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UK House prices: News & Views


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Indeed.

 

Unless of course the financial collapse some here imagine actually arrives, then they'll print to the moon and back, and the masses will get their wage rises, they'll pay off their fixed mortgages and then, once they've paid off their £200,000 monthly heating bill etc, they'll probably even have enough left over to buy a loaf of bread a week :lol:

 

No, it'll just get stuck in the balance sheet of the banks. You don't think the plebs will actually see any of the new money, do you?

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No, it'll just get stuck in the balance sheet of the banks. You don't think the plebs will actually see any of the new money, do you?

 

What are you on about Van? Haven't you seen UK families take-home incomes are UP this year! :rolleyes:

Families with two parents in a committed relationship with two or more children saw an 8% annual rise in their monthly income to £2,327, while those with two parents in a relationship who had one child saw a 4% rise to £2,171.

 

http://uk.finance.yahoo.com/news/home-pay-increases-070103748.html

 

At this rate, they'll be inflation beating soon :lol:

 

(But don't be a single parent, their incomes are down 8% :( )

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Prime homes face 50% drop if euro fails

 

By Norma Cohen

 

The report, which was conducted on behalf of commercial property developer Development Securities, concludes that the factors that have driven up prices for prime central London properties relative to the rest of Britain swing into reverse in the event of a messy break-up of the euro.

 

The report concludes that since 1995, the single most important reason for the outperformance of prime central London properties has been flows of capital seeking a safe haven, both in the run-up to the launch of the euro, when uncertainty was great, and in the past few years as its future has come under question.

 

Two further factors responsible for driving up property prices have been relative sterling exchange rates, which have made British property cheap generally for non-UK investors, and the performance of the equities market, which is the key asset underpinning the wealth of high net worth individuals.

 

“A break-up of the euro would almost inevitably produce a significant appreciation of sterling and a collapse in global equity prices,” Fathom concluded, a development that would undermine the wealth of many of the high net worth individuals who have purchased central London homes.

 

/more: http://www.ft.com/intl/cms/s/0/66da3a54-aa6b-11e1-899d-00144feabdc0.html#axzz1wT6CPD11

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“A break-up of the euro would almost inevitably produce a significant appreciation of sterling and a collapse in global equity prices,” Fathom concluded, a development that would undermine the wealth of many of the high net worth individuals who have purchased central London homes.

 

/more: http://www.ft.com/intl/cms/s/0/66da3a54-aa6b-11e1-899d-00144feabdc0.html#axzz1wT6CPD11

 

So, we could sell our houses here, and buy whole villages in France or Spain! Nice :D

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Little antidote

 

Over the last three weeks a growing number of estate agents and borrowers in prime London have been asking me if they consider the London market is about to correct. All are of the opinion that prices being achieved and have gone up to fast and to far. There are alot of nervous people out there. Those working in the City are the most pessimistic with job security their main concern, and so they should. No job no money to pay the mortgage. Simples

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This makes some good points

 

 

"Paying interest to the bank is exactly the same as paying rent to a landlord...

The money goes out the window."

 

I agree.

 

I get very annoyed by the idiots who say:

Why waste money paying rent to a landlord, and they then say in the next breath

that buying is better - but ignore the fact that most of a mortgage payment is interest

 

If I hear this from an agent, I often refuse to let it pass, and will "dis-assemble" him

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This makes some good points

 

 

"Paying interest to the bank is exactly the same as paying rent to a landlord...

The money goes out the window."

 

I agree.

 

I get very annoyed by the idiots who say:

Why waste money paying rent to a landlord, and they then say in the next breath

that buying is better - but ignore the fact that most of a mortgage payment is interest

 

If I hear this from an agent, I often refuse to let it pass, and will "dis-assemble" him

 

Well yes, in a way it is, yet the rent paid to a landlord is forever, the interest paid to the bank is only for the length of the (repayment) mortgage.

 

That's the difference that should be pointed out, not the rent being money down the drain crap.

 

Of course, they could just (rightly) point out that renting is paying of the landlords mortgage, whereas buying is paying off your mortgage :rolleyes:

 

However, with prices still going down, if you can, and if you’re in a place you like, it’s best to keep renting from a purely financial perspective.

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They are both "forever."

You don't get rent back. You don't get interest back from the bank either.

 

No you don't, but, however you look at it, once that big ole mortgage is paid off, the interest payments (or rent to the bank, as such) stop, finito, end of. (To be precise, you could just say the house cost you more (mortgage principle + deposit + interest)

 

The rent to a landlord goes on as long as you do, i.e. forever in your frame of reference.

 

first 25 years paying a repayment mortgage at 1000 per month = 300,000

first 25 years paying eq house type rent = 300,000

 

next 10 years of owning = 0

next 10 years of renting = 120,000 (assuming no rent increases over that time, however unlikely that is)

 

Also, once the mortgage is paid off, (or indeed as soon as equity has been built up) that house is an asset. You can't leave a rented place to your kids/friends/charity etc.

 

Of course, in the same way, it's a potential* liability when prices are falling like now ;) .

 

Time and a place for everything :rolleyes: .

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The Guess on Halifax

 

"Late in Great Britain, Halifax House Price Index (HPI), value the price change of homes that are financed by Halifax Bank of Scotland (HBOS); rise from -2.4% on May up to 0.3% now is estimated."

 

/see: http://www.fxstreet.com/fundamental/market-view/forex-daily-outlook/2012/06/06/

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Well yes, in a way it is, yet the rent paid to a landlord is forever, the interest paid to the bank is only for the length of the (repayment) mortgage.

That's the difference that should be pointed out, not the rent being money down the drain crap.

GONE FOREVER is what they mean.

That is money you will not see back.

 

By contrast, principal paid on a Mortgage often comes back

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No you don't, but, however you look at it, once that big ole mortgage is paid off, the interest payments (or rent to the bank, as such) stop, finito, end of. (To be precise, you could just say the house cost you more (mortgage principle + deposit + interest)

 

The rent to a landlord goes on as long as you do, i.e. forever in your frame of reference.

 

first 25 years paying a repayment mortgage at 1000 per month = 300,000

first 25 years paying eq house type rent = 300,000

 

next 10 years of owning = 0

next 10 years of renting = 120,000 (assuming no rent increases over that time, however unlikely that is)

 

Also, once the mortgage is paid off, (or indeed as soon as equity has been built up) that house is an asset. You can't leave a rented place to your kids/friends/charity etc.

 

Of course, in the same way, it's a potential* liability when prices are falling like now ;) .

 

Time and a place for everything :rolleyes: .

 

These calculation comparisons need to be based in the real world. It's not realistic to live in the same place for 25 years. Indeed the reason that renters rent is that they like or are required to be highly mobile. Throw in the cost of moving home every 5 years from a buyers' point of view and let's see how the calculations come out.

 

 

 

 

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The Independent: Osborne's latest plan: ask Britain's savers for money

 

The Chancellor has told Treasury officials to find ways to persuade savers to transfer billions of pounds held in bank accounts, building societies and investment funds to new government "growth bonds". If successful, the withdrawal of funds from banks and building society's could make it interesting for anyone wanting a mortgage.

 

(REWARDING The Useless... yet again )

 

Daily Mail: Islington council houses family on benefits in £1.8 MILLION property

 

Anger as cash-strapped council house family on benefits moved into £1.8 MILLION property... with access to private basketball court. If rented privately the council-owned property could earn around £2,000 a week but when the family move in they will be paying less than £1,000 a month. The Indian couple, believed to be in their 30s, with four children and another on the way, are said to be amazed by their luck. One neighbour, Kelly Gladwell, 40, said: 'It's disgusting. The council should sell it off privately and build several homes for people who really need them.' Another resident, Dolores Murphy, 63, added: 'We were all surprised the council was giving a family the whole house. I have four daughters, all born in Islington, who had to move out of London to afford rent. It's so unfair

 

In India, they'd be begging in the streets, or would find some sort of job - rather than gaining such generousity

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These calculation comparisons need to be based in the real world. It's not realistic to live in the same place for 25 years. Indeed the reason that renters rent is that they like or are required to be highly mobile. Throw in the cost of moving home every 5 years from a buyers' point of view and let's see how the calculations come out.

 

While a few might move that often, the vast majority, especially those with families certainly don't.

 

Besides, you'll see I didn't increase the rent figure over 25 years (fat chance of rents staying the same, wouldn't you say?) to make it a more realistic comparison.

 

So whilst it's true interest rates will rise at some point, increasing the mortgage repayments, the cost of moving to long term fixed rates will be far less than the corresponding rent increases over that period.

 

More like the real world? :rolleyes:

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Winkworth / Market Insight Spring 2012

 

London still star performer

 

/ has made some significant changes to the cost of buying a home at the very top end of the UK housing market.The full impact on London's housing market remains to be seen but we have provided an overview of the key points below.

 

more...

http://winkworth-oxford.briefyourmarket.com/Goto/116679-287-IUMLML

 

Hitting the Top End

 

Only time will tell what the real impact of these changes is likely to have on London's property market. In our local market, based on 2011 sales, an additional £11.2m stamp duty would have been paid.

 

We anticipate that the 7% SDLT will be felt most by households immediately at the £2 million threshold. The additional cost that moving will now incur may put many off. This could further constrain supply and reduce transaction levels in a market that

already suffers the consequences of an imbalance between supply and demand. However, over time we envisage that this extra cost will be absorbed in a similar way to the increase seen in last year's budget.

 

- should reduce the average price, if the Top properties fall

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While a few might move that often, the vast majority, especially those with families certainly don't.

 

Besides, you'll see I didn't increase the rent figure over 25 years (fat chance of rents staying the same, wouldn't you say?) to make it a more realistic comparison.

 

So whilst it's true interest rates will rise at some point, increasing the mortgage repayments, the cost of moving to long term fixed rates will be far less than the corresponding rent increases over that period.

 

More like the real world? :rolleyes:

 

Good point, but don't forget to factor in maintenance and repairs for homeowners! wink.gif

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scenario: trading up from a 300k house with 100k equity to a 400k house.

 

Buying

---------

Stamp duty: 12k

Covenyancing costs: 2k

Moving cost: 1k

 

Selling

---------

EA fee @2%: 6k

conveyancing cost: 1k

Remortgaging fee: 1k

 

Total: £23k

 

I dunno about you, but 23 grand buys a lot of rent in the markets in which I operate!

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scenario: trading up from a 300k house with 100k equity to a 400k house.

 

Buying

---------

Stamp duty: 12k

Covenyancing costs: 2k

Moving cost: 1k

 

Selling

---------

EA fee @2%: 6k

conveyancing cost: 1k

Remortgaging fee: 1k

 

Total: £23k

 

I dunno about you, but 23 grand buys a lot of rent in the markets in which I operate!

 

300K to 400K, jees Van, the vast majority of the UK have an average house with price of ~160k of less ;)

 

That reduces those figures somewhat, so moving from 160k to 200k

---------

Stamp duty: 2k

Covenyancing costs: 0.7k (what we paid last time)

Moving cost: 0.5k (Speedy Movers, Glasgow - Brilliant guys)

 

Selling

---------

EA fee @1%: 1.6k

conveyancing cost: 0.6k (what we paid last time)

Remortgaging fee - No fee deal

 

Total: £5.4k :rolleyes:

 

And, you aren't including the mortgage that has been paid down over the period, and you aren't allowing for any capital gains (depending when the person bought the property) and and and...... we could go on forever.

 

Bottom line is that, at the right time, buying is a no brainer. At the wrong time, well heh, that depends on your situation. If you can afford the mortgage, and have a secure job(s), and it's cheaper to buy than rent, then it could still make sense for some. Note I said, for some. For the rest, at present, it would be foolish.

 

PS Can't remember the thread, but locked in 100 ticks on my dow long earlier, not sure how long this bounce will last.

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scenario: trading up from a 300k house with 100k equity to a 400k house.

 

Buying

---------

Stamp duty: 12k

Covenyancing costs: 2k

Moving cost: 1k

 

Selling

---------

EA fee @2%: 6k

conveyancing cost: 1k

Remortgaging fee: 1k

 

Total: £23k

 

I dunno about you, but 23 grand buys a lot of rent in the markets in which I operate!

Renting,

and using a portion of your savings to trade Gold might work out better

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Bottom line is that, at the right time, buying is a no brainer. At the wrong time, well heh, that depends on your situation. If you can afford the mortgage, and have a secure job(s), and it's cheaper to buy than rent, then it could still make sense for some. Note I said, for some. For the rest, at present, it would be foolish.

 

PS Can't remember the thread, but locked in 100 ticks on my dow long earlier, not sure how long this bounce will last.

The 'right time' might be years away

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No you don't, but, however you look at it, once that big ole mortgage is paid off, the interest payments (or rent to the bank, as such) stop, finito, end of. (To be precise, you could just say the house cost you more (mortgage principle + deposit + interest)

 

The rent to a landlord goes on as long as you do, i.e. forever in your frame of reference.

 

first 25 years paying a repayment mortgage at 1000 per month = 300,000

first 25 years paying eq house type rent = 300,000

 

next 10 years of owning = 0

next 10 years of renting = 120,000 (assuming no rent increases over that time, however unlikely that is)

 

Also, once the mortgage is paid off, (or indeed as soon as equity has been built up) that house is an asset. You can't leave a rented place to your kids/friends/charity etc.

 

Of course, in the same way, it's a potential* liability when prices are falling like now ;) .

 

Time and a place for everything :rolleyes: .

Rent the asset or rent the money.

 

Capital payments are just savings with compound interest.

 

The differences are only introduced when the asset price changes, or the cost of renting the asset or the money are different.

 

In your example using a 5% rate for everything and slightly rounding some figures;

 

25 year repayment mortgage @1000 per month is purchase price of 171,000.

To save 171,000 in 25 years with compound interest you need to save 291 per month.

So if you can rent the 171,000 asset for (1000-291) = 709 per month (5% of the asset price) then everything is equal.

 

Now make it real world and everything gets really complex with differing rates and different costs other than just the interest / rent, but basic principle is the same, still looks a bit odd if you imagine it over 25 years, but scale back to 12 months and it's simpler.

 

(Though oddly enough, my current rental almost exactly balanced; renting, mortgage interest and savings interest were all within a shade of 2.9%, I'm facing the downside of that decision right now though as landlord has decided to sell up <_< )

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Halifax to publish UK May house price data on June 7

London South East - 9 hours ago

 

Economists polled by Reuters expect the index to show a 0.5 percent monthly rise in house prices after a 2.4 percent drop the month before.

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Rent the asset or rent the money.

 

Capital payments are just savings with compound interest.

 

The differences are only introduced when the asset price changes, or the cost of renting the asset or the money are different.

 

In your example using a 5% rate for everything and slightly rounding some figures;

 

25 year repayment mortgage @1000 per month is purchase price of 171,000.

To save 171,000 in 25 years with compound interest you need to save 291 per month.

So if you can rent the 171,000 asset for (1000-291) = 709 per month (5% of the asset price) then everything is equal.

 

Now make it real world and everything gets really complex with differing rates and different costs other than just the interest / rent, but basic principle is the same, still looks a bit odd if you imagine it over 25 years, but scale back to 12 months and it's simpler.

 

(Though oddly enough, my current rental almost exactly balanced; renting, mortgage interest and savings interest were all within a shade of 2.9%, I'm facing the downside of that decision right now though as landlord has decided to sell up <_< )

 

 

Well put.

 

In the UK at the moment, it is said that 90% of places are cheaper to buy than rent at present. Of course, in those calculations there are many assumptions (and some costs left out, but even stripping them out, its probably about the same cost (rent/buy) in about 50% of places.

 

And there are the other factors that make owning preferable, as you have pointed out (landlords being a**h*les for 1, making it just as you want it, being able to add value with extensions etc etc etc). When the kids arrive and the schools become important, for example, a landlord deciding to sell can life very tricky.

 

Oddly though, in the nice areas by us (suburbs with good schools etc), it makes sense to rent (yields about 3%), yet in the other nice bits (more built up like the W.End etc) it makes sense to buy (yield about 6%). Of course, it's almost impossible to rent where we are, yet loads for rent in the W.End, weird :unsure:

 

(Also, for the savings, are you assuming tax free saving?)

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