Spoony Posted July 31, 2010 Share Posted July 31, 2010 (edited) duplicate post Edited July 31, 2010 by Spoony Quote Link to comment Share on other sites More sharing options...
Spoony Posted July 31, 2010 Author Share Posted July 31, 2010 I've been thinking about this for a long time. So its looking like 5-10 years of flat HPI. And 5% inflation at least. Meanwhile your savings are being eroded about 3% (assuming you are getting 2% net.) So with continual saving, your need for a mortgage reduces or your eventual purchase price can increase in monetary terms. With this course of action you need far less of a mortgage, if any, therefore there is massively reduced/no interest to pay when the time comes to buy. On the face of it at nearly 2am I can't see why waiting all this time wouldn't have been the best course of action compared with buying in even as far back as 2003 (when I could have done) I've been prudent. I knew that even in 2003, prices were insane. So didn't want to buy into it. But I did not expect the madness that followed in Browns attempts to disguise and prop up the bubble to the deteriment of the longer term health of Britains economy. Whats annoying is when I read people saying that 'real' prices will get back to 2003 levels by 2015 through inflation but I guess then so will have my savings. In this case would I have taken the best path or shouldn't have have just joined all the other sheeple in 2003? Its there something else I didn't consider? (it is 2am!) Cheers for any reply to my wonderings Quote Link to comment Share on other sites More sharing options...
Spoony Posted July 31, 2010 Author Share Posted July 31, 2010 No one can truly pick the market tops and bottoms. I would say that if you want to buy a house then you should buy it as early as possible in your lifecycle, don’t over commit, look after it and it will look after you. I have a house I bought it in my early twenties. Its a miniscule thing. All I want to do is trade up for realistic price and not fall straight into negative equity. Quote Link to comment Share on other sites More sharing options...
expatowner Posted July 31, 2010 Share Posted July 31, 2010 Piece in the telegraph about the perils of putting your money into some stock market or other financial product. Concludes by saying bricks and mortar are are good (if not better). http://www.telegraph.co.uk/finance/personalfinance/savings/7919778/7billion-a-year-skimmed-off-our-savings.html I'm with Bardon on this one. If you can afford a better house I see nothing wrong in going for it. There is too much pent up demand for houses and not enough available stock for the price to fall dramatically. Quote Link to comment Share on other sites More sharing options...
Spoony Posted July 31, 2010 Author Share Posted July 31, 2010 (edited) You are only mentally equipped to deal with the things in the hear and now so if you try to get too detailed about your future you will feel anxious. Similarly if you obsess on the past you will feel resentment. so if you are considering trading up then a flat or falling market is the best time to do that.. I would say that all you should deal with is the hear and now and target the right house, hone your negotiating skills, present your small house well for selling and go for it. Anything else is shadow boxing. OK well this is how I feel: I have followed this course, even before I had even heard about HPC.co.uk. To carry on and throw in the towel now would be a waste of those years waiting. Looking to the future I see only way way for houses and thats down - be it losses through inflation or proper falls. The best time to buy is in a rising market after you think the bottom has been reached. But what I am wondering is if I had just bought in 2003 I might as well have done that instead and would be as ok financially? Edited July 31, 2010 by Spoony Quote Link to comment Share on other sites More sharing options...
Spoony Posted July 31, 2010 Author Share Posted July 31, 2010 Piece in the telegraph about the perils of putting your money into some stock market or other financial product. Concludes by saying bricks and mortar are are good (if not better). http://www.telegraph.co.uk/finance/personalfinance/savings/7919778/7billion-a-year-skimmed-off-our-savings.html I'm with Bardon on this one. If you can afford a better house I see nothing wrong in going for it. There is too much pent up demand for houses and not enough available stock for the price to fall dramatically. Why? What if inflation erodes the house more than it would your cash? Its possible? Quote Link to comment Share on other sites More sharing options...
MarkG Posted July 31, 2010 Share Posted July 31, 2010 I've been thinking about this for a long time. So its looking like 5-10 years of flat HPI. And 5% inflation at least. Meanwhile your savings are being eroded about 3% (assuming you are getting 2% net.) Do you really think that Britons are going to be getting 5+% pay rises every year for the next 5-10 years? Because that's the only thing that inflates away the debt. Quote Link to comment Share on other sites More sharing options...
Spoony Posted July 31, 2010 Author Share Posted July 31, 2010 Probably not in the private sector. But I do know that if I don't get a pay rise to match inflation (most likely) then my purchasing power goes down. Its no good keeping that house at 200k by inflating it away if my salary doesn't go up enough (along with other peoples) so I can do 4 times salary to buy it Quote Link to comment Share on other sites More sharing options...
MarkG Posted July 31, 2010 Share Posted July 31, 2010 Probably not in the private sector. But I do know that if I don't get a pay rise to match inflation (most likely) then my purchasing power goes down. Its no good keeping that house at 200k by inflating it away if my salary doesn't go up enough (along with other peoples) so I can do 4 times salary to buy it But that's rather the point: price inflation without wage inflation leaves people with less money to waste on mortgage payments, so it makes the debt worse. Only wage inflation reduces debt in real terms. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted July 31, 2010 Share Posted July 31, 2010 But that's rather the point: price inflation without wage inflation leaves people with less money to waste on mortgage payments, so it makes the debt worse. Only wage inflation reduces debt in real terms. Its the sign of a brainwashed mind that sees the world from a "they gotta help" point of view. they are going to inflate their debts away. they must provide me with pay rises to cope. they must make sure banks are lending. how about...I think THIS is going to happen so this is what I will do. Nanny state does this transform on the minds of men. Quote Link to comment Share on other sites More sharing options...
NEO72 Posted July 31, 2010 Share Posted July 31, 2010 There is too much pent up demand for houses and not enough available stock for the price to fall dramatically. Would you care to provide any evidence for this, or would you just like to add some more cliches? Quote Link to comment Share on other sites More sharing options...
Johnny Storm Posted July 31, 2010 Share Posted July 31, 2010 I've been prudent. I knew that even in 2003, prices were insane. So didn't want to buy into it. But I did not expect the madness that followed in Browns attempts to disguise and prop up the bubble to the deteriment of the longer term health of Britains economy. Whats annoying is when I read people saying that 'real' prices will get back to 2003 levels by 2015 through inflation but I guess then so will have my savings. In this case would I have taken the best path or shouldn't have have just joined all the other sheeple in 2003? Your thinking seems to mirror my own. Thinking that houses prices were insane and not buying has cost me thousands and missed years of paying the mortgage, and the lowest period of interest rates in history. There does seem to be a glimmer of hope now (but wasnt there years ago) that maybe this time with the force of public sector job cuts will make a difference. So I have decided to give it another year, and if this time next year things are still the same I will buy. It takes a big man to realise he was wrong. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted July 31, 2010 Share Posted July 31, 2010 Your thinking seems to mirror my own. Thinking that houses prices were insane and not buying has cost me thousands and missed years of paying the mortgage, and the lowest period of interest rates in history. There does seem to be a glimmer of hope now (but wasnt there years ago) that maybe this time with the force of public sector job cuts will make a difference. So I have decided to give it another year, and if this time next year things are still the same I will buy. It takes a big man to realise he was wrong. one more on the bank failure bandwagon. lemmings to the rescue. screw the prudent. Quote Link to comment Share on other sites More sharing options...
Guest BetterOffOnBenefits Posted July 31, 2010 Share Posted July 31, 2010 There is too much pent up demand for houses and not enough available stock for the price to fall dramatically. I wish people would look up the definition of demand before using the tired old phrase No funds = no demand. Quote Link to comment Share on other sites More sharing options...
Guest BetterOffOnBenefits Posted July 31, 2010 Share Posted July 31, 2010 Your thinking seems to mirror my own. Thinking that houses prices were insane and not buying has cost me thousands and missed years of paying the mortgage, and the lowest period of interest rates in history. There does seem to be a glimmer of hope now (but wasnt there years ago) that maybe this time with the force of public sector job cuts will make a difference. So I have decided to give it another year, and if this time next year things are still the same I will buy. It takes a big man to realise he was wrong. You weren't wrong. The govt of the day took measures that only a lunatic would consider. They staved off the hangover for an incredible amount of time.....but it will arrive, probably the second after you sign your life away Quote Link to comment Share on other sites More sharing options...
Once in a lifetime Posted July 31, 2010 Share Posted July 31, 2010 You weren't wrong. The govt of the day took measures that only a lunatic would consider. They staved off the hangover for an incredible amount of time.....but it will arrive, probably the second after you sign your life away ...and the next ...and the next ...and the next. Quote Link to comment Share on other sites More sharing options...
Confounded Posted July 31, 2010 Share Posted July 31, 2010 I wish people would look up the definition of demand before using the tired old phrase No funds = no demand. Exactly, expatowner should send some of his pent up demand to the town I grew up in (SE Market town). Since the last time I visited (early June) the number of for sale boards has rocketed (at least 3 fold) without a single one of them registering a sale. I have never seen such a lack of demand for housing in my whole life. Quote Link to comment Share on other sites More sharing options...
DarkHorseWaits-NoMore Posted July 31, 2010 Share Posted July 31, 2010 Yes, I made a mistake not buying years ago but hey, live n learn, move on. Sometimes your life doesn't always turn out the way you expected, sheet happens!. There are lots of mistakes I didn't make and lots of other things to be greatful for (still in one piece ). Playing the current hand, still seems I must not buy in the near future and possibly make another really big mistake. Quote Link to comment Share on other sites More sharing options...
Guest BetterOffOnBenefits Posted July 31, 2010 Share Posted July 31, 2010 (edited) ...and the next ...and the next ...and the next. I agree that all govts WANT to keep HPI going but that flies in the face of the nations economic health. We could print away forever and keep IR's below 1% like Roger Bootle (a man who has a high success rate in getting it wrong) predicts and we can end up like Zimbabwe. Edited July 31, 2010 by BetterOffOnBenefits Quote Link to comment Share on other sites More sharing options...
Guest BetterOffOnBenefits Posted July 31, 2010 Share Posted July 31, 2010 (edited) Before you chuck the towel in, why not give this govt a chance? We've had 13 years of Labours insane chav spending habits and a mere 2.5 months of the coalition. I'm not saying that they'll definitely be any better but it's a bit premature to call off the HPC. It was never going to start under Labour 12 months of the coalition govt should give us all a clearer picture Edited July 31, 2010 by BetterOffOnBenefits Quote Link to comment Share on other sites More sharing options...
Johnny Storm Posted July 31, 2010 Share Posted July 31, 2010 one more on the bank failure bandwagon. lemmings to the rescue. screw the prudent. You can stay on the delusional wagon all you like. Its not served you very well so far. Just dont cry to me in 10 years time when you still havent bought a house and average house price is £300k. Quote Link to comment Share on other sites More sharing options...
rxe Posted July 31, 2010 Share Posted July 31, 2010 Why? What if inflation erodes the house more than it would your cash? Its possible? On its own, inflation doesn't erode the value of the house: the house is still worth whatever a house of that characteristic is worth. What inflation may do is make the house worth less in global terms, so a bloke from India could come over and say, hmmm, £200K, that's the price of a diet coke back home. Being in assets is the ultimate hedge against inflation: even if GBP was re-valued tomorrow, a house (or gold or whatever) would still have a value that is aligned with its characteristics. I bought in 2008 - just as the wobbles first started and the smart people priced realistically, and the idiots who mortgaged to the hilt and went in 20% over asking vanished. We lost the house to one of them first time round, they couldn't complete. My view is that we got it for 15 - 20% off what it would have gone for in 07. Am I happy? Yes. I would have been crapping myself having £LARGE in the bank, and even if the house falls by 20%, it is still performing better than cash or (to be honest) equities. Quote Link to comment Share on other sites More sharing options...
Spoony Posted July 31, 2010 Author Share Posted July 31, 2010 (edited) Well thats my point. At least the new government do understand the problem, what went wrong with Labours policy errors and how to fix it. Its always the same. Labour make Britain and the governent spend and live beyond its means, massive deficit etc. Then the Tories have to come in, make cuts, clean up the mess and restore order and sanity. Labout have yet to even acknowledge the part the played in causing this recession and making it worse for the taxpayer. They probably don't even understand it, well most of their MPs, like Ed Balls and other new leader candidates, and the old Darling and Brown - are still in denial. The problem is that now they have the Lib Dems side and their socialist leanings, they are not doing the right thing and cutting enough. They don't want to upset all those people who overpaid for property, and loads own property themselves, so they have a vested interest in low IRs and a 'soft landing'. Plus also inflating away the deficit must be attractive? But to buy now and throw in the towell and admit you are wrong? I can't bring myself to do it. Surely common sense will win in the end. Through taking this route, sure you have missed years of paying down a mortgage but as long as you have been banking that money, then you have not paid the interest the buyers will have. I have acrrued enough of a pot to buy a house without much of a mortgage if I wanted to, but hell have I scrimped over all this years to achieve it! To blow all that on a house then see sanity return and lose tens of thousands from your former cash cushion would be terrible. I nearly did it end of last year, even found a nice house but I just couldn't do it when it came to signing. It felt wrong. You might remember my posting on here in a confused state wrestling with my conscience! Edited July 31, 2010 by Spoony Quote Link to comment Share on other sites More sharing options...
NEO72 Posted July 31, 2010 Share Posted July 31, 2010 You can stay on the delusional wagon all you like. Its not served you very well so far. Just dont cry to me in 10 years time when you still havent bought a house and average house price is £300k. Gosh, so we're going to have 100% wage inflation over the next 10 years are we? Can I come and live in your future? Quote Link to comment Share on other sites More sharing options...
Guest_Bosworth_* Posted July 31, 2010 Share Posted July 31, 2010 ...Surely common sense will win in the end. "The market can stay irrational longer than you can stay solvent." PS I'm an uber-bear and STRd last year with my 18 mth old son with another one on the way - screw buying, I'm hoarding my money for better times or better locations. Quote Link to comment Share on other sites More sharing options...
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