Edinbugh Latest

[ccc]

Zoopla figures tie in with OurProperty, which isn't surprising as they'll both be getting the same feed from Registers of Scotland.

'..fairly big issue..' - seconded. If the ESPC's press figures are based on their archvie, and it's this far out of whack with Registers, then what credence do we place on their figures?

Either:

(1) The Solictor in question has made an error.

(2) ESPC figures are inaccurate and riddled with mistakes.

(3) ESPC 'fudge' their figures.

I doubt the third is likely but you never know. The first is no big deal. The second is a very big deal.

[HAMISH_MCTAVISH]

Compound Interest Calculator

I didn't bother to check your calculations earlier as I assumed you would be correct. Seems I was wrong on that count at least.

10,000 borrowed at 5% over 25 years will result in £23,863.55 payable. So your sums were compeltely wrong. I think you may have missed out the compound aspect...

As you have been telling us you can get a fixed rate of 5.98% over 25 years today. You have also been telling us that the long term rate is 5%.

You know what that ickle little 0.98 difference makes over 25 years on a 200k mortgage ?

£654334.36-£477270.99

£177,064

You starting to understand why banks like people taking long term mortgages out yet...

Actually taking that 5.98 fixed rate do you know what I could save by buying in cash for 100k in 2012 compared to getting a mortgage in 2007 at 180k ?

Including interest payments - Circa £470,000

So as long as the next 3 things occur I will save close to 500k. I will also have my own house outright at the age of 35 rather than 55.

1) Continue earning V good money - 50/50

2) House drops from 180k to 100k - 80/20

3) Entire Worlds financial system does not collapse - ****** knows !!

Honestly ccc, you really don't help yourself one little bit, do you.

I hope you're prepared to eat a very large slice of humble pie........ Because public humiliation is never nice.

You do realise that interest on a mortgage does not compound, in fact it reduces yearly on a repayment mortgage as the size of the principal reduces.

OK, clearly you didn't realise that, having never actually bought a house.

Perhaps it's just a case of foot-in-mouth disease, lets hope its curable .

I'll make it nice and easy for you.

Here's a hypothetical example of a £100,000 property where the rent is a gross yield of 6% (not an uncommon yield in the UK, but obviously not common in Edinburgh), the mortgage interest is 5% and the total 25 year costs for rent, interest only and repayment mortgages. (ignore the rent for now, it's irrelevant) Obviously on the repayment mortgage you also then add the principal amount to the final total.

I/O mrtge Repayment Rent

1 £5,000 £4,953 £6,000

2 £10,000 £9,801 £12,000

3 £15,000 £14,537 £18,000

4 £20,000 £19,158 £24,000

5 £25,000 £23,655 £30,000

6 £30,000 £28,024 £36,000

7 £35,000 £32,258 £42,000

8 £40,000 £36,350 £48,000

9 £45,000 £40,291 £54,000

10 £50,000 £44,075 £60,000

11 £55,000 £47,695 £66,000

12 £60,000 £51,140 £72,000

13 £65,000 £54,402 £78,000

14 £70,000 £57,473 £84,000

15 £75,000 £60,342 £90,000

16 £80,000 £62,999 £96,000

17 £85,000 £65,432 £102,000

18 £90,000 £67,632 £108,000

19 £95,000 £69,586 £114,000

20 £100,000 £71,280 £120,000

21 £105,000 £72,702 £126,000

22 £110,000 £73,837 £132,000

23 £115,000 £74,672 £138,000

24 £120,000 £75,191 £144,000

25 £125,000 £75,377 £150,000

So the total amount spent for an I/O mortgage is £125,000. For a repayment mortgage it is only £75,377, because as you pay down the mortgage, the annual interest rate applies to a smaller figure every year.

(plus of course the principal, but you have that amount in equity in the asset, actually far more than that, at the end)

The difference between a 5% mortgage and a 5.98% mortgage in the above is about £25k on the repayment version, or about £50k on your £200K mortgage mentioned over 25 years, NOT the £177k difference you stated.

No wonder your ideas about buying are so utterly bizarre, if you don't have the faintest clue about how to calculate mortgage interest and the lifetime costs of buying versus renting.

I mean really, your example mortgage costs were exagerated by around three times what the real numbers are!!!!!

Wasn't it just the other day you were reminding us all about the fact that you've been posting on here for years, and you know all about the facts and figures?????? How did you last so long thinking that mortgage interest compounded? And if you've mentioned that before, how did you ever get away with it, unless everyone else on here thinks the same? In which case, congitive dissonance doesn't even begin to describe this forum.....

Edited February 16, 2009 by HAMISH_MCTAVISH

[fflump]

We were looking around this property today as well. We're going to end up competing for the same property, I can just tell....

It sold for 420 in 2003, so I agree it is pretty reasonably priced at the moment. That explains the interest.

It's a lovely property and it's on one of the nicest streets in Edinburgh but it's suffering badly from subsidence. It's been dealt with but the whole property is really quite wonky (did you look at if from the rear?). It doesn't exactly fill you with confidence, spending half a million on something that could potentially fall down!

Shame, as we loved it. Probably not going to make an offer though.

Lol yeah we pretty much have exactly the same targets property-wise-we've probably bumped into each other back int he days of open viewings :-)

My partner loved it and I liked the property but I find it all a bit dull and quiet in the middle of the Grange. I wasn't so much concerned with the subsidence-having lived in south london everything has subsidence issues. Did you see the concrete buttressing on the side of the property?-pretty heavy duty!

To be honest I am still happy renting and to sit it out for another 9-12 months at least. Every property like this that comes on will prematurely draw a cashed up punter into the market and leave the field clearer for when the real value arrived.

[fflump]

leaving aside the fact that the drops are modest AND the prices remain unrealitic-I have logged these cuts in my search area (of 60 properties) that have occured in the last week or so:

96 Braid Road

http://www.espc.co.uk/Buying/270904.html

recently gone frpm fp650 tp fp625

The Braid one is interesting. The sellers believe that there is someone would consider the place at 625k that did not consider it at 650k, a whopping 3.8% difference. They look like classic market chasers. If they dropped to 550 they might actually sell, but come next winter they'll need to drop much lower than that.

As a follow up to this-it has now dropped to 595k.

But-the weird thing is that it apparently sold in July 08 for 600k, and yet has been on the market for sale since at least October last year. Who bought it and why sell it on so quick? Distressed seller?

The property has also been on to let-maybe it still is.

As has been noted-it also sold for 440 in jan06, which seems quite low even for then.

[mechos]

By comparison, I bought at the age of 20, never paid any rent, and ended up paying off my mortgage 7 years early. In my case, I ended up with a property worth £400,000, with no mortgage, by the age of 38.

It sounds like you played the boom pretty well. I guess you are here because you are thinking about playing the bust?

Hopefully it's not too late to do so. Equivalent property to any you can sell now, you will be able to pick up cheaper in a year or two.

At the very least you should, of course, not be 'long' houses at present. i.e. shift any investment properties while you have the chance.

Your property is now worth about £360-380K - It would probably shift at 350,

That money in the bank should easily pay for over £800 monthly rent. You would likely want to top that up to £1000 in order to rent in comfort during your dislocation.

£1000 gets you a 3 bed detached house in Blackhall (I assume you know Edinburgh- this being an Edinburgh thread).

Like the lifestyle choices of those playing the boom, but this time round your cash, rather than debt secured against your house, is the cash machine.

And - the owners are probably negotiable on price by this stage.

Anyway the extra top-up shouldn't erode your capital by too much ~ £4000 over two years.

In all likelihood, by that time, an equivalent property to your current house will be available for under £300K, netting you at least £45K (though there is stamp duty to consider). If some forecasts are to be believed then you'll be buying back your own home for less than the 250K stamp duty threshold. Fingers crossed.

[dances with sheeple]

Fair enough. Another good example of why, over a lifetime, buying young and never renting would financially be the best option by far for most people.

And I would agree that in places like Edinbugh, that is often not the case. However, for large parts of Scotland it is. (Particularly Aberdeen, which has just made the top ten places in the UK where buying is cheaper than renting)

Times---top ten cheaper to buy than rent

So to come back full circle, everyone is in different circumstances, and different local markets have different costs and benefits versus buying and renting, which was my original issue with the contributor to the Scotsman making claims based on the Edinburgh market as applying to Scotland as a whole, when it's clearly innacurate for many areas.

So say you are young in 2007, about twenty maybe, would you say my best financial option wold be to buy? I`m so glad you are not my financial adviser Hamish

[dances with sheeple]

OK, ccc. I think I've got your general idea. Obviously everyones circumstances are different, and obviously there will be significant differences in areas and property types.

So, you intend to rent/save until you are 35, and end up with a mortgage free property worth £100,000, for the cost of the property plus the cost of (lets assume) 15 years of rental.

By comparison, I bought at the age of 20, never paid any rent, and ended up paying off my mortgage 7 years early. In my case, I ended up with a property worth £400,000, with no mortgage, by the age of 38.

The main difference, is that in my case inflation (which is inevitable over any real length of time) worked for me, whereas it worked against you.

IMO, whether you pay someone elses mortgage interest (and capital) through rent, or pay it directly to the bank in a mortgage, it's the same thing. The bank gets it either way, so I'm not sure why the glee at not doing so.

To each their own, I suppose.

As I've said, if you happen to be a FTB that is lucky enough to be born at a time that puts you in the market around the time of a crash, it's probably worth waiting a year or two, IF you can time it that well.

For the other 90% of the population, the secret to wealth is to buy young and never pay rent.

Also, FWIW, as you can currently buy a 25 year fixed mortgage at 5.98%, if anyone does think that rates will skyrocket, they can lock that in and cover themselves. I wouldn't though, as I think you could massively beat that rate over 25 years, but again, thats just an opinion.

As for the general argument that buying young limits your freedom, I don't buy it at all. I bought young, and often worked overseas. I even looked into renting the property while I was gone (but didn't in the end as I didn't need to cause the company paid my O/S accomodation), although my bank manager was quite happy to let me without changing my mortgage to a BTL, provided it wasn't permanent, provided I didn't buy another property, and provided I bought insurance to cover it.

But again, whatever, theres obviously more than one way to skin a cat. I will probably continue to believe that the best way to do well is to buy young. You will probably continue to believe its better to wait for a crash. Theres probably some truth in both, but hopefully at least you now see it's not as clear cut as you thought.

Bold point 1/ Nice earner, what did you do with the money? Gold? Beans? bank it? what?

bold point 2/ You don`t grasp (or want to grasp) the idea of a cheap credit fuelled boom which will only happen once in your lifetime, and which relies on mortgage debtors and renters being brainwashed into the amounts they need to pay to the bank/landlord? My rental outlay for ten years in Edinburgh is about 40k, I have rounded it UP to give you a sporting chance you are being misled by people telling you that they pay 800 a month for a flat in Edinburgh. They do, but that is driven by the size of the landlords mortgage (because he is a sucker) and the niave belief in the "superiority" of certain postcodes by the renter ( because he is an even bigger sucker) Hamish, don`t you understand why flats in Edinburgh were 50 - 70k in the late 90`s, and don`t you understand the effect of massive speculative development? If not I`m afraid you are the biggest sucker old chum, the last sucker perhaps?

[BigSack]

Either:

(1) The Solictor in question has made an error.

(2) ESPC figures are inaccurate and riddled with mistakes.

(3) ESPC 'fudge' their figures.

I doubt the third is likely but you never know. The first is no big deal. The second is a very big deal.

OK I spoke to our solicitor about this. He says the ESPC archive is more reliable than the internet sites. They use use land registry data and can sometimes omit data.

The 2002 sale was probably done privately or via an estate agency, hence not being listed in the ESPC archive.

[BigSack]

Lol yeah we pretty much have exactly the same targets property-wise-we've probably bumped into each other back int he days of open viewings :-)

My partner loved it and I liked the property but I find it all a bit dull and quiet in the middle of the Grange. I wasn't so much concerned with the subsidence-having lived in south london everything has subsidence issues. Did you see the concrete buttressing on the side of the property?-pretty heavy duty!

To be honest I am still happy renting and to sit it out for another 9-12 months at least. Every property like this that comes on will prematurely draw a cashed up punter into the market and leave the field clearer for when the real value arrived.

This now has 8 notes of interest!

My solictor is saying that the home report is a bit vague on the subsidence: the structural engineer says it is ok, the surveyor says it still needs some work.

It looks like it was sold in 2002 for 325K as ccc says, then put on fixed price at 460 and sold for 420 in 2003. That's a pretty big leap in one year, perhaps that was when the buttressing was done. Also, this not selling for its fixed price during the boom in an area like the Grange is not a good sign.

The phrase 'ten foot pole' springs to mind...

Anyway, I'll get to have a look through my first home report tonight. Should be interesting.

[HAMISH_MCTAVISH]

So say you are young in 2007, about twenty maybe, would you say my best financial option wold be to buy? I`m so glad you are not my financial adviser Hamish

I've already repeatedly stated waiting can make sense in an area like edinburgh, IF it's only for a few years, and IF you happen to be lucky enough to be born at a time when you will be an FTB around the time of a crash. But not for the other 90% of the population.

So either you ignored that to try and score a cheap point, or you did not comprehend it.

Perhaps you need a reading tutor more than a financial advisor? Maybe you and CCC can team up and get a bulk discount for tutoring in reading and maths, given his clanger on compund interest earlier?

Edited February 16, 2009 by HAMISH_MCTAVISH

[fflump]

This now has 8 notes of interest!

My solictor is saying that the home report is a bit vague on the subsidence: the structural engineer says it is ok, the surveyor says it still needs some work.

It looks like it was sold in 2002 for 325K as ccc says, then put on fixed price at 460 and sold for 420 in 2003. That's a pretty big leap in one year, perhaps that was when the buttressing was done. Also, this not selling for its fixed price during the boom in an area like the Grange is not a good sign.

The phrase 'ten foot pole' springs to mind...

Anyway, I'll get to have a look through my first home report tonight. Should be interesting.

So did you note interest? Hunters told me that I had to note interest in order to receive a home report.

The danger for the sellers is that a number of these notes have only been made in order to look at the report.

[ccc]

I stand corrected Hamish. I misunderstood the calculations on the tool I was using. You were right I was wrong. You see what I did there ? Maybe try it sometime.

So yes it only looks like if my plan comes to fruition I will save a measly £230,000.

Honestly I don't even know if it is worth it anymore. Quarter of a million savings ? Bah. Peanuts.

My application for a change to bull status is in the post.

[dances with sheeple]

I've already repeatedly stated waiting can make sense in an area like edinburgh, IF it's only for a few years, and IF you happen to be lucky enough to be born at a time when you will be an FTB around the time of a crash. But not for the other 90% of the population.

So either you ignored that to try and score a cheap point, or you did not comprehend it.

Perhaps you need a reading tutor more than a financial advisor? Maybe you and CCC can team up and get a bulk discount for tutoring in reading and maths, given his clanger on compund interest earlier?

And eating weetabix can make sense in an area like West Lothian, but not in Glasgow because the water is slightly different and the weetabix tastes like cornflakes? THERE HAS BEEN CHEAP CREDIT PUMPING EVERYWHERE, THE PRICES HAVE RISEN BECAUSE OF THIS. NOTHING YOU SAY, DO, OR WRITE CHANGES THIS FACT! GAME OVER MON AMI!

[ccc]

OK I spoke to our solicitor about this. He says the ESPC archive is more reliable than the internet sites. They use use land registry data and can sometimes omit data.

The 2002 sale was probably done privately or via an estate agency, hence not being listed in the ESPC archive.

Cheers for that - interesting.

Not sure if the ESPC being more accurate than the actual RoS is a good thing. Fair enough certian thing sbeing omitted and all I can understand. However a difference in the actual sale price.....How does that work ?

[TTD]

OK I spoke to our solicitor about this. He says the ESPC archive is more reliable than the internet sites. They use use land registry data and can sometimes omit data.

The 2002 sale was probably done privately or via an estate agency, hence not being listed in the ESPC archive.

I'm obviously missing something here. How can an 'omission' of data fed from Registers of Scotland to Zoopla or OurProperty lead to a DIFFERENCE in price between what the ESPC archive says it sold for, and what's recorded at Registers?

As stated already, there seem to be 3 possibilities;

The solicitor put the wrong figure on the form, or whatever was sent to Registers

The solicitor sent the correct figure to Registers, who then recorded it incorrectly

The figure was sent to and recorded at Registers correctly, but the figure archived at the ESPC was altered

The ESPC archive can only be claimed as 'reliable' for sales conducted by the ESPC. As you've pointed out, missing from the ESPC archive are:

Sales made by non-ESPC Estate Agents (Rettie, Savill, RE/MAX, Stewart Saunders, etc)

Sales made by Surveyors firms (can't think of any off-hand)

Private Sales

Auction Sales

So if a house was sold once by an ESPC member, then later by Stewart Saunders, then last by Savills, the ESPC archive will only have one of these transactions recorded. Reliable? For that transaction, maybe. Accurate? Far from it, not looking at the overall picture.

[TTD]

Oh, and another thought - if someone uses an ESPC firm, but - heaven forbid - doesn't choose to use the ESPC for advertising (i.e. the solicitor just puts them in their own window), they might not appear in the ESPC archive.....

[BigSack]

Interesting...

The property IS being sold by C Atchley, sorry ccc I must have got my names mixed up. So it looks like the OurProperty is correct.

I had a look back over the posts and I just realised that ccc said that there were 2 sales registered on Ourproperty - one in 2002 and one in 2004. I was under the impression that there was only one.

The structural engineers report stated that they had also inspected the property when it was sold in 2002 and December 2003.

So the ESPC is listing it as sold at 420 in April 2003 and OurProperty at 390 in March 2004. I reckon that there was a mistake and the ESPC entry should be April 2004. Perhaps it was entered incorrectly into the database.

Now another thing my solicitor mentioned was that sometimes the land registry figure can be lower. The ESPC figure is the agreed sale price as reported by the solicitor and the land registry figure is the 'official' price. This can be lower as people may want to reduce stamp duty. To be honest I didn't really understand how these figures can be different. I'll try and get him to explain that again. As for the different year, I suppose the land registry entry may be delayed, but there is a huge gap. I'll ask him about that too.

I've got the home report now (I did note interest fflump). It's the first one I've got my hands on. It is stating that there is work probably needing done on damp and the subsidence and that some windows need replaced. I'd imagine this is going to put a lot of people off. It will be interesting to see how many bid when it goes to closing.

These home reports are really going to affect closing dates. Previously people were bidding blind, then they would get a survey done. Now that they get the survey after they note interest they may not even bother bidding, so you will probably get far more closing dates with no bidders. Perhaps we will see more fixed price properties as a result. I hope so!

[geed]

Well done ccc. I actually can't fault much of what you say in this post, which is not to say I neccessarily agree with it, but it is a far more credible post than many of late.

I'll query some of it, challenge some of it, and ask for further explanation on some as well. Who knows, we might finally get a good debate going instead of the usual slagging match!!!!

Several points here.

Your current observations are presumably based on incomplete data, in as much as you are only able to monitor rough prices through O/O or fixed, not final sales prices in real time, and sold prices have a month or so time lag to appear.

The ESPC figures will show an average, however you are out of synch with Quarters. That decline is presumably from peak, (I can look it up and check), but that is not comparing apples with apples. What is the seasonally adjusted Q4 2008 ESPC year on year drop in Gorgie? I'd bet it's not the 15%+ you claim. Because even in a normal year prices can fluctuate by 8% plus, and we won't see the highest prices of this year until Q2.

The latest ROS data includes all sales made up until Dec 31 2008. It is not 6 months behind.

I don't ignore it, I've discussed it in length with you. I don't for one moment deny that it is theoretically possible that a single person in Perth lost 200K. However, given that the average sale price in perth only fell by a couple of percent for the entire year, they have to be the (and I'll phrase this as charitably as I can) unluckiest people in scotland right now. And if they did take a hit that badly, then an awful lot of other people had to buy at above peak prices to even out the average.....

Glad you finally get it.

Absolutely. And most people that try get it spectacularly wrong. Including most of the Uber-Bears on here.

Yes, but to be fair you'd be turning yourself into a short term property speculator, which is against most people's mentality. Most people buy a house, and live in it for decades.

Also, although it was obvious by 2003/2004 that we were into bubble territory, there was no way to tell when the crash would be, how big it would be, how long someone would have to rent for, how much further appreciation would take place before the crash, how much Scotland would be affected, etc etc etc. Don't forget in the last 2 crashes, most of scotland saw no appreciable decline in house prices whatsoever. The only reason we are now is because there is simply no credit available for half the borrowers, and this was not the case in previous crashes.

That there would be a crash eventually was predictable. That it would happen in such a different way, and for such different reasons from previous crashes was not. And the timing was equally impossible to predict.

I'm actually quite interested in your perspective on that. Could you explain all of those points in a lot more detail? How big a crash, why, what are the local causal factors, etc.

Again, could you explain that further? How, and under what circumstances, do you expect to pull that off?

"Don't forget in the last 2 crashes, most of scotland saw no appreciable decline in house prices whatsoever. The only reason we are now is because there is simply no credit available for half the borrowers, and this was not the case in previous crashes."

I have been enjoying the posts between you and ccc but could not let this go. THE ONLY REASON! That statement alone voids any credibility you may have built up posting on this site. Up to this point I respected your arguments but did not agree with it at all. Take a look at what happened to house prices in 06/07 (attached), they boomed ridiculously. The reason why Scotland (Edinburgh) didn't suffer too badly during the last crashes is that (and will suffer this time)

1) prices grew more "organically" i.e just ahead of average inflation prior to the crash (there was no boom)

2) Scots were generally very shrewed with their financials...remember that was when Scots could run banks...

3) This crash is the motherf*cker of all house price crashes. Prices have fallen UK wide by a greater percentage in 18 months than they did in 4-5 years in the early 90's. This one will hurt all homeowners.

Bubbles are inherantly unstable. A war, an oil crisis, a spike in IR's or a credit crash will all cause them to burst. Next crash will be triggered by an"oil crunch"... you heard it here first.

Many Many observers (mostly on here) saw this coming. We predicted when (and often got it wrong!), we predicted how (many got it right). It was simply looking at fundamentals. Long term core inflation, base IR's, long term house price inflation, salary inflation...etc... It was crystal clear in my mind that houses were vastly overvalued and I (like many on here) was bang on the money. Renting suited my lifestyle as I have travelled a great deal and invested my wealth, wisely avoiding property from 2004 onwards. I will take a look at some of the figures used and check them out myself.

Very few houses are selling

Banks aren't lending (40% deposit for competitive deals)

Big redundacies coming in Edinburgh

and houses are going to boom......when??????

Buying into this market without getting a substantial 25-50% discount will be akin to trapping yourself for the next 10 to 15 years as your equity is eroded.

I will always listen to a well articulated argument....but keep it real.

Sorry but I have not updated this chart for sometime..but it is still relevant...

Edinburgh_house_price_chart_big.bmp

Edinburgh_house_price_chart_big.bmp

Edited February 16, 2009 by geed

[Guest An Bearin Bui]

These home reports are really going to affect closing dates. Previously people were bidding blind, then they would get a survey done. Now that they get the survey after they note interest they may not even bother bidding, so you will probably get far more closing dates with no bidders. Perhaps we will see more fixed price properties as a result. I hope so!

That's interesting - the home reports seem to be a real help to buyers. A property like that one in the Grange would have been a nightmare in the past for buyers as it's a tempting location but with so little transparency on the structural problems, bidding a fair price would have been almost impossible. How many people in the boom overbid as a result of hidden or undetermined structural problems like this? I'd imagine a lot of properties of this kind (good area, problem building) will be coming up for sale in the next few years as people who overbid for a prime location in the boom realise that they can't afford the 100k worth of work required and can't remortgage either.

Good to be aware of the market as it is atm - the rest of us can be more aware of the tactics when we buy ourselves (in 2012 of course, when TEOTWAWKI kicks in and the good burghers of Edinburgh are fighting each other for scraps of food from Red Cross trucks while the RBS HQ at Gogarburn is a burnt-out shell, home only to ex-employee squatter-vagrants )

[geed]

OK, ccc. I think I've got your general idea. Obviously everyones circumstances are different, and obviously there will be significant differences in areas and property types.

So, you intend to rent/save until you are 35, and end up with a mortgage free property worth £100,000, for the cost of the property plus the cost of (lets assume) 15 years of rental.

By comparison, I bought at the age of 20, never paid any rent, and ended up paying off my mortgage 7 years early. In my case, I ended up with a property worth £400,000, with no mortgage, by the age of 38.

The main difference, is that in my case inflation (which is inevitable over any real length of time) worked for me, whereas it worked against you.

IMO, whether you pay someone elses mortgage interest (and capital) through rent, or pay it directly to the bank in a mortgage, it's the same thing. The bank gets it either way, so I'm not sure why the glee at not doing so.

To each their own, I suppose.

As I've said, if you happen to be a FTB that is lucky enough to be born at a time that puts you in the market around the time of a crash, it's probably worth waiting a year or two, IF you can time it that well.

For the other 90% of the population, the secret to wealth is to buy young and never pay rent.

Also, FWIW, as you can currently buy a 25 year fixed mortgage at 5.98%, if anyone does think that rates will skyrocket, they can lock that in and cover themselves. I wouldn't though, as I think you could massively beat that rate over 25 years, but again, thats just an opinion.

As for the general argument that buying young limits your freedom, I don't buy it at all. I bought young, and often worked overseas. I even looked into renting the property while I was gone (but didn't in the end as I didn't need to cause the company paid my O/S accomodation), although my bank manager was quite happy to let me without changing my mortgage to a BTL, provided it wasn't permanent, provided I didn't buy another property, and provided I bought insurance to cover it.

But again, whatever, theres obviously more than one way to skin a cat. I will probably continue to believe that the best way to do well is to buy young. You will probably continue to believe its better to wait for a crash. Theres probably some truth in both, but hopefully at least you now see it's not as clear cut as you thought.

What year did you buy? I agree your age, therefore you DOB is critical in how easy/hard it is to enter the property market.

[TTD]

... So the ESPC is listing it as sold at 420 in April 2003 and OurProperty at 390 in March 2004. I reckon that there was a mistake and the ESPC entry should be April 2004. Perhaps it was entered incorrectly into the database.

Now another thing my solicitor mentioned was that sometimes the land registry figure can be lower. The ESPC figure is the agreed sale price as reported by the solicitor and the land registry figure is the 'official' price. This can be lower as people may want to reduce stamp duty. ...

"Can SDLT (Stamp Duty Land Tax) liability be reduced?

It is possible to allocate/apportion the purchase price between the property and the moveable items sold with it (i.e. white goods, shed). SDLT is only payable on the price allocated to the property itself. Apportioning the price could result in a substantial SDLT saving where the total purchase price is just over a SDLT threshold, i.e. the price is £251,000. By apportioning the price so that £1000 is for moveable items and £250,000 is for the property itself, the SDLT rate of tax is only 1% of £250,000 instead of 3% of £251,000, a tax saving of £5030. However, the apportionment between the property and moveable items must be reasonable and genuine. The Inland Revenue can and does investigate LTRs where the price for the property is just below a rate threshold. Items attached to the property are classed as fixtures and are not moveable

items, i.e. fitted wardrobes."

The current thresholds are 250,000 and 500,000, which evidently don't apply in the above case. On the assumption that the threshold AT THAT TIME was 400,000, the implication seems to be that our solicitor here 'apportioned' £30,000 to 'moveable items' included in the sale...........

I'll leave it to the group to ponder the term 'reasonable and genuine' quoted above......

[TTD]

... and flippin' 'eck, if they can't even get the YEAR right....

[TTD]

.. AND, if the solicitor 'apportioned' £30,000 to 'moveable items', and £390,000 to the house, giving a total of £420,000, then which is the more accurate and reliable figure FOR THE PRICE OF THE HOUSE -

Registers at £390k

ESPC total of £420k

???

[HAMISH_MCTAVISH]

I have been enjoying the posts between you and ccc but could not let this go. THE ONLY REASON! That statement alone voids any credibility you may have built up posting on this site. Up to this point I respected your arguments but did not agree with it at all. Take a look at what happened to house prices in 06/07 (attached), they boomed ridiculously. The reason why Scotland (Edinburgh) didn't suffer too badly during the last crashes is that (and will suffer this time)

Hi geed,

OK, fair perspective, but I think it is oversimplified. I'll explain.

The credit crunch (mortgage rationing) IS the only reason that we are currently seeing a HPC in Scotland (and the UK for that matter). I do not disagree with you that there was a bubble. I do not even disagree that there are many parts of Scotland/UK where houses are overpriced. But in many, in fact, in most areas of Scotland, the bubble was not nearly as big as it was in England. If you look at the Scottish averages, you will see that as late as 2006, (and maybe later, but I can't find the figures atm) there were some areas of Scotland showing price/earnings multiples as low as 2.5. And for Scotland as a whole, as I recall (again don't have figures to hand atm) the average price earnings multiple peaked at 4.7, versus 5.7 for the rest of the UK.

Now, very many people get on here and argue very loudly that the only reason for all this HPI was the massive boom in irresponsible lending. If that is so, then surely the withdrawal of 50% of the UK's mortgage lending is the only reason for the crash happening at this point in time.

Whilst I do not disagree that eventually bubble HPI must end, and there must eventually be a correction, there is no technical reason for why it has to be through a crash instead of a long period of stagnation. For example, although we can agree that Edinburgh has seen excessive price rises, and Edinburghs very low rental yields would seem to confirm that it is not only due to supply and demand, if we had not had an interuption in the credit supply (and the subsequent crash and recession), there is no reason that prices would not eventually just have stagnated when they reached the upper limit of the consumers ability to pay.

Previous corrections have been caused by recessions, which have then caused a crash. This crash was caused by a credit crunch, which then caused the price correction (and business failures/cutbacks), which then caused the recession. That is an important structural difference.

There seems to be an assumption on this board that in a civilised western country, it is impossible for the price/earnings multiple to exceed 3.5 for any length of time. This is fundamentally untrue. Australia has now had average house prices trading in a range of 5 times earnings to 9 times earnings for 25 years. They have had two crashes in that time, and are now entering a third, but they have still never had prices drop below 5 times income in two and a half decades. Their comparitive cost of living is similar, and their taxation structure is actually higher, so why have they been able to sustain such high house prices for so long if it is impossible? Of course it is possible. We just assume it is not because we have not done so yet, and because we assume that the pattern of the last crash will automatically apply to the next one. But there is no reason this must be so, and there will likely come a day when it does not.

So for my statement to be untrue, ie, that the withdrawal of credit is not the only reason we are having this crash, then we would have to assume that.....

-There is a structural reason why UK prices cannot reach similar levels as Australian ones

-This recession would have happened now anyway without the credit crunch

-Scottish prices can never reach the same income multiples as English prices

-And that prices would have fallen this year even if the credit availability had not been reduced by 50%

Thats a lot of (probably false) assumptions to make......

As for recovery, people like to point to the last two crashes and claim that this one will play out in a similar way and to a similar time scale. It may, but it just as likely may not.

There is an important difference this time. In previous crashes, the crash was caused by the recession. This time, the recession was caused by the credit crunch, and the credit crunch also caused the crash. (In fact, the crash started before the recession by almost a year)

As the only way to end the recession is to restore flows of massive credit and liquidity into the UK economy, then there is little doubt that with an election coming next year, this is exactly what the government will do, through QE if needed. And if there is a massive flow of liquidity and lending into the economy, then there is only one thing that can happen to prices in all categories, housing included.

Edited February 17, 2009 by HAMISH_MCTAVISH

[mechos]

Buying into this market without getting a substantial 25-50% discount will be akin to trapping yourself for the next 10 to 15 years as your equity is eroded.

I don't think HMcTavish is in any way saying that it would be a good time for anyone to buy property.

My guess is that he is stressing about making all these arguments in an attempt to justify his own decision to do nothing about selling his own property(s) in the face of this crash.

He wouldn't buy now, nor would he sell now. Most property owners will be feeling this kind of paralysis at the moment.

Making these arguments here is his attempt to inflict paralysis on those who might stand to benefit from his.

Putting monetary pros and cons aside for a moment, I for one am really appreciating the sense of control over my own destiny that the flexibility of renting is giving me at the moment.

- Good for the wealth and good for the mental health - Like home ownership was a year or two ago.

Come on in! The water is cold, but refreshing!

(STR 2007)