Is that clear.

Jonbvn

macaque wrote: »

I have produced links to support my assertion that equities outperform property. Until you produce a link, you post has no substance.

This is not a court of law.

I do recall reading somewhere that over the long term equities have historically outperformed property. However, you have to be very careful with any data you can find. As an example, what type of property is being considered? For the equities, are dividends reinvested? Is it just FTSE100 stocks? etc. etc.

Generali

Jonbvn wrote: »

This is not a court of law.

I do recall reading somewhere that over the long term equities have historically outperformed property. However, you have to be very careful with any data you can find. As an example, what type of property is being considered? For the equities, are dividends reinvested? Is it just FTSE100 stocks? etc. etc.

From what I recall of the article, they had all income reinvested (dividends, coupons, interest) and included cost of carry. The equities were FTSE 100.

The home ownership was being compared with other forms of investment not renting. They also made the point in the same section (no the same article) that property was at an all time high in virtually every country in the world with some exceptions (Germany and Japan spring to mind).

It'll be on the economist.com website somewhere if anyone can be bothered to trawl through. It would have been in 2005 I reckon.