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EmmaRoid

House Prices Quadruple During Your Mortgage Term

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Wages quadruple during mortgage term......only one purchase per customer due to unprecedented demand. ;)

Edited by winkie

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Not in my experience. Anecdote time:

In 1988, I bought my first house similar to, and in the same road as this one in Yeovil for £36,000, now up for £120k:

http://www.rightmove.co.uk/property-for-sale/property-38542649.html?premiumA=true

OK, mine was end terrace. BUT, in early 1989, my neighbour paid £56k for his (yes they were going crackers). So, anyone who bought one then with, I presume a 25 year mortgage has barely doubled in price, less than CPI I expect.

Yes, anecdotal, but when I moved in 1993, I got back a whole £500 more than i paid for it. Up like a shot and down too. Whoops, and I was lucky I reckon. Some people, including friends of mine were in NE for over 10 years round there.

Edit: Land Registry shows my old house sold for £105k in 2011. That shows what lucky timing can do, 1993 - 2011, tripled in 18 years.

Edited by deflation

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:lol:

Shameless, absolutely shameless.

What is this thread in relation to?

Oh, okay. Ian Cowie Telegraph blog...

Edited by tomandlu

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The HPC mods should make Cowie an honorary troll. I expect he'd like that.

Is "prester_john" in the comments actually Cowie himself?

Edited by Dorkins

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The HPC mods should make Cowie an honorary troll. I expect he'd like that.

Is "prester_john" in the comments actually Cowie himself?

Dunno, but he or she is in the infinite HPI game, from the comments(sorry I looked):

Houses offer another unique advantage compared to other asset classes, which is that you can live in them. This provides an inflation-indexed tax-free yield, in the shape of the rent it saves you paying.

If you buy a house for £100,000 interest-only, for 25 years you'd be paying the prevailing interest rate on the original £100,000 loan.

If you rented the same house, you'd be paying the rental yield - which is also, usually, the prevailing interest rate - on whatever it is worth throughout that time.

So the interest-only buyer would be paying, say, 6% a year on £100,000 for 25 years, which is £150,000.

The renter would be paying 6% of the continuously rising value, which would mean he lays out £375,000 (the average of the starting and ending value being £250,000, so £15,000 a year).

The difference after 25 years is thus £225,000.

After 25 years, the buyer still has a £100k mortgage but has saved himself £225,000. He can now use £100,000 of that to pay off the mortgage, and has £125,000 left. So he's now got a £400,000 house, £125,000 in cash, and no ongoing cost of housing himself.

After 25 years the renter has no house, no cash and a continuing housing cost of £24,000 a year.

Simply looking at the 60% real-terms gain seriously understates the advantages of buying. Over a long enough time span, it makes sense to buy anything you can, on any terms you can. In effect, in my example, the house appreciates to £400k but the real gain is not £300k (the inflation) but £525k (because you end up mortgage-free, with cash).

The losers at HPC, ranting furiously about semis in Norwich being £5,000 overpriced at £130,000, are simply too short-termist, too innumerate, and I'm afraid too thick to think this out.

If you can't afford to buy where you live, buy somewhere else, let it out, and rent where you live. Eventually the situation will sort itself out. You may have to wait until you're 40, which is a long way away when you're 25, but patience is a virtue.

(Edited by author 4 hours ago)

Hmm, checking RM I can see that the asking rent on the places I rented over the past six years or so are the same as I paid or slightly less.

Under bozo's assumptions of a rent given by a fixed fraction of a buying price which quadruples in 25 years, the first place I rented should be being offered at something close to £800/month rather than the £575 it currently is, the same as I paid in 2007. And in six years from now, that fantasy £800 rent will be a cool fantasy £1,050 per month on the same assumptions- not bad for a 2 bed flat in Wiltshire.

I suppose the real kicker is the statement that underlines the irredeemable property bull's outlook: "Over a long enough time span, it makes sense to buy anything you can, on any terms you can.". As for the 'buy it and rent it out' situation, to think that some people bemoan becoming accidental landlords, this guy is advocating it as a route to prosperity!

Perhaps he's scored big on London property, fair enough. But to advocate it as a winning ticket on any terms, anywhere, is a bit silly. There are plenty of people who have lost large sums in many places.

Edited by cheeznbreed

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  • 242 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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