First time buyers - now a good time?

ukcarper

I wonder what they did house prices in Brighton were about 5 % cheaper in May 2010 than they were in April 2008. So their £250k house would have dropped about £12.5k and their rent would have been £19.2k average price in Brighton now slightly higher than May 2010.

wotsthat

macaque wrote: »

Rent is the cost of a service and therefore not wasted money. If you rent, you don't have to pay for property maintenance and you are free to move without the transaction costs.

If you rent:
Cost of renting per year will be £800 X 12 = £9,600 (per year)
Over 2 years you will pay out £19,200

If you buy:
Cost of servicing the debt = £250,000 X 0.05 = £12,500 (per year)
Over 2 years you will pay out £25,0000 (before paying off any capital
You could argue that it is less because you are putting up a deposit but this is wrong since you lose the income on the £50k deposit

If you only ever buy one property, then you can ignore the transaction costs. However if you decide to trade up after 2 years, you can add the transaction costs to your bill
Transaction costs
Stamp duty - £7,500
Estate agent for selling £5,000
Lawyer for buying and selling £2,000
Sorting out the new house £10,000
Annual maintenance £2,500

What if house prices fall by 10% over 2 years
Capital loss £25,000

If you want to buy one home for the rest of your life, you can ignore most of the above. If however you intend to trade up, the difference between renting over 2 years or buying is:

Cost of renting over 2 years £19,200

Cost of buying over 2 years £77,000 (and this does not include any capital repayments).

In other words could be £60,000 better off by renting over two years.

OP beware!

This isn't a fair representation of the figures. It's fairly easy to work out the costs based on your own particular circumstances though.

Ask a real homeowner what the costs are involved in buying a house and living in it. If the figures above were anything like reality do you think anyone would have bought a house ever?

wymondham

If you are first time buyers and want to buy a brand spanking new property then your luck is in as the Government have just expressed genuine heartfelt concern about your plight and wish to help you out by giving you the deal of the century, and give you your dream at being a homeower, thus avoiding the wholely unexeptable position of having to rent. Im assured this has nothing to do with irresponsible promotion of expensive property and helping developers....

Sapphire

I don't know why someone is activating these old threads. It's annoying.

ruggedtoast

Oh carolt, where and whence did you go?