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Why are Brits so obsessed with buying their own homes?

theguardian.com

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Re: Why are Brits so obsessed with buying their own homes?

#91

Post by cthalupa »

themartorana wrote: post #86
cthalupa wrote: post #73

Earlier quoted context omitted.

Honest question: Is your credit bad? Even adding in PMI, property taxes, a 30 year rate, etc, the mortgage of house should be about the same, and often less than the rent unless you just can't get a good rate. A landlord has to make money, including the costs of longterm upkeep, replacing things like the air conditioner, paying real estate agents their commission, etc. If you can't make a 20% down payment I've seen P…

Ha, no, my credit is stellar. But I live in a nice neighborhood of Philadelphia. My 1000 sq ft 2 br apartment costs $2300/m in rent. (I'm aware it's a lot cheaper in other neighborhoods, but I love living here.) To buy my apartment (and this is just for the apples-to-apples comparison) would cost in the neighborhood of $485,000. If I put $97,000 down (about 20% to avoid PMI) I'm looking at around $2350 inclusive of t…

Hmm. Gotcha. I didn't take into account utilities being paid for - that can certainly be a pretty massive difference.

Re: Why are Brits so obsessed with buying their own homes?

#92

Post by velox_io »

darkr wrote: post #68
jamescun wrote: post #48

For me, wanting to buy is not about an investment. I want somewhere secure and stable to live. The "dead money" aspect of rent versus a mortgage is just a bonus. It must seem alien to most in the west the sheer lack of protection renters have in England (property law is devolved); it is based entirely in private contracts, and what law does exist is rarely if ever enforced. Just last week Parliament rejected an amend…

This. I rented for nearly ten years, latterly/mostly in East London, moving house on average every 12 months. Had my fair share of shitty landlords. Me & my girlfriend had circumstance/luck to thank; in 2012 (just before prices started climbing skywards again) we managed to save/borrow/scrape enough money together to get a deposit on a nearly derelict Victorian terrace and have been slowly doing it up since then. It'…

I've lived in London for nearly two years and can't wait until I can buy my own place. Not having to deal with landlords and moving would be enough reason.

That article glossed over inflation, rents have changed a great deal in the last 10 years (double digit growth year on year). A mortgage is a fixed cost, the will actually become relatively smaller.

Plus, I doubt I will be in London for ever, but if and when I decide to leave I would have accumulated a nice a nest egg.

Re: Why are Brits so obsessed with buying their own homes?

#93

Post by hestefisk »

From an Australian perspective, this is an interesting read. I live in Sydney where houses are so unaffordable that it is cheaper to rent. Protection for landlords and tenants is pretty good and balanced, and in times where nutcases would gladly spend in excess of 60% of their monthly net income on a mortgage, I would rather wait and see until the market has settled. Analysts say the market is about to burst and that, for first time in history, it is considered more feasible to rent as opposed to buying and selling the property 30 years later (the NPV would be less than if I kept the money in a high interest savings account). Property is all the craze here, but soon the average Aussie will wake up with a huge financial hangover.

Re: Why are Brits so obsessed with buying their own homes?

#94

Post by tobylane »

themartorana wrote: post #86
cthalupa wrote: post #73

Earlier quoted context omitted.

Honest question: Is your credit bad? Even adding in PMI, property taxes, a 30 year rate, etc, the mortgage of house should be about the same, and often less than the rent unless you just can't get a good rate. A landlord has to make money, including the costs of longterm upkeep, replacing things like the air conditioner, paying real estate agents their commission, etc. If you can't make a 20% down payment I've seen P…

Ha, no, my credit is stellar. But I live in a nice neighborhood of Philadelphia. My 1000 sq ft 2 br apartment costs $2300/m in rent. (I'm aware it's a lot cheaper in other neighborhoods, but I love living here.) To buy my apartment (and this is just for the apples-to-apples comparison) would cost in the neighborhood of $485,000. If I put $97,000 down (about 20% to avoid PMI) I'm looking at around $2350 inclusive of t…

I'm not familiar with HOAs. You pay them, they pay your utilities? How much are the HOA and utilities worth when they are apart?

Re: Why are Brits so obsessed with buying their own homes?

#95

Post by mrow84 »

lewiscollard wrote: post #76
scholia wrote: post #45

It makes sense to buy a house because, over the long term, the value of houses goes up while the value of money goes down. Even better, the real cost of mortgage payments keeps going down (thanks to inflation) while the real cost of rents keeps rising. My house would now rent for around 3x my mortgage payments, except I paid off the mortgage more than a decade ago so my rent is zero. There's always a chance house pri…

> over the long term, the value of houses goes up while the value of money goes down That which cannot go on forever, won't. > There's always a chance house prices could collapse, but that's unlikely in the UK. The population in Britain was 58.95 million in 2000 and is currently 64.04 million.[1] In the same time house prices have risen by an average of 153%.[2] It's reasonable to subtract baseline inflation from tha…

> Simple supply and demand dynamics are not at work here.

I think that in this case simple supply and demand is a pretty major factor. There has been consistently limited supply of new houses in the UK (policy driven, as I understand it), and at the same time there is a healthy buy-to-let market, where the buyers are both 'big' investors and relatively ordinary people (often from older generations who rode the wave of increasing house prices and so can afford second homes).

These two factors together reduce overall supply, pushing prices up further and making younger people stay renting for longer, thus reducing their available capital even more (relatively speaking).

Governments of all stripes are utterly dis-incentivised to address the issue in any comprehensive way because driving down house prices would completely screw over a large section of the voting public (i.e. almost anyone who currently has a house).

Mortgage prices are ridiculously lower than rents in this country - you could easily pay half as much in mortgage repayments as you do in rental costs for the same home, at least in the south.

Re: Why are Brits so obsessed with buying their own homes?

#96

Post by jacquesm »

grecy wrote: post #87
jacquesm wrote: post #10

Earlier quoted context omitted.

The moral of that cartoon is that we should all become beggars I guess. It's a funny way to represent it, but there is one person missing from that cartoon. The person that refuses to go into debt, saves until they have the money to spend on whatever it is they want to buy. Another useful addition would be someone with a mortgage that they actually pay off on, their net worth would likely dwarf the net worth of the b…

> The person that refuses to go into debt, saves until they have the money to spend on whatever it is they want to buy That's me! > Another useful addition would be someone with a mortgage that they actually pay off on, their net worth would likely dwarf the net worth of the beggar And they're so old their body has given up and they spend their days sitting in front of the TV, thinking about all the things they wish…

> And they're so old their body has given up and they spend their days sitting in front of the TV, thinking about all the things they wish they did in their life.

That is very much not necessarily true.

Re: Why are Brits so obsessed with buying their own homes?

#97

Post by op00to »

tobylane wrote: post #94
themartorana wrote: post #86

Earlier quoted context omitted.

Ha, no, my credit is stellar. But I live in a nice neighborhood of Philadelphia. My 1000 sq ft 2 br apartment costs $2300/m in rent. (I'm aware it's a lot cheaper in other neighborhoods, but I love living here.) To buy my apartment (and this is just for the apples-to-apples comparison) would cost in the neighborhood of $485,000. If I put $97,000 down (about 20% to avoid PMI) I'm looking at around $2350 inclusive of t…

I'm not familiar with HOAs. You pay them, they pay your utilities? How much are the HOA and utilities worth when they are apart?

You pay the HOA, they pay for maintenance of common areas.

Re: Why are Brits so obsessed with buying their own homes?

#98

Post by ghaff »

tobylane wrote: post #94
themartorana wrote: post #86

Earlier quoted context omitted.

Ha, no, my credit is stellar. But I live in a nice neighborhood of Philadelphia. My 1000 sq ft 2 br apartment costs $2300/m in rent. (I'm aware it's a lot cheaper in other neighborhoods, but I love living here.) To buy my apartment (and this is just for the apples-to-apples comparison) would cost in the neighborhood of $485,000. If I put $97,000 down (about 20% to avoid PMI) I'm looking at around $2350 inclusive of t…

I'm not familiar with HOAs. You pay them, they pay your utilities? How much are the HOA and utilities worth when they are apart?

I imagine the arrangements vary on whether utilities are included as part of homeowner dues. The cost of utilities will also vary a lot depending on the climate and your type of heat etc. In my case (house in Northeast without central air), oil/electricity/water/propane average out to the $300ish/month range.

Re: Why are Brits so obsessed with buying their own homes?

#99

Post by scholia »

lewiscollard wrote: post #76
scholia wrote: post #45

It makes sense to buy a house because, over the long term, the value of houses goes up while the value of money goes down. Even better, the real cost of mortgage payments keeps going down (thanks to inflation) while the real cost of rents keeps rising. My house would now rent for around 3x my mortgage payments, except I paid off the mortgage more than a decade ago so my rent is zero. There's always a chance house pri…

> over the long term, the value of houses goes up while the value of money goes down That which cannot go on forever, won't. > There's always a chance house prices could collapse, but that's unlikely in the UK. The population in Britain was 58.95 million in 2000 and is currently 64.04 million.[1] In the same time house prices have risen by an average of 153%.[2] It's reasonable to subtract baseline inflation from tha…

> Simple supply and demand dynamics are not at work here.

It depends on your definition of "simple".

I certainly don't think it's possible to relate prices directly to shortage of supply, because things are not that simple.

I also note that, because so many overseas buyers want UK properties, demand is essentially infinite. This decouples prices from the local buyers' ability to pay.

> I'm sure there was a crisis not so long ago where lots of people were betting on house prices continuing to go up for the foreseeable future which didn't end too well.

It didn't end too well for some people who were forced to sell, for whatever reason. But the vast majority of home owners just sat tight and waited for prices to recover. They did. And so far, they always have.

There are obviously going to be local variations due to external events -- floods, factory closures, gentrification and thousands of other things. However, the overall trend is clear.

> Maybe, just maybe, the problem is too many people thinking of housing as an investment?

Maybe, just maybe, the problem is that they are absolutely correct to think that way.

As you point out, if you bought a house in 2000, you've doubled your money and saved a lot on rent, and with very little risk. With interest rates at current levels, where else can you get that sort of deal? (Serious question if you have a serious answer. My shares and savings haven't beaten inflation.)

Re: Why are Brits so obsessed with buying their own homes?

#100

Post by gozur88 »

lewiscollard wrote: post #76
scholia wrote: post #45

It makes sense to buy a house because, over the long term, the value of houses goes up while the value of money goes down. Even better, the real cost of mortgage payments keeps going down (thanks to inflation) while the real cost of rents keeps rising. My house would now rent for around 3x my mortgage payments, except I paid off the mortgage more than a decade ago so my rent is zero. There's always a chance house pri…

> over the long term, the value of houses goes up while the value of money goes down That which cannot go on forever, won't. > There's always a chance house prices could collapse, but that's unlikely in the UK. The population in Britain was 58.95 million in 2000 and is currently 64.04 million.[1] In the same time house prices have risen by an average of 153%.[2] It's reasonable to subtract baseline inflation from tha…

>>The population in Britain was 58.95 million in 2000 and is currently 64.04 million.[1] In the same time house prices have risen by an average of 153%.[2] It's reasonable to subtract baseline inflation from that at 55%[3], in which you STILL end up with a 98% increase. And I'm not ignoring the silliness in London; nearly every region of the UK has seen near-doublings of house prices since 2000, with a population increase of about five percent.

>Simple supply and demand dynamics are not at work here.

Price curves aren't linear. If you have a market with inelastic demand, small shortages can produce huge price increases.

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