"hamster" Hammond awaits housing crash
21 January 2007, 12:57 PM
#31
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Oh yeah & people that rent pay the same as someone with a mortage month on month so after 25 years they've both paid the same it's just one of them owns a house worth, say, £1m in 25 years time.
TX.
TX.
Last edited by Terminator X; 21 January 2007 at 01:00 PM. Reason: Oops, similar replies above! Sorry.
21 January 2007, 01:09 PM
#32
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Depends on discipline. Some people seem to need to have a debt around their necks (a mortgage) to force them to pay towards something every month.
Regarding rents, at the moment that simply doesn't seem to apply. A repayment mortgage on the property I'm renting would cost nearly three times what I'm paying in rent.
Regarding rents, at the moment that simply doesn't seem to apply. A repayment mortgage on the property I'm renting would cost nearly three times what I'm paying in rent.
21 January 2007, 02:25 PM
#34
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Obviously you then buy again when prices are significantly lower, so basically you're playing the market to your advantage - and I have a suspicision people like John will stand to do rather well this time around.
21 January 2007, 03:12 PM
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I think it depends on where you live, for example where i live houses are about £400 per month to rent, now a 90% mortgage on the same property is only about £520 a month over 25 years so surely the £120 a month is a good investment? its not a massave difference either.
21 January 2007, 04:07 PM
#37
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UK Estate agents with homes, houses & property for sale on rightmove.co.uk and asking £95k
these two are in the same block of flats so a fair comparison, so theres not alot in it really.
21 January 2007, 04:18 PM
#38
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really makes you think that does, I think plenty of lower income people would benefit if they left london and seeked cheaper housing, as although they would earn less outside of london its a hell of alot cheaper to live there though.
21 January 2007, 05:18 PM
#39
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Over the long term I suspect I will own for much longer than I rent, expecting at most up to just a few percent per year of real capital growth once inflation is accounted for. Apart from being a student, so far I have owned for 8 years and rented for 6 months. In that time I saw a spectacular growth in an asset that I've now liquidated. I don't believe that it can continue indefinitely, and what is probably exciting Petem95 is that the sentiment appears to be at last changing, as well the official inflation data and interest rates. Along with a seasonally adjusted 1% drop in house prices in December and very heavy debt levels, he might be talking a lot of sense. If he and others predicted it too early we could suggest that is just means that the bubble has more speculative froth to explode.
At present I am renting an asset like many others that is at about 2.5% rental yield. Add inflation and costs to this and he'd need to make about 10% growth in the coming year to break even. The downside risk is IMHO a lot higher. Have I got my sums wrong, or will I continue to believe that in the present environment that the people that spout that "Rent is dead money" have bothered to do the sums?
At present I am renting an asset like many others that is at about 2.5% rental yield. Add inflation and costs to this and he'd need to make about 10% growth in the coming year to break even. The downside risk is IMHO a lot higher. Have I got my sums wrong, or will I continue to believe that in the present environment that the people that spout that "Rent is dead money" have bothered to do the sums?
Think about it, it took 3 years with ir of 10%+ how long will it take this time? 5 years? Also the type of property I presume you will buy will be the last to fall, ie in a sought after area.
Your maths is correct though and you may have timed it perfectly, but you will have to sit it out for 3-5 years in rented property before you get maximal benefit from your strategy.
21 January 2007, 05:58 PM
#40
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I think my main danger is going back in too early as these things do take a while to unravel. To help me in my decision, the crossover point in is likely to be when buying looks better value than renting as it did in 1998 when I bought last. Meanwhile, if renting seems better value than buying then I think I'll be delighted to continue renting, saving meanwhile. I'm flexible on the number, value and locations of properties (or property funds) I do buy when the time comes.
Renting really is not the hardship I expected. The deal was far easier, quicker and cheaper than a house purchase. Can't change anything, but don't want/need to except perhaps it would be nice to have a ceiling mounted projector rather than a coffee table one LOL but I can live with that for 3000+ sq ft surrounded by fields of show horses for about the price of a large cupboard to put Audilover's tools in in London. Gardener and maintenance are included. Wages are a little lower, 10-15% for me, and it is colder.
Renting really is not the hardship I expected. The deal was far easier, quicker and cheaper than a house purchase. Can't change anything, but don't want/need to except perhaps it would be nice to have a ceiling mounted projector rather than a coffee table one LOL but I can live with that for 3000+ sq ft surrounded by fields of show horses for about the price of a large cupboard to put Audilover's tools in in London. Gardener and maintenance are included. Wages are a little lower, 10-15% for me, and it is colder.
21 January 2007, 06:32 PM
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21 January 2007, 07:48 PM
#44
and if you are a family the issue is so much more compounded.....my dad bought his house for £13k 30 years ago - thats now worth £500k and when he goes (say 20 years) 50% will come to me - so thats £250k in todays terms....by then i may be 50 ish myself and my mortgage will be gone on a house worth £400k in todays terms.....so thats now the thick end of £1m in property - i will downsize to a cottage in the country and pass £500k out to my kids who will also be on the ladder by then.....and so it goes on.
The poeple who are stuffed are those renting with parents that do the same! Off the ladder and no inheritance to speak of, if 20 years time there will be plenty of people still wanting to buy - but those folks one be able. Meanwhile the population V space issue will always ensure theres demand (despite the "ohhhh, it cant last because i'm poor so everyone must be" attitude)
The poeple who are stuffed are those renting with parents that do the same! Off the ladder and no inheritance to speak of, if 20 years time there will be plenty of people still wanting to buy - but those folks one be able. Meanwhile the population V space issue will always ensure theres demand (despite the "ohhhh, it cant last because i'm poor so everyone must be" attitude)
Your dad may outlive you, or god forbid end up in a nursing home.
Get him to start doling the cash out now !
21 January 2007, 08:15 PM
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we've been hearing crash, crash, crash for the last 10 years. i'm getting a bit bored of this now. if there are people out there who "know", i would recommend they keep the info to themselves and use it to their own advantage.
21 January 2007, 08:23 PM
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21 January 2007, 08:31 PM
#47
My guess would be that tenants have much better (legal) protection from greedy landlords. All of a sudden investing in property becomes a decidedly illiquid investment under circumstances where the tenant can't be booted out on a whim.
I recall that from renting in Switzerland (which 75% of the population does), that the rent payable moved with interest rate levels, both up and down. I rented a super studio appartment in the Zurich Niederdorf in 1993 for 1500 swissies a month which had fallen to 1300 swissies by the time I moved out almost 4 years later. A major renovation could also justify an increase in rent. Speculation was further discouraged, with foreigners buying property not being able to sell at a profit for 5 years.
I recall that from renting in Switzerland (which 75% of the population does), that the rent payable moved with interest rate levels, both up and down. I rented a super studio appartment in the Zurich Niederdorf in 1993 for 1500 swissies a month which had fallen to 1300 swissies by the time I moved out almost 4 years later. A major renovation could also justify an increase in rent. Speculation was further discouraged, with foreigners buying property not being able to sell at a profit for 5 years.
21 January 2007, 08:50 PM
#49
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One thing i noticed when visiting my brother in Fance is that they dont seem so hung up about having the latest "fashion" in their houses. A good tiled floor is a good tiled floor. They dont seem to care as much about this sort of thing.
22 January 2007, 02:38 PM
#50
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In the UK, the majority of the private rental market is owned by private individuals, in France & Germany it tends to be large financial institutions. People feel more comfortable knowing they can rent a property for the long term, possibly a life time.
As has been said, there are also cultural differences involved. People there don't feel the need to have the latest, biggest, shiniest new whatever, while in the UK it seems that many are driven to get the latest thing & the biggest mortgage.
Will there be a house price crash? Who knows. History shows there will be at some point, but when & how bad it will be no one can tell.
All I do know is that I haven't dealt with so many repossessions since the early nineties. The difference this time is that there are still people willing & eager to buy property, around here at the moment.
22 January 2007, 03:01 PM
#51
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People are living on the brink just to stay part of all this.
Wonder how many interest only mortgages have been taken out over the last few years?
This is a lengthy, quite comical period in time.The poorest bunch of 'wealthy' citizens you could ever wish to meet.
Wonder how many interest only mortgages have been taken out over the last few years?
This is a lengthy, quite comical period in time.The poorest bunch of 'wealthy' citizens you could ever wish to meet.
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