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Live_in_hope

House Prices - Is It Worth Getting On The Ladder At All ?

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At the moment with the stupid prices their is no way we'd consider buying. What worries us more is that to get on the ladder would mean we'd probably not be able to put as much into our pensions as we'd need to - I sure a decent pension is something we're all guilty of not thinking about very well.

We don't want to be in the position where our mortgage is payed off & we're at the end of our careers with all our equity tied up in the house, yes you can downsize but who really wants to do it a that time of life.

So our solution (is give birth to a football team - joke sure its possible) get a nice council house, then we can rent it for the rest of our lifes for less than 400 a month leaving us to build up a good pension & enjoy our lifes.

Edited by Live_in_hope

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At the moment with the stupid prices their is no way we'd consider buying. What worries us more is that to get on the ladder would mean we'd probably not be able to put as much into our pensions as we'd need to - I sure a decent pension is something we're all guilty of not thinking about very well.

We don't want to be in the position where our mortgage is payed off & we're at the end of our careers with all our equity tied up in the house, yes you can downsize but who really wants to do it a that time of life.

So our solution (is give birth to a football team - joke sure its possible) get a nice council house, then we can rent it for the rest of our lifes for less than 400 a month leaving us to build up a good pension & enjoy our lifes.

Pensions v Buying an house. I am in a similar position. I would very much like to buy a house. I did not start saving in a pension until my late thirties and so I need to contribute relatively more of my income than people who started saving earlier.

Theses are some of the questions that I have been asking myself:

1. Are house prices good value for money in the current market?

In my area, I would consider them to be very poor value for money. Some of the houses are 'real rubbish' in poor areas with high asking prices. The nicer houses are far too expesive and would involve becoming maxed out in debt in order to service the mortgage and pay the council tax.

2. Can I currently get affordable decent rented accommodation?

3. Do I want to retire relatively early, the normal retirement age, or am I prepared to work until I am 70+?

Sacrificing pensions in order to buy an house, in the current market, will probably result in later retirement and possibly low income retirement. Unless the person has a lot of spare cash to put down a very large deposit (or pay for an house outright), of course.

4. Do I think that House prices will fall in the next decade or so? If so, are they likely to fall by a large amount?

It would be irrational to buy a major asset such as a house if you expect the price to fall.

5. If I put money into a pension fund, Is the value of the fund likely to fall?

In my opinion, when we do have a House price crash, it will be accompanied by a serious recession in the economy overall. Pension funds invest into assets that can go up as well as down in value. If the economy falters , many other asset types could also fall in value (shares, corporate bonds, with profits, commercial property etc.).

My main pension is a final Salary pension. However, I also have a small stakeholder pension in addition to this. When looking for a pension, I looked for one that allow investment into a variety of funds (including cash). Also it needs to allow the pension holder to switch between funds without charge at quick notice. It also needs to be low charge. Stakeholder funds usually enable these things.

I am currently putting all my contributions into the cash part of the L&G pension fund. The reason for this is that I expect most assets to fall in the next decade or so. However, the fund allows the ability to switch. I may therefore switch some of the capital into Far East equities or indexed linked funds later on. It all depends on how things pan out.

Ther are a number of companies that provide stakeholder pensions. Friends Provident, L & G, HSBC, Inveso and a host of others.

http://www.stakeholdersaving.gov.uk/

http://www.legalandgeneral.com/pensions/st...or-individuals/

http://customer.friendsprovident.co.uk/products/pensions/

http://www.mlim.co.uk/uksite/pensions/

6. There is a good tax incentive to invest in pensions. However, you cannot release any of the capital until you are 55.

7. How secure is my current employment ans what would the consequences of redundancy entale if I have a large mortgage.

8. Would I be able to sleep at night if I was maxed out in debt (many can, some can't)?

In the end, I decided to put half of my savings into saving for a house and the other half into pensions sticking to traditional Building Society/Post Office savings types of saving.

I hope that you reach the best decision.

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At the moment with the stupid prices their is no way we'd consider buying. What worries us more is that to get on the ladder would mean we'd probably not be able to put as much into our pensions as we'd need to - I sure a decent pension is something we're all guilty of not thinking about very well.

We don't want to be in the position where our mortgage is payed off & we're at the end of our careers with all our equity tied up in the house, yes you can downsize but who really wants to do it a that time of life.

So our solution (is give birth to a football team - joke sure its possible) get a nice council house, then we can rent it for the rest of our lifes for less than 400 a month leaving us to build up a good pension & enjoy our lifes.

A reasonable strategy but you are relying on future governments not to sting people with decent pension pots, and also to keep providing council accommodation to people who don't really need it.

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Property as a "ladder" doesn't really exist anymore, IMHO.

So, there's no point in trying to get on something that doesn't exist.

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Pensions v Buying an house. I am in a similar position.

3. Do I want to retire relatively early, the normal retirement age, or am I prepared to work until I am 70+?

Sacrificing pensions in order to buy an house, in the current market, will probably result in later retirement and possibly low income retirement. Unless the person has a lot of spare cash to put down a very large deposit (or pay for an house outright), of course.

This is the main thing I can't understand about people who see buying an "investment property" as equivalent to a pension. I can understand that by-and-large over the long term prices do go up, so if you kept the house for 20-30 years there's not much chance that it won't have gone up in value. But as the famous HP vs. average income graph shows us, house prices are long cycle, so what if you get to age 65 and want to retire, but the value of your house(s) are currently floundering at the bottom of a very deep trough. You could be waiting 5 years or more before it's worth enough again for you to sell up and retire!

Edited by tomr

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A reasonable strategy but you are relying on future governments not to sting people with decent pension pots, and also to keep providing council accommodation to people who don't really need it.

But how do you quantify 'don't really need it'

In the SE where I live I know of plenty of families / couples living in council houses (not all council areas are rat infested dumps over-ridden with crime) who have nice cars & two holidays a year.

Once you've got your council house you've got it for life, their is no means testing.

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Once the demographics start to bite, luxuries like private pensions will all be taxed at 40% in order to subsidise the billions in unfunded entitlements promised to public sector workers and of course to fund the extended leisure time of our dependent underclass, all in the interests of "fairness", of course.

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This is the main thing I can't understand about people who see buying an "investment property" as equivalent to a pension. I can understand that by-and-large over the long term prices do go up, so if you kept the house for 20-30 years there's not much chance that it won't have gone up in value. But as the famous HP vs. average income graph shows us, house prices are long cycle, so what if you get to age 65 and want to retire, but the value of your house(s) are currently floundering at the bottom of a very deep trough. You could be waiting 5 years or more before it's worth enough again for you to sell up and retire!

And you think your stock market backed pension fund will time the market perfectly instead? Dream on !

Trick with pensions is the annuity trap at the end which you at some point have to take the bulk of your pension as an annuity or a screw-u-ity as it often nicknamed, currently rates are as bad as they have ever been.

Rest assurred your pension sales man has made nice commissions.

Houses are relatively more flexible than pensions, one they have your money in your pension pot they have you...you just have to moan and whinge......at least worst case scenario with BTL's you can sell up and leave the country before any planned legislation hits.

I'll skip all Mr Browns and his heirs pension grab and muddling and take a nice simple rental revenue stream that goes up with inflation(and a little capital appreciation to as well)

Edited by mercsl

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Houses are relatively more flexible than pensions, one they have your money in your pension pot they have you.

And once you've taken out a mortgage on a house, the government have you: houses are the easiest thing in the world to tax, because it's pretty hard to own one without the government finding out about it.

With taxes ever increasing, I can't see how 'home owners' can avoid being sucked dry by the government.

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And you think your stock market backed pension fund will time the market perfectly instead? Dream on !

That's precisely why your pension pot is progressively shifted from equities towards bonds as you approach reitrement! Try doing that with property, especially having all your eggs in a single property from a single asset class, everyone would need to throw the equivalent two sixes in order to sell up in time and achieve the best returns.

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  • 302 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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