Owning your own home

Problem is my other half isn't living in london, so it'd be just me. I earn an average salary and have equivalent of about 9-10 months salary saved. So not a lot of chances to buy...

Problem is my other half isn't living in london, so it'd be just me. I earn an average salary and have equivalent of about 9-10 months salary saved. So not a lot of chances to buy...

have a look at a chart of salary multiples compared to house prices over the last 30 years and take a punt on whether it's going to go up or down.

notice any similarities?

I see that argument, but I'm paying ~£650 a month on rent, and no longer adding to savings. That has to be factored-in.

As does depreciation on new build properties, which nearly all part buy/part rent properties are.

In almost all part buy/rent deals the part buy half is well overpriced. I'd steer well clear, personally.

plus any negative equity is taken up by you not the seller/renter. they are also notoriously difficult to sell on, and as has been said by many massively overpriced.

I see that argument, but I'm paying ~£650 a month on rent, and no longer adding to savings. That has to be factored-in.

so do the maths on an interest rate rise up to 6%. you say you are not adding to savings which to me suggests you have no spare cash after your £650 so how will you pay if interest rates go up? maybe the maths works out if your repayments are £450 and you have some slack.

personally if you don't have a 25% deposit i would wait until you do as prices are only going one way and it certainly isn't up.
but everyone's circumstances are different

prices are only going one way and it certainly isn't up.

Why?

Maybe in the UK as a whole, but I don't see it happening in London. There is still the demand which is keeping the prices high.

maybe in the top end of the market funded by foreign investment due to our weaker currency .
but you can't ignore the silly income multiples, massive personal and sovereign debt levels quantitative easing, banks not lending on more than 25% as they know a big fall is iminent, a government not able to raise interest rates to stifle inflation because of the repossessions that will follow at 5-6%, stagnant growth,budget deficit.cost of living and energy increases etc etc

Population is also rising, as is migration into cities...

so why are properties sitting there for a year unsold?
too expensive and overvalued with no price drops because of it's perceived value (i.e. what the owner paid at peak)
lack of credit and willingness to lend by the banks

so is the answer 100%mortgages and 5-6x income multiples? look where that ended up.
if prices are going to rise above wage inflation then anyone on the national average wage isn't going to buy a property, this is already happening.

house price inflation above a long term trend is not sustainable as the growth is fictitious, it's not real money. tell me how a 'normal' property can increase in value by a couple of £k a month when it's prospective average purchaser cannot save the same amount?
actually i'll answer that for you. Debt.

the long term trend may be up but from the previous crash in 98 it took until 2004 to make up the lost ground that's 18 years of paying for an immovable asset that you can't sell without a loss.

The sensible thing right now would be to sit tight, yes?
My mates parents have a gorgous very high end town house, renovated from ground up by them and professionals, spent a packet on it, but originally bought the shell at auction for not a lot in the mid 90s. Took them too long to decide to sell so missed the boom.
Spent prob £300k.
Worth at peak £550k
up for sale at £425k last summer, been on market for over a year now and moved agents
currently at £275k and still little interest (had maybe 5 viewings, total!)
Had a jokes offer @ £215k and from the sounds they are making, will probably roll with it!

Their both coming up to retirement and wanted to let a bit of cash out of house (I reckon about 25-50k) to settle all remaining debts & mortgage + cars etc, before moving into a new poorly built box house thing in a part of town thats normally on fire which has no garden, parking or anything. Price for the box is £265k or £295k one of the two.

Now, I've never owned a home, or actually anything more than a car, so maybe I'm not one to talk.

But surely, they've been putting money into that house (and the chain before that one) for their entire lives, with the vision that they could retire on time, debt free, and ideally in their cosy upmarket victorian town house, or less ideally but still happy in a little box house but with debts wiped out.
So instead of just hanging on to the proper house, they are possibly just about to throw it all away and end up having to take out another 50-75k on the existing mortgage (to enable them to live in a smaller, less pleasant, more expensive to run (higher rates & needs fitted out etc) house) which they will then be paying for until they bin it.

Now are they mad, or am I missing something really obvious?

Personally way things are going I'll be lucky if I can get hold of a derelict canal boat for a few £k and call that home. Deposits & mortgages will likely never happen for me in this country, personally rather live on a boat than be perpetually in debt, spend the money on traveling and doing fun stuff :D

Where is this gorgeous townhouse? Dibs.

for every success story there is one like the one above.
as i said before peoples circumstances are different. i put an offer in last year on a repro but didn't get it (strangely it never appeared on the registry) luckily i have a 25-30% deposit but i wouldn't want to be buying with just peanuts right now. the only thing in peoples favor now is prices aren't in the stratosphere any more (still mostly overvalued imho)

Sparky, had a word with the other half, who works in the policy team at Shelter (and is policy lead on private rental sector and first time buyers).

If you are single, and live in an expensive area, such as London, part-buy part-rent can be the best option as the other option is just renting forever. You should consider that if you want to sell it will be harder to shift as it is a reduced market, and depreciation can definitely still be an issue, but it could definitely still be a better option than renting forever, if you can afford it, as at least you're still be building up an asset of a kind.

Why?

Maybe in the UK as a whole, but I don't see it happening in London. There is still the demand which is keeping the prices high.

3 words: Location, location, location

Taking the country as a whole the property market is severly depressed and properties are remaining unsold for months and years but, and again speaking from experience, there are areas of high activity and inner London is certainly one of those.

Sparky, had a word with the other half, who works in the policy team at Shelter (and is policy lead on private rental sector and first time buyers).

If you are single, and live in an expensive area, such as London, part-buy part-rent can be the best option as the other option is just renting forever. You should consider that if you want to sell it will be harder to shift as it is a reduced market, and depreciation can definitely still be an issue, but it could definitely still be a better option than renting forever, if you can afford it, as at least you're still be building up an asset of a kind.

I am in a 50% shared ownership and its done me ok over the years, but in today's market I would be less sure. You have a lot of buy to let executive homes at stupid prices, with a tiny share for sale, like 15%. That's barely better than renting.

On a side note, I'm surprised that Shelter has a first time buyers and private rental dept. Isn't that rather a huge scope creep?

Sparky, had a word with the other half, who works in the policy team at Shelter (and is policy lead on private rental sector and first time buyers).

If you are single, and live in an expensive area, such as London, part-buy part-rent can be the best option as the other option is just renting forever. You should consider that if you want to sell it will be harder to shift as it is a reduced market, and depreciation can definitely still be an issue, but it could definitely still be a better option than renting forever, if you can afford it, as at least you're still be building up an asset of a kind.

Good points here. I've come to a similar conclusion is splitting it into parts could be useful, or just admit to an unpleasant defeat of renting forever (though it has to be significantly less than buying). Though I know many people who are unable to raise the massive sums required for deposits right now and who pay a good deal more in rent than the property would cost if buying (say £750 rent on a £500/month/25yr 5% deposit effort); and location is the other killer. Right now I'm living in with family again (suck maxima) on the fringe of the lake district, 4 bed C16th farmhouse with a bit of an orchard + barn + outbuildings + low low rural rates etc and the approx mortgage monthly is less than what my brother is currently paying on a stripped out student house share (3 of them) on a tenement in Glasgow. Location is everything :p

Always amazed at the number of 20 something couples who appear on these property program's, both working average jobs, yet able to move from couple sharing south london bedsit squallier directly into country palace - not because of the difference in price/value/ one vs. the other, but how 2x 20 something have acquired the pricey bedsit squallier in the first place, I can only put it down to inheriting vast swaths of Yorkshire at some point or other?

Said townhouse is in the currently wholly undesirable north east of england ;) Hence why no one wants.

ref. townhouse: better options would be to either take in lodgers, or (expense involved) part-out the upper storeys as flats while the owners retain the lower half plus garden.

Why the 'need' to own?

Rent is just a living expense, accept it.

That's part of the point though- it's an expense that could be an investment.

Not if that expense is either out of reach or attaining it significantly diminishes your quality of life.

Why the 'need' to own?

I had to put my money somewhere other than in drugs, whores and holidays.

Not if that expense is either out of reach or attaining it significantly diminishes your quality of life.

Well of course, it's also unwise to stab yourself in the head with a fork whilst eating.

Common sense, innit.

But common sense doesn't apply to people when they decide they 'need' to own a home. Clearly, it didn't apply to the banks either hence the big fucking mess we're in.

I was thinking about this today, the hubris that must have been behind the "I know, a 110% mortgage is a cracking idea, lets provide one of those" is impressive.