Renting V Owning 2012-2016 The Arithmetic

[Richmond]

With the government slowly accumulating 20 (40 in London) percent of UK housing, it would be odd if they wanted to do anything but push prices up........

[bushblairandbrown]

With the government slowly accumulating 20 (40 in London) percent of UK housing, it would be odd if they wanted to do anything but push prices up........

Maybe just hold them from falling until a time of their choosing. Don't know!

Getting back to the renting vs owning thing. I can see from the calculation in the OP that it's HPI that mainly determines the difference between owning and renting. So, I'm struggling to see, are there wider implications of this?

For an OO, the balance is HPI and saving on rent vs mortgage costs. Alternatively for a landlord, it's something like HPI and income from rent vs loss of income from other investments that could have been made.

If buying a house (from a purely financial position) is a bet on HPI are there any ways to bet against HPI? Surely then people who understand what returns could reliably be achieved from other investments (plenty on here it seems, but not myself) would be able to keep the housing market in step if these exceeded rental incomes/the saving from not renting by shorting when appropriate.

[Locke]

Blair invented an economy based on buying and selling houses into a Ponzied market and it became the economy.

To be perfectly fair to that turdgobbler, even had he had fiscally conservative policies, the lunacy in the US would have driven real estate prices here

[crashmonitor]

In my view renting is (with current interest rates) financially very similar to an IO mortgage over the medium term - but with a lot more freedom.

The only financial difference is dependent upon whether prices go up or down during your period of tenure.

Renters have lost financially for many a year - but that is about to change. Anyone that has rented for years and buys now will have made two timing mistakes of epic proportions.

With current interest rates is the key point. If mortgage rates were at a normal 7% and savings rates were at 5%, then you would need some serious HPI to make owning work financially. Even at 2% lost investment returns I have only just about made owning work these last four years. A further point is that the 6k expended on repairs, renewals and ''improvements'' over the last 15 quarters is just way under the national average. Some people spend that much just on their gardens, 1-2% of the purchase price per year, if you take everything into account from lawn mowers to redecoration and carpets would be a fairer figure. None of these costs occur when you rent. And my 6k included all these things.

Yes I know in the la la land of Homes under the Hammer you can do a complete refurb for 6k and totally ignore transaction costs and lost investment income because this is all taken care of by the property fairy. Indeed on Homes under the Hammer prices you can no doubt get the roof fixed for the price of a bag of chips.

I really just need to remind myself how good not owning a depreciating pile of s%%t is called a house before I buy another.

My only cautionary note is that Kensington has done 100% since the previous peak; Cambridge 50%, basically about 400k to live in a piece of s**t there; Northampton 25%; Derby 10% and Newcastle about -10%. So anybody north of Derby ought to be a bit careful.

Edited April 5, 2016 by crashmonitor