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winkie

The End Of The Housing Ladder -- Guardian

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I must confess that I am overloaded with bear food today. its been non stop on MSM and on the radio

Its too much for me. I'm getting sick of the talk. I want house prices to actually, you know, crash.

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Its too much for me. I'm getting sick of the talk. I want house prices to actually, you know, crash.

Patience, they will, but it will take a few years before the time is right to buy as prices will be falling for some time ;).

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Patience, they will, but it will take a few years before the time is right to buy as prices will be falling for some time ;).

Yep.

We must get a longer term let, 2 or 3 years contract, and wait comfortably for the right time to buy.

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Patience, they will, but it will take a few years before the time is right to buy as prices will be falling for some time ;).

Even a train that comes off the rails will continue under its momentum for a while. And boy is our economy one big train that has come spectacularly off the tracks.

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Yep.

We must get a longer term let, 2 or 3 years contract, and wait comfortably for the right time to buy.

why wait another 3 years? Let's say price of the house I am looking to buy is actually 150k. -25% over the next 3 years = 112500. At the moment I pay £500 a month rent, so 500 x 3 years =18k!!! That means if I can buy the same house for 130K now, it won't make any difference? With 20% deposit 5 year fixed should cost me around £600 a month. Am I right or am I missing something here? :blink:

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why wait another 3 years? Let's say price of the house I am looking to buy is actually 150k. -25% over the next 3 years = 112500. At the moment I pay £500 a month rent, so 500 x 3 years =18k!!! That means if I can buy the same house for 130K now, it won't make any difference? With 20% deposit 5 year fixed should cost me around £600 a month. Am I right or am I missing something here? :blink:

Interest.

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Isotope's post on there is fantastic.

Is he one of us?!

smasing knob-cheese reply tho:

RaynorGoddard

14 September 2010 11:09AM

@Isotope:

"...My issue is with boomers who act as though the ridiculous appreciation of their house makes them an investment genius of Warren Buffet proportions..."

Yes I think even I can sympathise with that!

Off to buy my 23rd BTL now. The state will support my feckelss f**k wittedness...

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why wait another 3 years? Let's say price of the house I am looking to buy is actually 150k. -25% over the next 3 years = 112500. At the moment I pay £500 a month rent, so 500 x 3 years =18k!!! That means if I can buy the same house for 130K now, it won't make any difference? With 20% deposit 5 year fixed should cost me around £600 a month. Am I right or am I missing something here? :blink:

Well you are forgetting that that 20% deposit will be earning you interest while you rent. Plus the money that will pay for stamp duty and fees, that will earn interest until you fork it out. And 3 years of repairs, maintenance, water rates etc that you don't pay while renting.

At the end of the day its not quite as simple a calculation as it first appears, and any calculation you do involves a huge amount of guesswork (25% over 3 years.... what about if its actuall 40% over 2 years, or 20% over 4 years, or 60% over 5 years..... your guess is as good as mine), but the bottom line is that while paying rent is "money down the drain", so is sitting in a house that is losing value even faster.

Your question is a little odd too - if the house is listed as £150K but you can get it for £130K then why could you not get the £112500 listed house in 3 years for ~£100K? After 3 years of drops getting a heavy discount should be easier as people will be in a panic by then.

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Well you are forgetting that that 20% deposit will be earning you interest while you rent. Plus the money that will pay for stamp duty and fees, that will earn interest until you fork it out. And 3 years of repairs, maintenance, water rates etc that you don't pay while renting.

At the end of the day its not quite as simple a calculation as it first appears, and any calculation you do involves a huge amount of guesswork (25% over 3 years.... what about if its actuall 40% over 2 years, or 20% over 4 years, or 60% over 5 years..... your guess is as good as mine), but the bottom line is that while paying rent is "money down the drain", so is sitting in a house that is losing value even faster.

Your question is a little odd too - if the house is listed as £150K but you can get it for £130K then why could you not get the £112500 listed house in 3 years for ~£100K? After 3 years of drops getting a heavy discount should be easier as people will be in a panic by then.

It should be noted that the mortgage will inevitably be 'front loaded' so the first monies paid aren't directly reducing the capital sum but instead a large part of them is paying off charges and fees.

It's not therefore as simple as saying that 'buy now at current price - x years worth of rent saved' works out the same as continuing to rent for x years and then buying at a lower price than current.

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why wait another 3 years? Let's say price of the house I am looking to buy is actually 150k. -25% over the next 3 years = 112500. At the moment I pay £500 a month rent, so 500 x 3 years =18k!!! That means if I can buy the same house for 130K now, it won't make any difference? With 20% deposit 5 year fixed should cost me around £600 a month. Am I right or am I missing something here? :blink:

I pay £900 per month rent and receive more than that on the money I have in the bank that I wouldn't have there if I bought the house I'm renting for cash ;).

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...the truth hurts. ;)

indeed,blair leaves a lingering stench that if bottled,could quite easily be defined as WMD.

time to open the windows and get some fresh air in....pheeeeeew!

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A wise man once said... (see sig ;))

for completeness

"The ladder is a metaphorical construct designed to sucker FTBs on to the "first rung". That boomers have been able to trade up over their lives to bigger and better properties does not mean that there is a ladder there for subsequent generations to climb, nor that there should be one. HPI has made the rungs too far apart and in some instances the ladder has been pulled up away from the average FTB altogether as boomers recycle their equity to their offspring to give them a leg up (the levitating ladder).

If there ever was a ladder it was during a period when boomers were expanding the economy and marching onwards and upwards in a demographic bulge. The economy is no longer doing that and for most people their first property may be their last.

My late grandfather, a machine tool maker in the North East, bought his first and only house in the '30s. He never moved, his first house was adequate for family needs (he had 4 children and his wife did not work). He was not wealthy by any objective measure but by today's standards he seems to have been, which shows what a nonsense the UK property market has become.

JY "

Edited by daiking

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And on a repayment mortgage very little capital is repaid in the first few years. And that extra 12k paid could turn into a negative equity millstone.

Exactly.

It is shocking that most people don't realise that.

BTW, I think that if mortgage companies were obliged to send monthly statements, just like credit card companies have to do, informing the customer how much interest and how much repayment they are doing each month... I think it would change British culture on "buying" vs renting, and in a matter of weeks !

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I must confess that I am overloaded with bear food today. its been non stop on MSM and on the radio

Is it coz bears normally hibernate over winter?

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Exactly.

It is shocking that most people don't realise that.

BTW, I think that if mortgage companies were obliged to send monthly statements, just like credit card companies have to do, informing the customer how much interest and how much repayment they are doing each month... I think it would change British culture on "buying" vs renting, and in a matter of weeks !

That's true, but it's also true that at the other end of the mortgage, the final 5-10 years or so, you're paying peanuts on the mortgage, probably a fraction of the cost of renting an equivalent property.

There will be interest rate fluctuations, but generally the cost per month will be the same throughout the duration of the mortgage. So inflation adjusted, it gets cheaper and cheaper as time goes by.

It's a bit unfair to highlight one without the other.

It's entirely another argument about whether the next 50 years will be the same as the previous 50 years regarding wages, inflation, stagflation, interest rates etc.

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That's true, but it's also true that at the other end of the mortgage, the final 5-10 years or so, you're paying peanuts on the mortgage, probably a fraction of the cost of renting an equivalent property.

There will be interest rate fluctuations, but generally the cost per month will be the same throughout the duration of the mortgage. So inflation adjusted, it gets cheaper and cheaper as time goes by.

It's a bit unfair to highlight one without the other.

It's entirely another argument about whether the next 50 years will be the same as the previous 50 years regarding wages, inflation, stagflation, interest rates etc.

True. I agree, interest costs do go down as the years pass. But if borrowers were aware of interest costs, they would be able to time better the purchase. We were talking about that in this thread because a poster was comparing "wasted rent money" with some ("good"?) mortgage payment, ignoring interest costs, and concluding wrongly that, even if prices fall, it would be better to buy now, because he would have "saved" the "wasted" rent money, but ignoring the "wasted" interest money. Here: http://www.housepricecrash.co.uk/forum/index.php?showtopic=151051&view=findpost&p=2709869

.

Edited by Tired of Waiting

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  • 244 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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