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Uk House Prices Rise At Fastest Annual Pace Since 2010 - Nationwide


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Long time lurker, first time poster.

In discussions like this, about the financial merits of buying and renting, would probably benefit from an actual tool/app that takes all the variables into account. Luckily, the New York Times website has one (it expresses the numbers in dollars, but that's irrelevant; just read all the $ signs as £ signs): http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0

Using this, my girlfriend and I have decided to rent for now (unless we see a property we fall in love with, but we haven't yet): when we put our details into this calculator, it's clear that unless house prices rise by several percentage points every year, we're better off renting. And that's not to mention the stress of buying/selling.

Anyway, I thought I'd add the link because it looks like it would really help discussions like the one in this thread.

That tool is not too far out if you input my figures for a cash purchase versus renting over the last six years.

Monthly rent £900

Home price £400,000

Downpayment 100%

Mortgage rate 1% (it won't allow 0%, but no matter as mortgage value is £0)

Annual Property tax £0 (we don't have an annual property tax)

Annual home price change -2% (the correct figure for my rented house)

Annual rent increase or decrease 0% (actually 0.4% so 0% is closest)

It shows a cost of £221,669 for owning over a six year period against a cost of £71,696 for renting.

£221,669 - £71,696 = £149,973. So it is £149,973 cheaper to rent than to buy over a six year period.

The calculation is perhaps a bit heavy on ownership costs but is light on opportunity cost, at least I did rather better than their example, but the bottom line figure is within 10% of my own "real life" figure.

Edit: I've just noticed that the tool can calculate the figures for between one and thirty years. If I change it from the default six years to seven years, which is my actual time scale, the figure showing it to be £169,449 cheaper to rent than to buy is remarkably close to my actual figure.

Edited by Bruce Banner
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This paints quite a depressing picture, other than Londonistan of course.

http://www.landregistry.gov.uk/__data/assets/pdf_file/0004/45931/HPIReport20130621.pdf

Tends to negate the headline.

What is happening there? Are foreign families chipping-in to buy a house in London? I've seen 3 generations living in the same house for the last 40 years there.

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"There are few signs that the supply of housing is improving significantly.

Not going to matter much when, as in 2008, it's a credit event. Except on the borrowing side this time, shrivelling up.

kmla.jpg

We're at the very peak now, in my opinion. UK house prices are going to track down like gold prices have fallen.

I think one thing to keep in mind here is that a house is not an equity. It is a large, energy, tax and resource consuming entity that can’t be parked in to a bank account. For most buyers, even the investor types, the house has to be either occupied by the owner or the renter. Otherwise, it just bleeds maintenance and tax costs. This will be the limiting step, not how long they are willing to hold on to the house.

You wouldn't think the cuts are coming on thick, and velocity is dropping off all the time, with incomes for living costs under pressure, as punters have kept pushing into buy at higher prices in these final reflation months.

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Long time lurker, first time poster.

In discussions like this, about the financial merits of buying and renting, would probably benefit from an actual tool/app that takes all the variables into account. Luckily, the New York Times website has one (it expresses the numbers in dollars, but that's irrelevant; just read all the $ signs as £ signs): http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0

Using this, my girlfriend and I have decided to rent for now (unless we see a property we fall in love with, but we haven't yet): when we put our details into this calculator, it's clear that unless house prices rise by several percentage points every year, we're better off renting. And that's not to mention the stress of buying/selling.

Anyway, I thought I'd add the link because it looks like it would really help discussions like the one in this thread.

That tool is not too far out if you input my figures for a cash purchase versus renting over the last six years.

Monthly rent £900

Home price £400,000

Downpayment 100%

Mortgage rate 1% (it won't allow 0%, but no matter as mortgage value is £0)

Annual Property tax £0 (we don't have an annual property tax)

Annual home price change -2% (the correct figure for my rented house)

Annual rent increase or decrease 0% (actually 0.4% so 0% is closest)

It shows a cost of £221,669 for owning over a six year period against a cost of £71,696 for renting.

£221,669 - £71,696 = £149,973. So it is £149,973 cheaper to rent than to buy over a six year period.

The calculation is perhaps a bit heavy on ownership costs but is light on opportunity cost, at least I did rather better than their example, but the bottom line figure is within 10% of my own "real life" figure.

Edit: I've just noticed that the tool can calculate the figures for between one and thirty years. If I change it from the default six years to seven years, which is my actual time scale, the figure showing it to be £169,449 cheaper to rent than to buy is remarkably close to my actual figure.

This worked out really accurate using my figures, perhaps someone else could give it a try.

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I gave it a go. Remember this is Northern Ireland

rent 450

price of house 145k

down payment 100%

mortgage rate 1%

property tax 0

price drop -7%

rent rise 0%

89224 less renting than buying over 6 years

saving 14871 per year

Suddenly there's a distinct lack of VIs queuing to bump this thread :lol:.

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This worked out really accurate using my figures, perhaps someone else could give it a try.

I was quite surprised at this, having just notched up 5 years of renting:

Monthly Rent: 1,000

Home price: 175,000

Down Payment: 100%

Mortgage Rate (irrelevant): 1%

HPI: -1%

Over 5 years, it's 14k cheaper renting than buying, 16 years to break even.

If I change the HPI to 0%, it still takes a total of 8 years to break even, and 9 for buying to become cheaper.

One point though - I think you need to add utility costs into your rental figure to get a true comparison. My figures above are based on that.

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This worked out really accurate using my figures, perhaps someone else could give it a try.

Did you input the current rent and value, or the rent and value when you started renting your home? My results come out significantly different, but I still believe I'm better off renting.

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Did you input the current rent and value, or the rent and value when you started renting your home? My results come out significantly different, but I still believe I'm better off renting.

I used a median figure with a 0% escalator because my rent has only increased a total of 2% over the seven years I've lived there.

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I had earlier simplified my situation in order to make the sums easier. In actual fact, although I could have bought outright, I took out a mortgage 2 years ago for 34% of the purchase price so as to take advantage of the low interest rates then offered (HSBC lifetime tracker, base rate + 1.89% = 2.39%). Return on savings has been roughly 3.5%. So my numbers for the calculator where changed from default are:

Annual home price change: 2% (actually, about 2.5% over past 2 years according to Zoopla)

Annual rent increase: 2% (assumed in line with HPI, don't know for sure but reasonable)

Monthly rent: £750

Home price: £200,000

Down payment: 66%

Mortgage rate: 2.39%

Property taxes: 0%

Cost of buying: 1% (solicitor's fees + surveyor's fees)

Cost of selling: 1.5% (haven't sold, so not sure if applicable, 1.5% seems to be going rate)

Length of mortgage: 20 years

Home-owner’s insurance: 0.1% (actually about £70)

Additional monthly utilities: 0%

Rent deposit: 6 months (moved from abroad, self-employed!)

Renter's insurance free: 0%

Rate of return on investments: 3.5% (about the best I could manage!)

Inflation rate: 3.5% (estimated, last 2 years)

Result: Buying cost me £6,546 less than renting.

Up until July 2011, I benefited from not buying (like Bruce), but buying at that point has turned out better financially than continued renting. There were, of course other reasons for buying in my case. I would have had to move house if I didn't buy, which is fairly major hassle for a lone parent with a school-age child, and there didn't seem to be much on offer et the time. Also, most of my savings were in euros, and July 2011 was, luckily, just about the perfect time to change them to sterling.

Edited by snowflux
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Over the seven year period I've been renting I'm over £160K in pocket as a direct result, although the low interest rates over the last year or two, coupled with my aversion to risky investments, have reduced the advantage to about £4K a year and if rates do not rise before some of my fixed rate deals end, the gap may close further. However, I'm perfectly happy to wait because I expect house prices to fall by 30% to 40% by the end of the decade.

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I had earlier simplified my situation in order to make the sums easier. In actual fact, although I could have bought outright, I took out a mortgage 2 years ago for 34% of the purchase price so as to take advantage of the low interest rates then offered (HSBC lifetime tracker, base rate + 1.89% = 2.39%). Return on savings has been roughly 3.5%. So my numbers for the calculator where changed from default are:

Annual home price change: 2% (actually, about 2.5% over past 2 years according to Zoopla)

Annual rent increase: 2% (assumed in line with HPI, don't know for sure but reasonable)

Monthly rent: £750

Home price: £200,000

Down payment: 66%

Mortgage rate: 2.39%

Property taxes: 0%

Cost of buying: 1% (solicitor's fees + surveyor's fees)

Cost of selling: 1.5% (haven't sold, so not sure if applicable, 1.5% seems to be going rate)

Length of mortgage: 20 years

Home-owner's insurance: 0.1% (actually about £70)

Additional monthly utilities: 0%

Rent deposit: 6 months (moved from abroad, self-employed!)

Renter's insurance free: 0%

Rate of return on investments: 3.5% (about the best I could manage!)

Inflation rate: 3.5% (estimated, last 2 years)

Result: Buying cost me £6,546 less than renting.

Up until July 2011, I benefited from not buying (like Bruce), but buying at that point has turned out better financially than continued renting. There were, of course other reasons for buying in my case. I would have had to move house if I didn't buy, which is fairly major hassle for a lone parent with a school-age child, and there didn't seem to be much on offer et the time. Also, most of my savings were in euros, and July 2011 was, luckily, just about the perfect time to change them to sterling.

you missed.

Life insurance.

maintenance

Gardening and other stuff Homeowners spend fortunes on.

200K gets you a box around here.

My rent of £900 gets me a very large 4 bedroom house, off street parking for about 10 cars, shed, washroom, garage, large back garden and views over fields.

numbers dont always make sense when quality of life overrides.

Edited by Bloo Loo
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stock-footage-time-lapse-of-english-countryside-on-a-sunny-day-in-the-yorkshire-dales.jpg

A very nice piece of man made country side.

All it needs are a good few nicely designed houses and kids running around outside and it'd be perfect.

I was working on a pipeline near the M25 recently and it takes you to privately owned land that most of us would never see, very nice countryside but as only a few get to use it at present, it'd be far better if houses were built on it so it was beneficial to the masses not just the wealthiest few who want somewhere to put their horses.

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I've got an inkling this could be a north/south divide thing again, particularly in those areas where sold prices have remained static since 2007. There's no doubt in my mind that renting is the better option in the short term, e.g. if you need somewhere for say 5 years. However, the cost to rent v cost of mortgage isn't that too dissimilar in my target areas (SE). Rent for a 3 bed detached house is around £1250 pcm, and a 90% mortgage for a similar house is about £100 more.

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I've got an inkling this could be a north/south divide thing again, particularly in those areas where sold prices have remained static since 2007. There's no doubt in my mind that renting is the better option in the short term, e.g. if you need somewhere for say 5 years. However, the cost to rent v cost of mortgage isn't that too dissimilar in my target areas (SE). Rent for a 3 bed detached house is around £1250 pcm, and a 90% mortgage for a similar house is about £100 more.

The selling price (achieved) for three bedroom town houses, similar to the one I rent in the South East, has fallen from £400K to £350K in the seven years I've lived there whilst my rent has increased, over that period, from £900 to £920 pcm.

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The selling price (achieved) for three bedroom town houses, similar to the one I rent in the South East, has fallen from £400K to £350K in the seven years I've lived there whilst my rent has increased, over that period, from £900 to £920 pcm.

Fair enough, so the prices haven't remained static in your area. This isn't the case where I'm looking, sadly, for houses around £250-275k.

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Long time lurker, first time poster.

In discussions like this, about the financial merits of buying and renting, would probably benefit from an actual tool/app that takes all the variables into account. Luckily, the New York Times website has one (it expresses the numbers in dollars, but that's irrelevant; just read all the $ signs as £ signs): http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0

Using this, my girlfriend and I have decided to rent for now (unless we see a property we fall in love with, but we haven't yet): when we put our details into this calculator, it's clear that unless house prices rise by several percentage points every year, we're better off renting. And that's not to mention the stress of buying/selling.

Anyway, I thought I'd add the link because it looks like it would really help discussions like the one in this thread.

My feeling is that the break even point is around inflation +2% for hpi. As we have not reached these levels outside London and a few favoured spots since 2003/4, I guess home owners have gotten spanked for about 9 consecutive years now.

Edited by crashmonitor
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House Prises rising at fastest annual pace since 2010? Newcastle upon Tyne would like to disagree:

JyoBAPL.png

Source: Land Registry HPI

Starting to just tip over into fear phase of the bubble graph eh?

Newcastle doesn't exist, as with the rest of the sticks. There has been no house price crash and you were wrong. The Property Supplements can smugly claim that house prices only ever go up and fill the pages with London prime.

Edited by crashmonitor
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Out of interest, what difference does it make if its called 'credit' as opposed to 'debt' ?

AFAIK in accounting terms when one owes money to a bank they are your "creditor" and you have credit on the liability side of your balance sheet. The bank has you as a "debtor" and has the dept on the asset side of its balance sheet. Ergo the interest you pay is the cost of the credit.

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not quite my view, I am in Essex after all....field with grazing horses directly behind...from upstairs can look across the stour...

Very nice, that was a view of the Yorkshire countryside.

A very nice piece of man made country side.

All it needs are a good few nicely designed houses and kids running around outside and it'd be perfect.

I was working on a pipeline near the M25 recently and it takes you to privately owned land that most of us would never see, very nice countryside but as only a few get to use it at present, it'd be far better if houses were built on it so it was beneficial to the masses not just the wealthiest few who want somewhere to put their horses.

One of the good things about the English countryside is the freedom to roam in many places the rights of way through private land and fields and the bridle ways people can use and enjoy, so not only can you look out at the land you also have the right to use and enjoy that land. ;)

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