Wednesday, May 14, 2008
Fantasy article from Agents-7 Good reasons to buy now
Urban Spaces: Reasons to buy now!
An extract of their idiot innumerate reasoning below:
Let's take a £300,000 property and look at two scenarios.
Scenario 1 - The prices drop by a further 10% over the year
Scenario 2 - We are at the bottom and prices will stabilise.
The buyer who waits, notionally will save themselves £30,000 by holding off for a year, but to rent that same product will cost them approximately £300 per week or £15,000. So in truth, their gamble by waiting would save them only £15,000 and the money they paid in rent would have been used towards mortgage repayments on the loan.
What about interest on 300 k at >300 p.week? or scenario 3 where prices fall 35%?
Posted by musicben @ 01:00 PM (350 views) Add Comment
9 Comments
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1. little professor said...
LOL, he doesn't know seem to know you are charged interest on a mortgage
2. jonb said...
and that the interest charge is quite often higher than the rent.
3. Adsey said...
lol i love the article - they've even done some proper research "house prices have doubled every 12 years since the war" - very good. I think i'll go out and buy a house right now. Seriously though if i had just got back from my holiday to the moon and went on their website to buy a house and saw this article i would soon realise that now's not a good time to buy a property.
Reckon when you go for a viewing they'll have coffee brewing and bread in the over?
I can't undrstand why 1000 estate agent branches have closed year to date they seam so switched on to the economics of real estate.
4. Pdb said...
"5. I fundamentally do not believe that people should try and earn their money playing a market that they are not experts at. They should be focussing on their home, rather than on their investment and property should be viewed as that."
I expect that they will tell everyone what to do as they are the experts??????
What a load of B"£$"£
5. letthemfall said...
Another property site in Toytown?
6. drewster said...
@musicben
Actually their financial illiteracy is even worse:
Scenario 1 - You buy a £200,000 property now, with an interest-only mortgage at 6%, so you're paying £1,000 a month (interest only).
- After a year, the property has fallen by 10% and is now worth £180,000. You however still owe £200,000, so you're now in negative equity, and you're still paying £1,000 a month.
Scenario 2 - You wait for a year, paying £1,000 a month in rent (although your rent would probably be much lower in the current climate). After a year, the house you wanted to buy has fallen 10% to £180,000. You buy it with a 6% mortgage, making payments of £900 a month.
In scenario 1, you're screwed no matter what happens.
In scenario 2, the longer you can hold out the more the situation improves! The only time that buying makes sense is when (a) prices have stopped falling and (b) the mortgage payments are no greater than your rent.
7. Tulipmania said...
@drewster
Spot on and also:
£500 - £1500 for the mortgage arrangement fee every 2 years
£500 - £4000 on either a service charge or repairs to your house p.a.
the hassle of making repairs rather than ringing the landlord
the damaging psychological strain of knowing you're in negative equity
knowing you're a fool because you should have listened to the sensible people on housepricecrash and not Ztuart Lawz and the Assetz boyz.
8. Bigbadwolf said...
"The only people who benefit and should most definitely wait before they sell at the moment, is the people looking to sell up and downsize." Some mistake, surely? Net cash residue of selling large house to buy small house today is bigger than it will be after falls. Say prices fall a measly 33%. You have a 600K house and are downsizing to 300K house, ideally made of straw and not too far from my den. Difference in = 300K. Ta muchly. Difference after 33% falls to 400K and 200K is respectively = 200K. So better to downsize now for 100K more even if it takes you a while to sell and you don't get the first price you thought of.
9. hpwatcher said...
Those tw@ts are away with the fairies.