Jump to content
House Price Crash Forum
Sign in to follow this  
wish I could afford one

Not Buying Has Cost Me £95,000

Recommended Posts

A reader of my blog asked me the following question a couple of weeks ago - "I wonder, have you ever drawn up a cash flow and risk spreadsheet comparing the value of buying vs renting, based on decisions made in the past and on a decision made now?"

I've now had a chance to sit down and calculate exactly that. By my calculations not being leveraged up while being part of the London boom has cost me a cool £95,000. Posting here as I'm sure I'm not the only HPC'er in the same situation and relevant to this forum.

If anyone's interested in all the gory detail it's here.

Share this post


Link to post
Share on other sites

I considered buying in London in 2004 just after I graduated. That might of cost me a decent lottery win. Who knew the lengths they would go to. It really did look like then it was bubble crazy and couldnt last much longer.

Share this post


Link to post
Share on other sites

I nearly bought a £575,0000 place in SE London in 2012, it'd be worth a mill plus now, so what? I don't have a 500k mortgage either.

I like to reflect on all past decisions to learn for next time. Whether it be learning about contango, how hidden investment fees eat up returns big time or the rent vs buy argument it's all relevant education.

It doesn't mean I'm about to buy though. Back in 2007 I thought house prices were overvalued and now I think they're just farcical. I'm just going to work the one more year and b*gger off.

Share this post


Link to post
Share on other sites

I like to reflect on all past decisions to learn for next time. Whether it be learning about contango, how hidden investment fees eat up returns big time or the rent vs buy argument it's all relevant education.

It doesn't mean I'm about to buy though. Back in 2007 I thought house prices were overvalued and now I think they're just farcical. I'm just going to work the one more year and b*gger off.

Im sure you arent, but even investments have a warning that past performance has no bearing on future performance.

Thats why hindsight is 20/20.

Share this post


Link to post
Share on other sites

I like to reflect on all past decisions to learn for next time. Whether it be learning about contango, how hidden investment fees eat up returns big time or the rent vs buy argument it's all relevant education.

It doesn't mean I'm about to buy though. Back in 2007 I thought house prices were overvalued and now I think they're just farcical. I'm just going to work the one more year and b*gger off.

I don't know how you can learn much from that. We still don't know yet if london property will double or halve in the next few years.

Share this post


Link to post
Share on other sites

I don't know how you can learn much from that. We still don't know yet if london property will double or halve in the next few years.

What happens to London property from here on in wouldn't matter to me. I'd have had enough for FIRE, would have therefore now been sold up and would be now sunning myself.

Share this post


Link to post
Share on other sites

What happens to London property from here on in wouldn't matter to me. I'd have had enough for FIRE, would have therefore now been sold up and would be now sunning myself.

Would still affect your investments though? I still find london fascinating, people in their 30s on 50k still in house shares that don't really have a vast amount of disposable income. People on half the amount elsewhere have a greater disposable income.

Share this post


Link to post
Share on other sites

Would still affect your investments though? I still find london fascinating, people in their 30s on 50k still in house shares that don't really have a vast amount of disposable income. People on half the amount elsewhere have a greater disposable income.

Agreed. A crash in London house prices is surely to ripple out and affect my capital values elsewhere. That said, I'm planning on living off dividends only so whether they would be hit badly is another question.

Share this post


Link to post
Share on other sites

Buying at the wrong time cost me quite a bit once, and ten years of poverty. Well not exactly poverty, but I always had a crap car, and ex rental TV, and charity shop furniture. :huh:

Share this post


Link to post
Share on other sites

London is just about unreachable as a job destination for me. Somebody would have to pay me bucketloads, and I would live in a crap place. This can't last. :huh:

Share this post


Link to post
Share on other sites

It surprises me the figure is not higher. These times are wacko crazy off the scale, particularly in london, and this increase only represents 1/8th of your total which I gather was accumulated in less rare bubble reliant ways.

People who benefitted from these times in london are the minority, those with investment properties (not their home) who get out in time, and owner occupiers I would argue have suffered;They generally don't cash out, and cant afford to move 'up'. Sadly they only feel smug as they get to look down on those who were born earlier and are forced into insecure rentals instead, a rather sickening way to judge yourself, taking joy in others relative misfortune.

Share this post


Link to post
Share on other sites

London is just about unreachable as a job destination for me. Somebody would have to pay me bucketloads, and I would live in a crap place. This can't last. :huh:

London is going to die if it continues. Less businesses are setting up there, and more people can work remotely.

I know someone that commutes from Leicester every day, and shes not even near the office once she gets to london..

Share this post


Link to post
Share on other sites

It surprises me the figure is not higher. These times are wacko crazy off the scale, particularly in london, and this increase only represents 1/8th of your total which I gather was accumulated in less rare bubble reliant ways.

...

While I haven't played the single asset class leverage game I've still made reasonable use of the money that would have otherwise gone into buying which has helped minimise the damage. I would have been buying almost to the day at the previous peak, 15 or so months later and it would be a very different story, so again less damage than otherwise. For London, even back in 2007, I suspect £250,000 was also very modest. Combining these and my investments elsewhere have made me about £110,000 vs house price equity gain (capital gains + principle repaid) of £205,000. Thus the £95,000.

Share this post


Link to post
Share on other sites

I reckon I've saved 300-500K easy by not buying in Belfast in 2007.

Amazing! What will you be doing with the money (that you didn't really have)? :huh:

Share this post


Link to post
Share on other sites

Spending it in my head.

Well that sounds quite wise. We have moved into a rent-it world where you "buy" a car on a PCP sheme, just to have the latest model, and you know what, you have only borrowed to pay the depreciation, and the lease company wants it back in a few years, or you pay yhe residual value, but they won't. They will want the latest one, and the madness continues.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   101 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.