Someone on this forum just bought his first house (me :D )

[greektony]

Rave is back!!! I can see your point, and maybe if I wasnt in the position I am in (I inherited some money which HAD to be used as a deposit on a property as stated in my Aunts will), I would be renting. For me as long as house prices dont drop by more than £50k, (which for the property I am in the process of buying its value would need to drop by over 30%) in the next 3-4 years I wont be out of pocket.

I agree though that interest only mortgages do appear to be all the rage at the moment. But as I am sure you agree, seem rather pointless.

[Koolpc]

House prices won't drop that much. Just look at the history of house prices over the last 20 years!

If someone wants to rent then so be it. Up to them. For me, it would be like throwing money down the drain as you will never get that back! Of course, if the rent price is substantially cheaper than having a mortage and you are then able to save, superb!

[GeorgeTuk]

House prices won't change much since what the Bank of England are really trying to bring down is unsecured borrowing while keeping house prices in check a little.

We'll just keep going on as we are unless you have other debts because the interest rates will start to really be punishing soon. I'm interest only for 2 years then I start paying of the capital, its given me time to sort the house out (re-decorating and re-fitting) and find a new job so I am in an even better position to meet the payment, which I can currently (withtthe girlf's input of course 60/40) easily handle. Its all about being sensible, we knew we didn't have enough for the 'average' house and neither did we need it (being only 2 of us) so we have to buy one and do it up.

[htid]

When prices crash (or stagnate) to the extent that it's cheaper to buy a house than to rent, then I'll buy. Until then, I'll rent.

Can you let me know when that is then?

I have no idea about houses or mortgages or anything, and reading this thread scares me because most of you do seem to know. But Rave you seem like you know what you're talking about so when it's a good time to buy, let me know, I trust your judgement

[Koolpc]

There is no point in 'Waiting' for the right time to buy as you could be near retirement and still be waiting! I was lucky in that when i bought my house the prices were ok, even though i was borrowing my max at the time! My mortgage finished approx 2 years ago now so interest rate rises are good for me and my savings.

If you can afford a mortgage now then i would say go for it. Having bricks and mortar has always been a good investment (Unless you are a bus driver!!...lol) (Bus drivers get paid more than me! )

[ikonia]

............apart from the 1980's crash

[IBM]

If I end up at retirement age having rented all my life and with a massive wodge of savings that I never got round to using as a deposit on a house, I've still got as many options as someone who slaved away for 30 years paying off the mortgage on the house they bought when it was massively overpriced.

How good are you at saving? Most people spend the money they have unless they have already assigned it for something else (like a mortage). It's a daft reason to buy a house, just to force yourself to 'save' money, but all the same, take two average people, one putting money towards a house, one putting money into a savings account, which one is likely to have greater assets at the end of a 25 year period? Especially considering the difference between mortage repayments and average rent is not that great, and subject to change.

Anyway, I wouldn't buy a house right now, regardless. It's a crazy market, and even if the house prices keep rising for another 3-5 years, and then slump (which is what I think they'll do), you're still better off waiting for the slump than risking it and buying now.

[GeorgeTuk]

Anyway, I wouldn't buy a house right now, regardless. It's a crazy market, and even if the house prices keep rising for another 3-5 years, and then slump (which is what I think they'll do), you're still better off waiting for the slump than risking it and buying now.

Yeah but the housing market will always recover as there is always demand, it doesn't slump for long and even then though the values go down, it means less people moving around not more cheaper houses just houses which no one wants.

Don't forget its in everyones interests to keep the market going, Bank of England, corporations (half my companies pension defecit was recovered through property investment), developers, the government (for houses, investment and land value), home owners, the banks.

[JPreston]

...That's INTEREST CHARGES ONLY, just in case you or anybody else missed the point...

You aren't going to see any CAPITAL APPRECIATION - you're deliberately missing that point .

You seem to expect the state of 'not owning a house' to transition effortlessly into 'owning a house' without any intermediate hardship, like - ooh I don't know - 'paying for a house'. Houses (and Ferraris) are expensive - but while it's valid to say "I'm not going to pay through the nose for a Ferrari" it's entirely different to say "You're all doomed for buying a house!!! HA HA HA HA HA HA....". You can rubbishrubbishrubbishrubbishrubbish £100k's on a Ferrari, or you can invest it in the most useful object you could ever own (keeping you warm in the winter, storing your stuff in, giving you an address that people can post birthday cards to, etc etc etc) that as a secondary consideration will earn you a return far in excess of anything else you could have done with your money.

...When prices crash (or stagnate) to the extent that it's cheaper to buy a house than to rent, then I'll buy. Until then, I'll rent. If I end up at retirement age having rented all my life and with a massive wodge of savings that I never got round to using as a deposit on a house, I've still got as many options as someone who slaved away for 30 years paying off the mortgage...

This isn't a dig at all - it's totally true - I went to a bus driver's retirement party last year. Him and his wife rented their whole life, the same place for 20 years in fact. They don't have any savings to show for it. They have made good friends with their landlady, which is nice. Seriously; house crashes, 15% interest rates, subsistence, there is no way at all that they are better off than if they had bought at any time over his working life. But it always seemed so expensive...

[Nick]

You know what?

It's piece of my mind time. I've had a thoroughly crappy day and now I'm going to cleanse my ire and release this massive reservoir of barely-held-in-check anger.

Right, so you think that buying a house is a terrible waste of money and all that... well, yeah, fine.

Know what? I don't care.

What the bloody hell do you expect me to do? Throw my arms up in the air at the shock of the sudden epiphany that I've been pouring money down the drain every month for the last 14 years?

I know, I'll sell up and move house, paying an estate agent up to 2% of the selling price and a further 2-3 grand on moving fees, solictors fees and the like... JUST to start renting.

Oh for sure, I'll have a massive £80,000 in the bank becuase of the equity in the house which I'll cash in on from selling...

Oh hang on... I WOULD NOT have any of that if I'd taken some of the advice in this thread... I'd have been renting for 14 years and still be renting... with no equity.

Like I said several posts and (it seems like) years ago, renting suits some more than others and conversely buying suits some and not others.

But taking me, average bloke, as an example, where would I be if I hadn't have bought? Oh no, already covered that one...

So, time to turn off the subscribe to thread option becuase truly and honestly I'm just too damn tired and angry with the world to keep reading 'facts and statistics' that say I'm a daft sod to have ever even entertained the idea of possible buying a house, let alone actually doing it.

BUt for every fact wheeled out to fight an argument there's one that can be brought out to counter it... and as wonderful as all these studies are for supporting and refuting arguments we could go on all day and all damn year firing off link after link.

I just can't be bothered anymore, it really doesn't mean that much to me as it obviously does to others, so I concede.

I was WRONG to buy a house, WRONG! DO YOU HEAR??? W R O N G !!

Of course, the flaw is that I'm sitting on 80 grand equity which, though it means nothing if I want to buy another house, does mean I can stick down a 50% deposit on a three bed end terrace in the commuter belt home counties.

Would you be able to do that after 14 years of renting?

That's it. My piece is said. I have nothing more to contribute.

dkmech, enjoy your new home, apparently it'll be worth the same as a wheely bin in two week's time if you believe some of the crud in here.

Or maybe you've just been as sensible as I'm being and hit the unsubcribe button.

I'm out.

[Rave]

You know what?

It's piece of my mind time. I've had a thoroughly crappy day and now I'm going to cleanse my ire and release this massive reservoir of barely-held-in-check anger.

<snips out massive rant>

Whoa whoa WHOA. I think someone (possibly many others in this thread too, to be fair) has misinterpreted what I'm trying to say, so let me clarify. I'm not against home ownership at all- au contraire, I'm very much in favour of it. If I wasn't keen on the idea of owning my own home why do you think I'd have gone to such trouble to research the market, look into the history of bubbles etc.?

Owning your own home is undoubtedly a great thing. Buying /= Owning- to own your home, you have to first pay off your mortgage, and if your mortgage is huge because you paid too much for your home, then that becomes very difficult.

You've already said that you bought your house more or less during a dip in house prices- and that was a smart move. Buying a house at (or near) the top of a massive bubble is definitely NOT a smart move. If it was just luck that you bought when prices were cheap- then accept that you got lucky. It's NOT a good argument to say "buying a house worked out great for me, so you should buy too"- because in real terms houses are far far more expensive right now than they were when you bought. One day, they will be relatively cheap again- and that's the time I and other clued up people will start buying.

House prices won't drop that much. Just look at the history of house prices over the last 20 years!

Yeah, look, right here

See that drop on the graph from 1990-1995? I'd say a 35% drop in real terms is quite a bit. All a question of how you define it I suppose.

Can you let me know when that is then?

I have no idea about houses or mortgages or anything, and reading this thread scares me because most of you do seem to know. But Rave you seem like you know what you're talking about so when it's a good time to buy, let me know, I trust your judgement

I think house prices will start to crash, but I can't tell you exactly when- frankly, nobody can. Similarly, when they do start to fall, nobody will be able to tell you exactly when they're at their cheapest. In the very long term though, national average house prices tend to average out at 3.5x the national wage- and in every previous crash, they've fallen below 3x the national wage. If you buy when they're 3.5x the national wage you're unlikely to lose out much; if you take the risk and wait until they're under 3x you're likely to win.

How good are you at saving? Most people spend the money they have unless they have already assigned it for something else (like a mortage). It's a daft reason to buy a house, just to force yourself to 'save' money, but all the same, take two average people, one putting money towards a house, one putting money into a savings account, which one is likely to have greater assets at the end of a 25 year period? Especially considering the difference between mortage repayments and average rent is not that great, and subject to change.

I'm about to become disciplined. You're right of course, and that's why I'm in no way against buying houses in general, I'm just against buying them right now at this point in time.

As an aside though, I think it'd be great if houses became so dirt cheap that nobody had to worry about affording a place to live- we're so tied up in this idea that property should be worth lots of money, that we can't even consider the idea that slaving away half your life just to put a permanent roof over your head is a complete PITA, and totally unecessary. How many man-years does it actually take to build one average size house? One? Two, if you include the time taken to make all the materials? By that measure, houses are always vastly overpriced.

Yeah but the housing market will always recover as there is always demand, it doesn't slump for long and even then though the values go down, it means less people moving around not more cheaper houses just houses which no one wants.

See aforementioned graph- I call a continuous fall for 6 years (1990-1996) quite a long time myself. And it certainly does mean cheaper houses. There are always people who need to move (or sell the house their mother left them in their will etc. etc.) and in a crash those houses sell for less money.

Don't forget its in everyones interests to keep the market going, Bank of England, corporations (half my companies pension defecit was recovered through property investment), developers, the government (for houses, investment and land value), home owners, the banks.

The only ones who really win are the banks. Everyone else actually loses, although they're too dim to see it. As I said, wouldn't it be great if you could buy a house for a couple of hundred quid instead of working half your life for one? Wouldn't it be great if you didn't have to worry about leaving a decent legacy for your kids because they wouldn't need it?

Dreaming aside, it doesn't matter anyway. The Bank of England can no more prevent a crash (or a recession) than King Canute could prevent the tide coming in. The governor has more or less admitted as much.

You aren't going to see any CAPITAL APPRECIATION - you're deliberately missing that point .

No, I'm not at all. I just think that serious capital appreciation in this market (I.E. rising house prices) is a thing of the past. If, for whatever reason, you very firmly believe that house prices will continue to rocket up, up and away, then of course you should buy a house immediately, to do otherwise would be foolhardy. In fact you should buy as many houses as you can.

I, however, think that the value of houses is likely to stagnate or decrease. In that situation, if I'm saving the difference between what I pay in rent and what I would pay in interest, then I am building up capital that the homeowner is not. It's not hard?

This isn't a dig at all - it's totally true - I went to a bus driver's retirement party last year. Him and his wife rented their whole life, the same place for 20 years in fact. They don't have any savings to show for it. They have made good friends with their landlady, which is nice. Seriously; house crashes, 15% interest rates, subsistence, there is no way at all that they are better off than if they had bought at any time over his working life. But it always seemed so expensive...

<shrugs>. If they'd bought in the mid-90s, they would have won. If they'd bought in 1989-90, I daresay they would have ended up with even less than they have now.

I'm not sitting here thinking "Great! I'm spending less on rent than I would on buying, let's spend the difference!"- I'm saving that money (in fact I'm paying off debts with it, but same difference). This enormous great long post I've just spent about an hour and a half writing ultimately boils down to just this one point:

There are good and bad times to buy a house. Now is a bad time.

Thank you and goodnight.

[JPreston]

...
I'm about to become disciplined....

Well, good luck with that, and I'm sure the idea never ocurred to my retired friend.

...How many man-years does it actually take to build one average size house? One? Two, if you include the time taken to make all the materials? By that measure, houses are always vastly overpriced....

Hhmmm. Well by that logic, or should I say 'logic', or should I say 'dementia', you should be able to exchange the computer you are typing at for about 500 houses. Then a) you would no longer be so obsessed with house prices, and b) you wouldn't be able to constantly post about them even if you were

Hey Rave; you live in London, you seem reasonably cogent - how come you don't get out and get a job that pays more money? You could buy a house if you worked at it, or you'd 'save up more capital' that way

[Rave]

Well, good luck with that, and I'm sure the idea never ocurred to my retired friend.

Well, if it occurred to him, then either he couldn't be arsed, or he retired with enough of a stack of savings to rent quite happily for the rest of his life. Which is it?

Hhmmm. Well by that logic, or should I say 'logic', or should I say 'dementia', you should be able to exchange the computer you are typing at for about 500 houses.

I totally fail to see how this is so. An Intel/AMD fab employs a few thousand people, and produces a few million processors a year. Ditto for all the other components. Total man years necessary to produce my computer = about .005.

Hey Rave; you live in London, you seem reasonably cogent - how come you don't get out and get a job that pays more money?

What, more than the ~£28k p/a or so that I'm on already? Doing what? I don't have a degree, I'm no good at managing people, and neither am I particularly good at kissing arse. With that in mind, I'd be interested to know what great career opportunities I'm missing out on.

You could buy a house if you worked at it, or you'd 'save up more capital' that way

Yeah, because obviously the answer is that I'm not working hard enough. People my parents generation didn't get to buy houses working only 50 hours a week did they? Clearly I'm just a lazy slacker who thinks the world owes him a living.

[b0redom]

Rave, You seem to be forgetting what you get when you buy a house is the land, as well as the building materials and labour. That's the reason property insurance is for much less than the cost of the house itself - you can rebuild the house if it explodes etc. It's also the reason that prices will tend to go up over time. No one is making land anymore, and the people demanding it is increasing.

I bought my first place in 2001 with a 102% mortgage. It wasn't in the best area it wasn't exactly what I wanted. It needed some cosmetic work. 3 years later, the equity in there allowed me to buy the perfect house in the perfect location.

You must have a very accomodating landlord if he/she is prepared to let you rent at the same rate for the next 5 years, even more so for the next 20 years. If I choose never to move again, my mortgage payments are more or less fixed for life.

Anyway congrats on getting your own place dkmech!

[greektony]

yeah, i feel sorry for dkmech, his thread has gone slightly off topic!!! Nice one for having the balls to buy your own place. I am in a similar boat having had an offer accepted a week or so ago

Congratulations

[TheAnimus]

okay rave, i'll try and explain this really simply.

Place i viewed earlyer this week. Currently let at 1300PCM, asking price of 250k (would offer just under stamp threshold).

5.25% of 225k (assuming a 10% deposite) per year the intrest is then 11,812 per year. Or just under 1k a month.

Now granted not everyone is just a good credit risk that they get some of these no tie in below base offerings. So lets assume a 7% over 25 years. Cost per month &#163;1350.

So your 'wasting' &#163;50 a month, at first, but your rent is never going too go up (enless you want to pay off your mortgage faster, which is a good idea of course if you can afford it, not too mention there are good deals which can be re-mortgaged every 2 years too better suite your income)/

Now lets say the flat devalues and never recovers, it stays at 100k for ever. Thats 100k from a &#163;50 a month investment if you where renting. Hard to make that! Or lets assume that it matches base inflation, the place will then be worth 850k.

And the i'm too poor is a piss poor excuse. You can easily afford 1k a month on 28k, which assuming you buy with someone in the same situation, is more than ample for payments. Deposite, well its not easy for most people to get them either, you just have to make cutbacks in decident spending!