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Heads I Win, Tails I Win

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For those of you following this I am going ahead with my purchase of a 4-bed in Hampton Hill for £490,000. On a First Direct 3-year offset fix this will cost about £1400/month (having put up £200k myself) compared to about £1900/month to rent my current somewhat tatty but and slightly smaller place in Twickenham. Admittedly I am now exposed to maintenance costs and lose investment income on the £200k, and there are transaction costs of about £16k. All-in-all its a comparable financial situation except that I am now exposed to London property instead oof Japanese stocks or oil company shares. And our living conditions will be better (wife and children off my back).

Furthermore I am realising that whatever happens next I am in a better situation. If property plunges it will be easier, in a few years, to move a bit closer to Richmond or more realistically somewhere a bit bigger.

If however London prices continue skywards, as they may well, then at least I have hedged the situation.

Comments (and not vitriol) please.

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Guest Cletus VanDamme

Comments (and not vitriol) please.

You've traded something ephemeral (electron states within a memory storage mechanism that records notional stock and share values) for something substantial (a house). At some point, you would have needed to cash in your shares, or take an income from them. And you've also provided stability for your family.

Not sure why you seek validation here though.

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For those of you following this I am going ahead with my purchase of a 4-bed in Hampton Hill for £490,000. On a First Direct 3-year offset fix this will cost about £1400/month (having put up £200k myself) compared to about £1900/month to rent my current somewhat tatty but and slightly smaller place in Twickenham. Admittedly I am now exposed to maintenance costs and lose investment income on the £200k, and there are transaction costs of about £16k. All-in-all its a comparable financial situation except that I am now exposed to London property instead oof Japanese stocks or oil company shares. And our living conditions will be better (wife and children off my back).

Furthermore I am realising that whatever happens next I am in a better situation. If property plunges it will be easier, in a few years, to move a bit closer to Richmond or more realistically somewhere a bit bigger.

If however London prices continue skywards, as they may well, then at least I have hedged the situation.

Comments (and not vitriol) please.

Fair enough I think. Obviously if prices fall you would have been better off to wait.

The difference between you and many of us is that huge equity cushion you are resting your ample buttocks on. If I had that I would probably do the same. As it stands I intend to move from London to another part of the UK in the next 2 years. I can't afford to get trapped in negative equity, so the equation doesn't resolve for me.

p.s. my intention in future is to buy a 4 bed+ family home in an area that I happy to stay in forever. The housing market is not something I want to dwell on in the future, though I suspect I will always keep an eye on it as it seems to be an interesting tool for analysing the economy.

Edited by Smell the Fear

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Guest X-QUORK

Good for you mate, you've managed to build up enough capital to take the hit when prices drop, and you now have a happy family. Contrary to many of the bulls' opinions that bears resent anyone who owns a property, I wish you all the best and congratulations on keeping the family happy, that's what really counts.

PS

I think that beyond the obvious economic arguments, most bears just want a home of their own at a reasonable price, and would buy sooner rather than later if it wasn't for the very real fear of NE.

Edited by X-QUORK

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For those of you following this I am going ahead with my purchase of a 4-bed in Hampton Hill for £490,000. On a First Direct 3-year offset fix this will cost about £1400/month (having put up £200k myself) compared to about £1900/month to rent my current somewhat tatty but and slightly smaller place in Twickenham. Admittedly I am now exposed to maintenance costs and lose investment income on the £200k, and there are transaction costs of about £16k. All-in-all its a comparable financial situation except that I am now exposed to London property instead oof Japanese stocks or oil company shares. And our living conditions will be better (wife and children off my back).

Furthermore I am realising that whatever happens next I am in a better situation. If property plunges it will be easier, in a few years, to move a bit closer to Richmond or more realistically somewhere a bit bigger.

If however London prices continue skywards, as they may well, then at least I have hedged the situation.

Comments (and not vitriol) please.

If I'm assuming that in terms of distance location from Central London it goes like this:

Central London > Hampton Hill > Richmond > Twickenham

If you were to wait till after the crash you could be something like this:

Central London > Chelsea > Hampton Hill > Twickenham

No?

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I think if it gets the wife and kids off your back, it is probably worth it.

However, to say that you win in both situations smacks of wishful thinking.

If you look at it from a purely objective stand-point, if house prices were

to crash, say less than 50% to £290,000. You would have lost £200,000 of paper

equity, and whatever future opportunities that would have made possible.

But who knows, any number of things could happen.

Money isn't everything. It's important that you and your family are happy.

Edited by Dr Doom

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you are resting your ample buttocks on

I'm a mere 10st.

The equity cushion came from STR in the first place, me having been fortuante enough to buy my first London property in July 1996 (sold in early 2003).

Otherwise as many of the other posters point out it would not be possible. One of the the relatively few compensations of great age.

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Hopefully this doesn't count as vitriol but it's hardly a win-win situation. Given opportunity cost on your deposit and a reasonable figure for annual maintenance, you're paying £1,000 per month more than you were before and it is far from infeasible that you could be in negative equity in a few years.

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In that case you are a tit outside now :D

:lol::lol::lol:

ps - cletus seems to think the house made from electrons, neutrons and protons is in some way more 'substantial' than his previous stash of money, which was composed of... electrons, neutrons and protons

:lol::lol::lol:

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except that I am now exposed to London property

I disagree. Assuming you don't want to rent for life, you were previously short on property and had to buy.

This means you were exposed to property prices and if then went up, you'd have to pay more.

Now that you have just the property you need, you are hedged. So you are no longer exposed to property prices as it doesn't matter whether they go up or down for you since you're just going to live there.

Only those short (houseless/STR) or long (BTLers) are exposed to house prices as they will have to either buy or sell at a future date.

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You've traded something ephemeral (electron states within a memory storage mechanism that records notional stock and share values) for something substantial (a house).

- £200k is merely "electron states within a storage mechanism" Classic, pure genius :lol::lol::lol::lol:

You've ACTUALLY exchanged a tangible asset class whether shares (which can instantly be converted into cash) or total cash, either of which is currently delivering an income, into a TRANSIENT asset valuation plus a REAL debt.

You've essentially moved from a low risk to a high risk strategy. (not to say you won't be financially better off 5 years down the line...but I very much doubt it).

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You've ACTUALLY exchanged a tangible asset class whether shares (which can instantly be converted into cash) or total cash, either of which is currently delivering an income, into a TRANSIENT asset valuation plus a REAL debt.

You've essentially moved from a low risk to a high risk strategy.

Classic, pure genius :lol::lol::lol::lol:

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Guest Cletus VanDamme

:lol::lol::lol:

ps - cletus seems to think the house made from electrons, neutrons and protons is in some way more 'substantial' than his previous stash of money, which was composed of... electrons, neutrons and protons

:lol::lol::lol:

Well, I guess we can have metaphysical discussions about which configuration of electron states and densities is more 'real'.

But hey, I'm in bed with bronchitis, give me a break <_<

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Furthermore I am realising that whatever happens next I am in a better situation. If property plunges it will be easier, in a few years, to move a bit closer to Richmond or more realistically somewhere a bit bigger.

Exactly.

Its a win win sit', Iv'e never grasped why ownership bears dont get it.

Ownership abstinance is all about fear, end of.

Can an ownership bear tell why they are afraid?

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Guest prudence

If you own an asset in a market that falls in value you don't win, however much you try telling yourself that the opposite is true. Just one ramification that is rarely mentiioned is that when the market rebounds, you will have to wait for your home to return to its real value before it then increases in value. Those buying after a market falls, pay less for their asset and see it gain in value much earlier on in the cycle....

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Good for you mate, you've managed to build up enough capital to take the hit when prices drop, and you now have a happy family. Contrary to many of the bulls' opinions that bears resent anyone who owns a property, I wish you all the best and congratulations on keeping the family happy, that's what really counts.

PS

I think that beyond the obvious economic arguments, most bears just want a home of their own at a reasonable price, and would buy sooner rather than later if it wasn't for the very real fear of NE.

#

yeah but what is a "reasonable price" and on another matter why shouldnt house prices be unaffordable to almost all apart from the very wealthy? why dont the rest just rent?

I want a Ferrari but I can't afford it, so I have to drive an old Mazda instead...

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Guest X-QUORK

yeah but what is a "reasonable price"

I'd say an average wage earning couple should be able to buy an average 2/3 bed terrace without stretching themselves too much i.e a repayment mortgage multiple of 2.5 x joint income.

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Dr Doom

that's Rockefeller in your avatar? What an evil looking barsteward.

Actually no, it is Henry Ford.

I had Rockefeller Snr as my avatar a while back.

jdr.jpg

Also a bit evil looking.

post-4316-1164209125_thumb.jpg

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Good job, like myself, you probably value owning a home more than owning an investment. I think some people are a bit more money orientated - fair enough. Indeed only time will tell if you will be financially better off or not, but to even speculate on that rather misses the point for me - you have a home, get nesting!

My one critiscm is the choice of area, having lived in that area I must say that it all seems nice, but prices seem way out of balance when compared to similar places as you go round the edges of London. Many of my peers are committed to buying in Richmond/Kingston etc, this just seems bizarre, I have friends who have shelled out 200k for a one bed flat. Now I live in a very similar location, but withuot the recognisable name, infact I prefer it, better access to the countryside and vastly improved trains (Richmond et al is a terrible commute - I did it for years, grrr SWT), quicker and more reliable. 200k bought me a home I could easily raise a couple of kids in, garden too (I aspire to something bigger though, hence hoping for a small price drop!). The money you have would have bought a gorgeous house where I am.

My folks recently accepted a £1m+ offer on their 5 bed town house over your way - so im afriad you have a long way to climb when you want to move up lol! Yet the same house a bit further round zone 5/6 would be half that. But hey, its not 'Richmond'. Ironically my cheaper area has one of the highest average earning per household rates and is recognised as one of the least deprived areas of the country - I honestly dont see why people are sooooo keen to move to places like Richmond/Kingston (getting quite chavvy these days imo!) - I mean, I enjoyed growing up round those parts but it werent that great! I miss Richmond park, and then only for sentimental reasons - many a happy summers day spent there :).

House prices are only crazy if you look in the wrong area ;)! And I suspect its these areas that will see the biggest drops too (and historically the biggest gains I suppose).

Good luck with the new place :)

Edited by Orbital

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  • 315 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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