A modern conundrum - house prices

[baguio]

more desirable the area there will always be demand and prices will always be high
I bought for the first time having spent 4 years looking.
We closed at the top of the market in 08 just as the "market collapsed".....

I had my house valued throughout the next 4 years and it didn't budge according to the lying estate agents. it is now worth more...so they say!

I fail to understand why you say that the estate agents were lying bewsher? The more valuable the property then the more money they make. The facts are that they told the truth. I should know. I sold 3 houses in 2007 and kept a very close eye on property. I only bought back in last year. If circumstances had allowed then I would have bought in 20012/13 but I didn't do so badly so can't complain. baguio

 

[I. Farticus]

BUT getting a decent rate mortgage now is a joke

my brother in law was offered a 9% mortgage not that long ago!

Santander are offering 1.59% fixed until Jan 2018... You just need to know a good broker.

Russian and Chinese money is pouring into the London hot spots, so those sellers are moving that little bit further out. This ripple effect is now evident all around the outskirts of London, but there are pockets of ridiculous increases, and I'm lucky enough to be getting the benefit of the banking fraternity heading into South Bucks in their droves. Lucky with the increase in value, less so in feelings of goodwill to all men, given the incredible arrogance and general f*ckwittery that they bring with them. Possibly time for a move to the West Country m'thinks...

 

[baguio]

It's all about credit scoring and deposits. Most of us will be getting offered far far lower than 9%.

 

[Bavarianbrit]

I have 6 properties rented out now but only because my planned retirement savings plan fell apart in late 2008 so where was I to put my savings? = rent to let.
Now my experiences of the stupidity of tenants I could already write a book. It is not an easy job landlording.
US financial idiots started this turmoil and it looks to me to be staying with us for a long time in the future.
One million refugees are now coming into Germany in one year and if only 5% of them do move on to the UK they will need housing - but where?
Where? where we now go stalking, methinks.
Martin

 

[Chasey]

There is a house in London worth less than a Quarter of a million?!?!?!

Its a flat

ATB

Mark

 

[JTO]

If interest rates stay low, people will invest in rental property. If interest rates rise, there may be a fall in house prices, but those that stretch themselves to buy a house will always struggle, no matter where interest rates are, and it's the people who stretch themselves to buy that set the price. If the value of my rental houses fall, I would be tempted to buy another one or two, but I wouldn't borrow too much to do it. If you're in debt, you're in danger! Demand, and therefore prices, is very regional.

 

[Chasey]

Where do i start..... Supply and demand? Resticted development, poor variety of new build stock?

i don't really mind increased prices or inflation (free market/capitalism), think of it this way, in 20 years time £100k of debt will look cheap!

I am also of the view that a rental market is healthy, foolish to think of your house as your best investment. Proving you have the discipline to put savings away (and invested) renting is fine.

I also have a theory following the recession. I am mid 30's and i see a load of 60-70 year olds who have made £100k's of equity over the last 20 years on rural(ish) family homes with little or no debt. All these homes are now worth say £500k plus and the younger generation aint there to buy them and many people are going to get a bit of a shock when they want to cash in their chips.

..... Then again ride the wave.... If prices keep going its leveraged profit on an appreciating asset - easy way to make £50k in 12 months.... New rifles!

The house is only worth 500,000 if houses are selling in that area for 500,000 within four to six weeks of advertising

Estate agents need cashflow just like veryone else so priceing properties unreasnobly high in an unsustainable market is not a winning formular

My couson baught a house in London (clapham Common) for 160K in 1994. Three story town house.

She is now 47 and has retired to focus on her painting

She managed that by selling the house for 1.2 million and mooving into a 200k property in herrodfordshire

That would never have happened if she was a rent payer but she would have lost her job and had to move as rental values in clapham are more like £1000 a week

1.5% mortguage rates?

Most are ********. You get that for two years but pay a £2000 arangement fee, so spread the arrangement fee over 2 years and see what the interest rate really is

WIll the property market crash again?

Yes obviously as soon as interest rates hit 7% and the reposesions start flooding in like they did last time

I took out a mortguage on 7% in 1985 and by 1987 I think it was 14%?

When that hapens the poo wil hit the fan

 

[Bavarianbrit]

I think I hit 15% in 1987 it was a horrible time.
I was earning good scrot overseas at the time too.
How the people living in Deal Kent managed then I will never know as there is never any work there, only gay (it appears to be all of them) antique dealers (not very PC I know) and Londoners coming down for the weekend were at that time the financiers to all the local builders/electricians/plumbers. Now the fast train up to the smoke has changed the game down there, Dover is still not picking up though.
martin

 

[kes]

It was 15% and I had taken out a mortgage maybe the year before at 7% fixed for 3/5 years. I do remember that by the time my mortgage rate returned to market rate, it was down to close to 7%. I was very lucky and got it dead right, simply by chance. I suppose that simple chance has made me very much more interested in putting effort into getting my next and potentially final purchase, right.

 

[Geordiehillbilly]

Honestly, if you look at the "true" cost of ownership from purchase (including your legal fees and stamp duty etc) through maintenance and refurbishment then selling including your fees, you're better off renting. Once you're on "the ladder" its actually quite hard to get off both mentally and financially. I'm advising my kids to rent, but they keep saying they want to get on the property ladder. The only way you will make money is sell in the booms, buy in the busts and make sure you have enough money to pay the mortgage every month.

 

[baguio]

The disadvantages of renting are that you lose control of your life. You can be given notice to move when you're settled. You can't change the house or even decorate without hassle. You will never live in your perfect house. Never have anything to pass to your kids. You will be paying rent for ever and possibly more than a mortgage would have cost?! I could go on. Ownership for me every time!

 

[kes]

Honestly, if you look at the "true" cost of ownership from purchase (including your legal fees and stamp duty etc) through maintenance and refurbishment then selling including your fees, you're better off renting. Once you're on "the ladder" its actually quite hard to get off both mentally and financially. I'm advising my kids to rent, but they keep saying they want to get on the property ladder. The only way you will make money is sell in the booms, buy in the busts and make sure you have enough money to pay the mortgage every month.

I fully agree with the last para but, lets face it such a scenario always means losers and often life changing. However the way the world economy is currently, oil prices, and any other number of indicators, I still feel a fall, albeit gradually perhaps is on the cards. I am in rented now and agree that I wouldnt want to remain for all the reasons Bagio states. If this were France, where the rented market is better developed and more reasonable than a longer period in rented wouldnt be a problem.

 

[JabaliHunter]

Honestly, if you look at the "true" cost of ownership from purchase (including your legal fees and stamp duty etc) through maintenance and refurbishment then selling including your fees, you're better off renting. Once you're on "the ladder" its actually quite hard to get off both mentally and financially. I'm advising my kids to rent, but they keep saying they want to get on the property ladder. The only way you will make money is sell in the booms, buy in the busts and make sure you have enough money to pay the mortgage every month.

Either way, it's hard to make money from renting someone else's property to live in.
There's a lot of luck involved in buying a house to make money. A lot of gains are just from a rising market, in which case the next property you buy will also be more expensive. Far better to have a mindset of buying a house to store wealth. After all, if it costs £X a month to rent and a mortgage and maintenance etc is the same, it's costing you the same to live each month. But when you buy, at some point you can get a big chunk of the money back if you need it. I've never heard anyone advised to rent for longer than necessary, but of course your last point is absolutely key... It has to be affordable in the hard times.

 

[pheasant sniper 1]

Honestly, if you look at the "true" cost of ownership from purchase (including your legal fees and stamp duty etc) through maintenance and refurbishment then selling including your fees, you're better off renting. Once you're on "the ladder" its actually quite hard to get off both mentally and financially. I'm advising my kids to rent, but they keep saying they want to get on the property ladder. The only way you will make money is sell in the booms, buy in the busts and make sure you have enough money to pay the mortgage every month.

Really disagree with you here..
Why would you encourage your children to rent in effect paying off somebody elses mortgage/retirement/massive investment
Im advising my kids to buy as despite the immediate hardship its not something we all haven't faced. I too was left with a mortgage rate of 15% and we still made it but my wife had to return to work when the baby was three months old. I dont recall any youngster saying they had it easy starting out with a young family.

Renting is in most cases more expensive than the mortgage and probably chosen by those that are unable to find the ridiculous high deposits needed these days. These deposits kill the market hopes for young families starting out

Ive bought and sold four houses in the last four years, one i had a sale agreed within 3 months of purchasing with a nice profit.

The places ive bought held no emotional attatchment and were viewed with one thing in mind and this is key imo.. I viewed all the propertys looking at what could be done with minimum cost and maximum profit and resale value/appeal to buyers.
Loft conversions/ basement etc are all jobs that are going to need a good bit of capital. Putting beams in and expanding rooms/ensuites etc a bit less.

I think if chosen wisely there is great opportunity and thats only going to rise.. My first flat bought 26 years ago for 42k would now sell around 160k. Thats a nice windfall for somebody that chose to rent the property out against the bugger all that another person renting for the same period would be looking at.

At the end of the day being happy from not stretching yourself financially comes before all this bricks and mortar bs

 

[Geordiehillbilly]

Really disagree with you here..
Why would you encourage your children to rent in effect paying off somebody elses mortgage/retirement/massive investment
Im advising my kids to buy as despite the immediate hardship its not something we all haven't faced. I too was left with a mortgage rate of 15% and we still made it but my wife had to return to work when the baby was three months old. I dont recall any youngster saying they had it easy starting out with a young family.

Renting is in most cases more expensive than the mortgage and probably chosen by those that are unable to find the ridiculous high deposits needed these days. These deposits kill the market hopes for young families starting out

Ive bought and sold four houses in the last four years, one i had a sale agreed within 3 months of purchasing with a nice profit.

The places ive bought held no emotional attatchment and were viewed with one thing in mind and this is key imo.. I viewed all the propertys looking at what could be done with minimum cost and maximum profit and resale value/appeal to buyers.
Loft conversions/ basement etc are all jobs that are going to need a good bit of capital. Putting beams in and expanding rooms/ensuites etc a bit less.

I think if chosen wisely there is great opportunity and thats only going to rise.. My first flat bought 26 years ago for 42k would now sell around 160k. Thats a nice windfall for somebody that chose to rent the property out against the bugger all that another person renting for the same period would be looking at.

At the end of the day being happy from not stretching yourself financially comes before all this bricks and mortar bs

I'm not disagreeing that there is money to be made. But your example was on the back of a massive hike in housing prices in the late nineties. They've fluctuated up and down since then but not that much.

If you look at the cost of renting against the cost of buying the very same house, renting will always work out cheaper. The big issue, is what you do with the spare cash and do you invest it to diversify your equity. That is what I am advising my kids to do and then they are not slave to a fluctuating market.

Anyway, has anyone shot any deer lately.....

 

[scoby270]

I'm not disagreeing that there is money to be made. But your example was on the back of a massive hike in housing prices in the late nineties. They've fluctuated up and down since then but not that much.

If you look at the cost of renting against the cost of buying the very same house, renting will always work out cheaper. The big issue, is what you do with the spare cash and do you invest it to diversify your equity. That is what I am advising my kids to do and then they are not slave to a fluctuating market.

Anyway, has anyone shot any deer lately.....

Hi,
renting does not always work out cheaper , my house was valued at £1500 a month to rent out this was a guaranteed return from 4 different estate agents, my mortgage is less than 1/3rd of this. Also we own a few other properties that are rented for way more than they would cost on a mortgage, it relies on purchasing at the right time and buying in the right areas.

Yes got a nice roe on Saturday.

Scoby270

 

[s.stimson]

we are just gonig through the process of selling our house to relocate across the country, while sitting with the mortage advisor (frankly being bored to tears while him and my wife discussed the financials) I did a back of the fag packet sum. We purchased our first house 14 years ago, deducting the cost of the initial deposit and mortage payments over that time we are in profit to the tune of £200k. Now we have had to work for that; both houses we have lived in during that time have been projects but if we had rented all we would have to show for it is 14 years of rent books.

And in relation to the renting is cheaper than owning question, whilst selling our house we discussed with the estate agent what the rental potential would be if we needed to move before finding a sale, the rental value was over double what we are paying in mortage.

 

[Geordiehillbilly]

Hi,
renting does not always work out cheaper , my house was valued at £1500 a month to rent out this was a guaranteed return from 4 different estate agents, my mortgage is less than 1/3rd of this. Also we own a few other properties that are rented for way more than they would cost on a mortgage, it relies on purchasing at the right time and buying in the right areas.

Yes got a nice roe on Saturday.

Scoby270

How much would your house cost to buy now with say a 10% mortgage which is the position most people are who are not already on the ladder? That's what I mean by the choice infornt of people now who do not already own a property. By the way, Im not suggesting you divulge the value of your house! I'm also not saying its the case every time.

 

[baguio]

The facts are that when I retire my mortgage will be paid off and I can live in relative financial comfort. Many of those who rented all their lives will be using a vast part of their pension to continue to pay their rent or even be relying on the state to pay it for them for the rest of their days. That is just not right or how retirement should be after working hard for all those years!
baguio

 

[scoby270]

Hi Geordie, I wouldn't like to guess but we did only purchase @17 months ago, just to put a smile on some peoples faces one of my tenants is a rabid anti, she has rented a flat off me since 1993 and has paid the place off twice over almost but she has no idea at all that i stalk and rough shoot, it brings a smile to my face every time the rent goes into the bank.


Scoby 270