Bad Bear Day

[Bloo Loo]

Of course its cheaper to buy. Even if the mortgage was double the rent, because at the end of the mortgage the house is yours. Renting goes on forever.

not that mortgage.....it was interest only.

[Johnny Storm]

not that mortgage.....it was interest only.

Eeeek! I never understood people who took those out.

[DownsizingDiva]

Of course its cheaper to buy. Even if the mortgage was double the rent, because at the end of the mortgage the house is yours. Renting goes on forever.

Not necessarily.

It may be cheaper to rent in the shorter (or even longer) term. You are making an assumption based on what? There are many factors which need to be taken into account, not least of which are a) interest rates (both in terms of return on savings and mortgage payments), and b ) HPI - if you buy a house at £500,000 (probably with a substantial mortgage), and that house is worth £250,000 in 10 years time - have you really "saved money"???

Edited July 21, 2010 by DownsizingDiva

[tim123]

Of course its cheaper to buy. Even if the mortgage was double the rent, because at the end of the mortgage the house is yours. Renting goes on forever.

No. They were just considering the interest component.

If you add the repayment part of the mortgage into the equation you also have to add in the effect of putting that much per month into a savings account for the renting option.

tim

[neil324]

The most depressing thing is that outside of this forum I don't know anyone who is bearish about prices, all my friends, relatives etc say that prices might stall this year but they'll be no crash.

Been at local (Bristol) auction rooms and they are still packed with people. I know lots of people with big deposits willing and ready to charge in.

Whatever anyone thinks where I live there is a huge amount of pent up demand and they aren't building many houses either!

Sorry, just rather depressing!

Sorry but in Birmingham Cottons auction last week got off only 38% of lots, bigwoods tommorrow will be the same. So people with money who pay cash and don't need to approach banks see the writing on the wall, at least in Birmingham.

[Redcellar]

No. They were just considering the interest component.

If you add the repayment part of the mortgage into the equation you also have to add in the effect of putting that much per month into a savings account for the renting option.

tim

Absolutely Tim.

Also there are none of the hidden costs when renting, such as other posters pointed out (insurance, damage, repairs, maintenance). It all adds up. I for one am much better off renting, and investing the money I have saved. It's not even a close call and will get even better when interest rates rise.

[babesagainstmachines]

How the hell can we have both austerity and printing at the same time? So we are supposed to be living within our means but at the same time creating fantasy growth with funny money? Me no understand

It's really quite simple. Labour is a big government party. QE paid for public sector spending, although of course they bailed out the bankers as well.

The Tories are all about looking after big business and the rich. The Tories QE will be buying dodgy private sector assets, helping out the rich even more than Labour did.

Austerity for all but the rich.

Edited July 21, 2010 by dazednconfused

[Blue Nose Bear]

Surprised no one has picked up on these stories or perhaps there is a bit of head in sand? Not sure where this leaves a HPC now, bad day for the bears...

Low interest rates to stay...

Low interest rates and more printing £££

Cheaper to buy....

Cheaper to buy

Er... things have moved on a bit.

Interest rates are probably gonna stay where they are for as long as Merv can blag it, yet HPs are still falling.

Debt burden and the lack of easy credit are finally being absorbed by the sheeple.

The only way HPs are going is down, an interest rate rise would accelerate the drop hypersonic.

[Bloo Loo]

It's really quite simple. Labour is a big government party. QE paid for public sector spending, although of course they bailed out the bankers as well.

The Tories are all about looking after big business and the rich. The Tories QE will be buying dodgy private sector assets, helping out the rich even more than Labour did.

Austerity for all but the rich.

no need for Austerity if you are rich...your logic is false.

[lulu]

Keep the faith, my brothers.

Here are a couple of scenarios:

1. The public sector cuts of the coalition gubamunt are carried through with much wailing and gnashing of teeth. Huge numbers of public sector workers either get less pay or lose their jobs. Benefits are cut too. Increase in people unable to pay mortgages. Increase in home for sale as people try to downsize. Downward pressure on house prices. Increase in bad debts for banks. Gubamunt tries to prevent banks repossessing, but the banks are suffering from capital constraints. Gubamunt realises it can't afford to rebail the banking sector. Banks rush for the door. High number of repossessions. House prices collapse.

2. The public sector cuts of the coalition gubamunt cause such pain in the public sector that the unions cause massive strikes and unrest. Coalition falls apart in the face of the strain. LibDem back-bench MPs side with Labour for a vote of no-confidence. Re-election called. Sterling collapses, gilt yields surge. Labour government elected promising electoral reform (for the LibDems) and a review of all the cuts to public spending. Sterling continues to weaken. Significant inflation from import prices drives unions to demand wage increases. Labour government gives in. Wider imbalance between public and private sector pay. Tax receipts fall. Populatist anti-bank legislation. Public sector finances look shaky. Inflation expectations grow. Interest rates eventually increase sharply to protect Sterling. House prices collapse.

I sadly expect the second scenario to be more likely. But neither are good for house prices.

But we are in a situation where the governtment is paying both OO and BTL LL mortgages. They can continue to afford this if the printing presses are cranked up again.

We are screwed and it is a very sad outlook for the UK society unless some protection is brought in to help people who rent have some security and some rent control too should be brought in.

[Johnny Storm]

, yet HPs are still falling.

Blatantly untrue. An average house in Q2 of 2009 was £160k, in Q2 of 2010 its 168K. It would be true to say low interest rates have caused house prices to rise in the last 12 months.

Lets try and keep things based on reality and less wishful thinking.

[Bruce Banner]

I keep meaning to change my status away from bear..I no longer believe there will be a HPC, the banks and the government simply cannot (literally) afford one: if by some chance there is a price crash then the lack of mortgage funding means only the rich will benefit from it: people are being deliberately disenfranchised and pushed into the rental sector as a means of disposessing and empoverishing them: you children will live in wildly over priced rented acommodation and their landlord will be someone like Legal and General..sorry, but given some massive and unknown event (a revolution would be good), thats the way things are going, thats whats planned for us.

Wow, you joined in May and have already changed you mind .

[Bloo Loo]

Blatantly untrue. An average house in Q2 of 2009 was £160k, in Q2 of 2010 its 168K. It would be true to say low interest rates have caused house prices to rise in the last 12 months.

Lets try and keep things based on reality and less wishful thinking.

yeah, compared to last year...thats what the bull trap does...they are also down in many indexes over the last 4 months in a row...maybe I could send you the precision Bloo Loo Incorporated trend prediction tool.

[Blue Nose Bear]

Blatantly untrue. An average house in Q2 of 2009 was £160k, in Q2 of 2010 its 168K. It would be true to say low interest rates have caused house prices to rise in the last 12 months.

Lets try and keep things based on reality and less wishful thinking.

Apologies.

Should have said:

"yet HPs are still falling, according to Rightmove, Halifax and Land Registry indexes, but not Nationwide."

[Bruce Banner]

Of course its cheaper to buy. Even if the mortgage was double the rent, because at the end of the mortgage the house is yours. Renting goes on forever.

What a load of rubbish, I've tried to explain this to you at least twice, but here goes again .

If you take £300K, or whatever, out of the bank to buy a house, you lose the interest on that money. £300K @ 4% = £12,000 per year, for ever .

The money is still yours but it's tied up in a house rather than in the bank earning interest.

[Meat Puppet]

What a load of rubbish, I've tried to explain this to you at least twice, but here goes again .

If you take £300K, or whatever, out of the bank to buy a house, you lose the interest on that money. £300K @ 4% = £12,000 per year, for ever .

The money is still yours but it's tied up in a house rather than in the bank earning interest.

I've been here about a month and it has been at least twice just in that time.

[Fishbone Glover]

Of course its cheaper to buy. Even if the mortgage was double the rent, because at the end of the mortgage the house is yours. Renting goes on forever.

Not necessarily. I've just done some quick 'back of a fag packet' calculations on a house for sale near me.

It's for sale for £177K, so I've done my first calculation on the basis of purchasing at £170K, 80% LTV (assuming me and the missus could pony up the £34K deposit ) with a 25 year mortgage, with interest rates at a more normal 7.5%, at the current rent, this would be the equivalent of 39.1 years.

If the house was priced closer to what it fundamentally should be (IMO), which is 2000 prices +inflation, it would be £119,000. At the same interest rate and LTV it is the equivalent of 27.4 years at the current rent.

i know I haven't taken increases in rent into account, but with rents following wages, I don't see much scope for massive wage inflation in the next few years, at least. I also haven't taken into account capital growth, so the two should cancel each other out to some extent.

Also, if the mortgage was double the rent, then I could rent the house for 50 years for the same money. I'd be very surprised if I was still about 50 years from now....

Edited July 21, 2010 by Fishbone Glover

[Pent Up]

Apologies.

Should have said:

"yet HPs are still falling, according to Rightmove, Halifax and Land Registry indexes, but not Nationwide."

Only until next Thursday!

[Bloo Loo]

Not necessarily. I've just done some quick 'back of a fag packet' calculations on a house for sale near me.

It's for sale for £177K, so I've done my first calculation on the basis of purchasing at £170K, 80% LTV (assuming me and the missus could pony up the £34K deposit ) with a 25 year mortgage, with interest rates at a more normal 7.5%, at the current rent, this would be the equivalent of 39.1 years.

If the house was priced closer to what it fundamentally should be (IMO), which is 2000 prices +inflation, it would be £119,000. At the same interest rate and LTV it is the equivalent of 27.4 years at the current rent.

i know I haven't taken increases in rent into account, but with rents following wages, I don't see much scope for massive wage inflation in the next few years, at least. I also haven't taken into account capital growth, so the two should cancel each other out to some extent.

Also, if the mortgage was double the rent, then I could rent the house for 50 years for the same money. I'd be very surprised if I was still about 50 years from now....

thats why BTL are in it for the long term.

rents MUST be higher than the IO otherwise...how could they rent it out and make a bit?

[plummet expert]

The only reason we left the recession was because they printed money. Even at that we struggled to get positive growth figures. So now they may justify more printing to stave off a double-dip. Priceless. Who appoints these fvcktards?

We appoint them don't we? They're called the Coalition. And before that they were Labour.

Theree is no bad bear day though. It matters not what the banks think or whether they cannot afford a HPC, they're getting one anyway. Period. The cement is drying quickly on that. Confidence is waning fast and there is literally no credible news which supports rising house prices for weeks.

[Johnny Storm]

What a load of rubbish, I've tried to explain this to you at least twice, but here goes again .

If you take £300K, or whatever, out of the bank to buy a house, you lose the interest on that money. £300K @ 4% = £12,000 per year, for ever .

The money is still yours but it's tied up in a house rather than in the bank earning interest.

Just to summarize, interest does not even cover inflation. Dont forget the tax you need to take off your 4% too. So since you are spending your partial inflation payment on rent then each year your savings become less in real terms.

Now you could argue that as long as house prices drop more, then by waiting you will save in the long term. I have had this argument myself, if I rent for 5 years and that costs me £40k and house prices go down a lot (say £50k) it has worked out. This was what I thought and told people.

However, what has really happened Is I have rented for 10 years almost, thats £70,800. House prices are around 80% more than what they were 10 years ago, so say they are £180K now rather than £100k. If you can spin this into something positive than go you. Its the biggest mistake of my life, and if keep saying this stops other suckers from falling for your "rent is good" bullsht then thats great. If I was a landlord I would want to convince people renting was good too.

Now personally I have saved myself from this fate by earning more this year than I have paid in rent for the last 10. But that doesnt alter the fact, rent is dead money.

Edited July 21, 2010 by Johnny Storm

[Pent Up]

...there is literally no credible news which supports rising house prices for weeks.

Hasn't been for months. What there has been in the news until recently was spin and denial. Now the spin is on our side it's becoming very hard for the sheeple to deny.

[Oliver Sutton]

However, what has really happened Is I have rented for 10 years almost, thats £70,800. House prices are around 80% more than what they were 10 years ago, so say they are £180K now rather than £100k. If you can spin this into something positive than go you. Its the biggest mistake of my life, and if keep saying this stops other suckers from falling for your "rent is good" bullsht then thats great. If I was a landlord I would want to convince people renting was good too.

It was a good time to buy in 2000. Doesn't mean it'sa good time now.

[Hip to be bear]

No. They were just considering the interest component.

If you add the repayment part of the mortgage into the equation you also have to add in the effect of putting that much per month into a savings account for the renting option.

tim

Are you sure about this..... I couldn't see this in the articles.

[Bruce Banner]

Just to summarize, interest does not even cover inflation. Dont forget the tax you need to take off your 4% too. So since you are spending your partial inflation payment on rent then each year your savings become less in real terms.

Now you could argue that as long as house prices drop more then you by waiting you will save in the long term. I have had this argument myself, if I rent for 5 years and that costs me £40k and house prices go down a lot it has worked out. This was what I thought and told people.

However, what has really happened Is I have rented for 10 years almost, thats £70,800. House prices are around 80% more than what they were 10 years ago, so say they are £180K now rather than £100k. If you can spin this into something positive than go you. Its the biggest mistake of my life, and if keep saying this stops other suckers from falling for your "rent is good" bullsht then thats great.

Now personally I have saved myself from this fate by earning more this year than I have paid in rent for the last 10. But that doesnt alter the fact, rent is dead money.

You sound really desperate. Bringing up the same old arguments, that have been shot down many times, in the hope of influencing a new audience. I could keep going, but I can't be bothered. To the 50 odd guests viewing this thread, if you want to buy now, go ahead, see if I care.