wish I could afford one Posted December 30, 2012 Share Posted December 30, 2012 ...The problem is I'm 30 in a few days time. ...Buying is cheaper than renting IF you have a massive deposit. You can't look at it that way. You must consider the opportunity cost of tying that money up in a house. My calculations and story: 1. YTD Nationwide is flat, Halifax is up 2.0%, Land Registry is up 1.4% and Academetrics is up 2.7%. 2. I'm early 40's, rent a property that is well below my affordability (rent money is dead money after all ) and invest the difference (plus a lot more). 3. Those investments are not complicated but are diversified and low expense. YTD they are up 10.3% Give me the 10.3% anyday. Quote Link to comment Share on other sites More sharing options...
Pent Up Posted December 30, 2012 Author Share Posted December 30, 2012 You can't look at it that way. You must consider the opportunity cost of tying that money up in a house. My calculations and story: 1. YTD Nationwide is flat, Halifax is up 2.0%, Land Registry is up 1.4% and Academetrics is up 2.7%. 2. I'm early 40's, rent a property that is well below my affordability (rent money is dead money after all ) and invest the difference (plus a lot more). 3. Those investments are not complicated but are diversified and low expense. YTD they are up 10.3% Give me the 10.3% anyday. Jesus what investments were giving you 10.3% YTD?? Bear in mind I'm extremely risk averse. I was earning around 3.3% roughly 50% taxable. Quote Link to comment Share on other sites More sharing options...
wish I could afford one Posted December 30, 2012 Share Posted December 30, 2012 Jesus what investments were giving you 10.3% YTD?? Bear in mind I'm extremely risk averse. I was earning around 3.3% roughly 50% taxable. It's no secret. I blog about all its trials and tribulations (plus a bit more) regularly. It's simply based on a non-emotional, mechanical, low fee, diversified portfolio and it does include some European and UK property (just not residential). A post that gives a decent summary is here. Quote Link to comment Share on other sites More sharing options...
winkie Posted December 30, 2012 Share Posted December 30, 2012 Enjoy your new home you have waited long enough and for the best moment that suits your own individual circumstances and from what you say got a reasonable deal on a home you will enjoy living under....whatever house it is or bricks your are paying for, the most important part are the happiness of people that live inside it. Quote Link to comment Share on other sites More sharing options...
NEO72 Posted December 30, 2012 Share Posted December 30, 2012 Congratulations PU - enjoy your new home (and keep on posting). Remember though for authenticity, in a couple of months you need to come back and claim that it's value has doubled Quote Link to comment Share on other sites More sharing options...
porca misèria Posted December 30, 2012 Share Posted December 30, 2012 Well Done Pent Up! I know you were looking in some of the same areas as I was looking. Once it's all done & dusted, could you pm some details? (Not the exact house in case you have drunken HPCers turning up looking for a housewarming party....) You can post pics from rightmove without revealing the location/identity of the house. And they never (AFAICT) get taken down! Quote Link to comment Share on other sites More sharing options...
200p Posted December 30, 2012 Share Posted December 30, 2012 RealistBear? Quote Link to comment Share on other sites More sharing options...
Pent Up Posted December 30, 2012 Author Share Posted December 30, 2012 RealistBear? Yes remember him? He bought a house then went a bit weird. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted December 30, 2012 Share Posted December 30, 2012 Yes remember him? He bought a house then went a bit weird. Erm, are you sure it was in that order? Quote Link to comment Share on other sites More sharing options...
timebandit Posted December 30, 2012 Share Posted December 30, 2012 Congratulations Pent-Up, well deserved. Always enjoyed your contribution to the 'cause'. Quote Link to comment Share on other sites More sharing options...
Pent Up Posted December 30, 2012 Author Share Posted December 30, 2012 Congratulations Pent-Up, well deserved. Always enjoyed your contribution to the 'cause'. Thanks Timebandit. Hopefully my contribution will continue despite my increased word commitments lately. Quote Link to comment Share on other sites More sharing options...
200p Posted December 30, 2012 Share Posted December 30, 2012 Forgot to say congrats, you'll have to change your name from "Pent up", to "Relieved". Quote Link to comment Share on other sites More sharing options...
Venger Posted December 30, 2012 Share Posted December 30, 2012 The attached house next door original house identical size but with a slightly smaller extension and not refurbished sold for £206k in 2005. So I think we got around early 05 maybe even late 04 price for the house, which is very good for Essex! Our mortgage payments are under £500 per month. A friend of the wife is paying £950 for a similar sized house in a worse area. Aww one of my favourite posters commits to buying, but doesn't sound like too bad of a deal, and you're well positioned. Happy for you. I hope the cottage offers you option of enough space for the long term for raising family. Nothing wrong with a smaller house where you and your family are happy, and channelling money into treating yourselves and into savings. As you say, buying at a lower price point, a young person on the up and up in work still able to upsize with a slow crash playing out over 5 years+. If it occurs and if you decide to do so. It's a reasonable hedge position. Hope its got space for to store your spare set of tyres, winter/summers. People are shocked when I tell them that we are buying with a 50% deposit and still have over £10k sitting in the bank for contingency. Nice with the 50% at 30, having endured years of people questioning your decision not to buy with their 'always goes-up' approach to housing. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted December 30, 2012 Share Posted December 30, 2012 I can remember reckoning out how much prices had risen back in 2004 and '5, and thinking to myself how ridiculous they were. Along came 2007 and '8 and many (definitely me included) expected a drop to 2001 or 2002 prices. Well, it ain't happened where I check prices. Now some people here on HPC (and yes again me included) would jump at the chance of a 2004 or 2005 price -- despite thinking how very expensive they were back then. That's the effect of inflation, which they gave a huge boost to via the evil of QE. I don't know if you thought 2004/5 prices were steep, but I remember I definitely did, Bruce. Now, they seem like a mercy! I sold my mortgage free house in 2005, to move area, and nervous of the market, decided to rent rather than buy. It was a good decision, had I bought the house I'm renting it would have cost me £400K but is now worth only £350K, so there's a saving of £50K. Add to that seven years compound interest on the £400K I would have had tied up in a depreciating asset and, after deducting rent and tax, I am well over £100K in pocket as a result of not buying. So no, looking back at house prices in 2005, they don't seem like a mercy. Had I bought then for £400K, I would now have a house worth £350k and well over £100k less in the bank. Quote Link to comment Share on other sites More sharing options...
gf3 Posted December 30, 2012 Share Posted December 30, 2012 (edited) And well done staying with your parents and building up your deposit. Although I realise some people don't have a choice but moving out at an earlier age into rented really pushes up prices for everybody else. Edited December 30, 2012 by gf3 Quote Link to comment Share on other sites More sharing options...
Pent Up Posted December 30, 2012 Author Share Posted December 30, 2012 Aww one of my favourite posters commits to buying, but doesn't sound like too bad of a deal, and you're well positioned. Happy for you. I hope the cottage offers you option of enough space for the long term for raising family. Nothing wrong with a smaller house where you and your family are happy, and channelling money into treating yourselves and into savings. As you say, buying at a lower price point, a young person on the up and up in work still able to upsize with a slow crash playing out over 5 years+. If it occurs and if you decide to do so. It's a reasonable hedge position. Hope its got space for to store your spare set of tyres, winter/summers. Nice with the 50% at 30, having endured years of people questioning your decision not to buy with their 'always goes-up' approach to housing. Thanks venger. It's not a massive house but has room to start a family. I think we probably would want to move eventually but could also easily stick it out. It has a garage for the tyres Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted December 30, 2012 Share Posted December 30, 2012 Oh, and good luck to the OP, you seem happy and your eyes are open so you've done the right thing for you. Quote Link to comment Share on other sites More sharing options...
inflating Posted December 30, 2012 Share Posted December 30, 2012 I sold my mortgage free house in 2005, to move area, and nervous of the market, decided to rent rather than buy. It was a good decision, had I bought the house I'm renting it would have cost me £400K but is now worth only £350K, so there's a saving of £50K. Add to that seven years compound interest on the £400K I would have had tied up in a depreciating asset and, after deducting rent and tax, I am well over £100K in pocket as a result of not buying. So no, looking back at house prices in 2005, they don't seem like a mercy. Had I bought then for £400K, I would now have a house worth £350k and well over £100k less in the bank. Sadly, I was not as bright. My most recent owner occupying part of the UK now has prices seriously north of where I sold. However, I didn't sell up just to STR, there was another reason and I draw some comfort from that as had some useful life experiences since as a result of not being tied to that neck of the woods. However, if I wanted to return to the old house, I'd need to borrow a lot of money to buy it back .... a rather crushing thought when I think about it. Quote Link to comment Share on other sites More sharing options...
Pent Up Posted December 30, 2012 Author Share Posted December 30, 2012 And well done staying with your parents and building up your deposit. Although I realise some people don't have a choice but moving out at an earlier age into rented really pushes up prices for everybody else. Its hard staying at a parents house. I feel some people look down on it and consider it not being independent or "grown up" although that all changes if I decide to tell them my bank balance! We didn't want to rent for that exact reason you mention plus with such a big deposit it makes the mortgage small and manageable. I'm looking forward to getting stuck into some serious overpaying! Quote Link to comment Share on other sites More sharing options...
porca misèria Posted December 30, 2012 Share Posted December 30, 2012 I sold my mortgage free house in 2005, to move area, and nervous of the market, decided to rent rather than buy. It was a good decision, had I bought the house I'm renting it would have cost me £400K but is now worth only £350K, so there's a saving of £50K. Add to that seven years compound interest on the £400K I would have had tied up in a depreciating asset and, after deducting rent and tax, I am well over £100K in pocket as a result of not buying. So no, looking back at house prices in 2005, they don't seem like a mercy. Had I bought then for £400K, I would now have a house worth £350k and well over £100k less in the bank. I had to move in 2005 'cos my landlady gave me notice to quit. She sold for £105k. Earlier this year, the next-door flat fetched £57k. Seems my landlady was right to sell, and I was right not to buy! That was about when my fortunes were turning round. Before then I was struggling on an income less than the dole[1] (hence living in a cheap flat); since then I've built up a healthy pot. [1] In 2002 an 2003 I was in real poverty. In 2004 I did a lot better, and made £7k which left me a decent £40/week after rent but before bills. Comfortable enough by comparison, but still significantly below the dole. Quote Link to comment Share on other sites More sharing options...
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