Moving House
Our landlord wants to sell the house we’re renting, so it looks like we’re going to be moving again before long. It’s not totally unexpected, but my heart still sinks at the prospect of going through the whole house-hunting thing again.
This time, we’re tentatively looking in to the prospect of buying a house, mostly because we desperately want to put down some semi-permanent roots. Initial enquiries about mortgages have not been encouraging. I’ve promised myself that I’m not going to become a crashing ‘house prices’ bore, so I’ll restrict myself to saying this: I find it a bit concerning that someone earning well over the national average salary can’t get anywhere close to getting a mortgage for a house selling at the national average house price. Is it just me, or does that not add up?
1
Bon chance. I would hate to have to start again.----- It doesn't add up. Find another place to rent. You'll be glad you did in two or three years.
by Dorothea @ 28/02/2006 10:02 pm • Permalink •
2
I have one question - How can renting a place be better than buying one? If you own it you can sell it. And also if you rent it there's still some investments yu have to make. If it's yours, you'll make it completely like you want it.
But the prices of the houses are incrediby high all over urban Europe. In Slovenia I just bought a garage in Ljubljana (capital) city centre, for the price of half of an older, smaller house 100 km away. And what's this? An hour? In the traffic jam in the morning I need almost the same time for 10 km.
by valem @ 01/03/2006 7:03 am • Permalink •
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valem: If your rent is cheaper than an interest only mortgage on a similar house, then it makes significantly more sense to rent than to buy a house. The proprety market is not going to yield 20% annual returns forever, and if it costs a third of the price to rent than to buy (as in my case - and that's not including the maintenance I'd have to do as a householder!) then it means my spare cash can go into better investments than bricks and mortar.
by Peter Cooper @ 01/03/2006 4:04 pm • Permalink •
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I don't get it either. A friend of ours bought a flat last year, she paid something like 5 times her salary for it... but I thought the banks only gave out 4 times... she had little savings.. how is it even possible?!
Luckily our house, which still needs some investment, was bought cheap for a quick sale. Gained £25k in six months. Unfortunately we can't now afford to move anywhere else as ALL the prices are stupidly ridiculous. We ARE thinking of renting again.
by Gordon @ 01/03/2006 5:03 pm • Permalink •
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Jonathan Briggs: Thanks - we're not really looking forward to the prospect.
Dorothea, valem and Peter Cooper: We really haven't decided what to do yet. On the one hand, if we could find another rented place as nice as the one we have now (and with as low a rent), then there really wouldn't be any point in buying, and we'd be quite happy. But most of the rented properties we've been looking at have rents that would be equivalent to what we'd pay in mortgage repayments (if we could get a mortgage), so renting starts to seem a bit pointless. Both sets of parents have generously offered to help us out a bit, so we'll see what comes up.
Gordon: Mad, isn't it?
by bsag @ 01/03/2006 6:03 pm • Permalink •
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I completely agree with you. How anyone can afford to buy a house anywhere is baffling to me. And the crazy mortgages (that allow people to buy houses 4-5X their annual salary) are part of the problem. Since people can "afford" more house, house prices go up. Just a few years ago I remember hearing that 2.5 times your annual salary is a good house price to start with. Even someone who makes 100K/year still couldn't afford many houses in this area.
by Amy @ 01/03/2006 9:04 pm • Permalink •
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Peter's point is something to think about; if rents are decoupled from house prices it normally means that the housing market has overheated. One estimate is that compared with rents house prices are 30% overvalued. having said that you've got to live somewhere and should put a value on the peace of mind you get from haiving your own place. We decided in autumn that it was worth paying more to buy our own place than continuing to rent.
by Ian @ 02/03/2006 7:04 am • Permalink •
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Valem, I would actually say the opposite - what's the point of buying when renting is actually smarter?
Yeah, sure, you can sell the house - but if you're renting you can move pretty much any time you want, and you don't need to go through all the paperwork and legal garbage of selling a house. Pack up, move on, job done.
People always tell me that renting is dead money. In the context of "paid to someone else" then yes, it is. But how is it better than borrowing x amount, and paying back x*2.5 in interest to the bank? Sorry, but I don't see how that extra 1.5 house-values is anything but dead money with sod-all to show for it.
Also, if you're renting a house and something goes wrong in it (say, electrics, heating, boiler, water, gas, whatever) then you simply call the rental agency or landlord, and say "sort it". And lo, it gets sorted. If you own a house, you have to find the correct proper tradespeople, get quotes, get the work done, pay for it, so on, so forth. More "dead money".
So the actual question should be "why buy a house when you can rent one?"
BSAG : sorry, that's kind of argued against your own decision, hasn't it? grin
by Lyle @ 02/03/2006 11:04 am • Permalink •
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I believe I don't know how the market in GB is. In Slovenia it's pretty confused. Renting or paying the mortgage is about the same, but in a "couple" of years the house is actually yours. In long term, the decision of buying house is much better. The other thing is getting a mortgage. It's not an easy thing at all and the prices for renting houses or appartments are sky high. In the other way, if it would be possible to rent a place for a normal price, we'd go for it. Still it's interesting form me to see quite similar problems in a much different culture.
by valem @ 03/03/2006 7:03 am • Permalink •
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I'm still not sure what to do for the best. I appreciate all your arguments, and they're all right in their own way. Just to throw another variable into the soup, I've seen a few shared ownership places: you get a mortgage on about half of the house's value, then pay rent to the owners of the other half (usually a housing association).
by bsag @ 04/03/2006 7:04 pm • Permalink •
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The ability of some people to purchase housing apparently way beyond a sensible multiple of their salary is perhaps not quite so baffling when you remember that the first mass generation of house owners is dying off and the capital in their houses is being passed down through families to grandchilden/great grandchildren. It would be interesting to know what the statistics are -- and it isn't the sort of thing people talk about (being English!). But anecdotally, almost every young academic I know who has recently got onto the housing market says "oh, er, well, I did have a bit of help from the family". (The average grandchild in the house-owning classes might hope to inherit a quarter of a house from each set of grandparents; go figure ...) The availability of that kind of family capital and the willingness of those who have it to plough it back will inexorably push up prices over time. Which is just a tad tough on those who haven't chosen the right parents to be born to ...
by Peter S @ 06/03/2006 12:04 am • Permalink •
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We're in the same situation at present. Have just sold our house and are now going to rent. We had the most horrendous time selling our house - even though it was highly desirable. The first buyers pulled out, then we found some more, but their chain was really messing us all about. It was a very stressful time, which I have no desire to ever repeat.
I agree with all the comments re renting - yes, if something goes wrong, the landlord has to pay to fix it, not you. Okay, it isn't your own property to do as you please in, but I feel that that is a small price to pay, and outweighs all the other factors. Why mortgagae yourself to the hilt, and give the mortgage company all that interest - the money would be better in your pocket.
The way things are going, nobody but the very very rich will be able to afford to buy their own property in the future. I feel very sorry for youngsters just starting out - they don't have a hope in hell of getting even onto the first rung of the property ladder.
by Katerina @ 11/06/2007 12:54 pm • Permalink •
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Looks like history has indeed repeated with the real estate market. At the end of the day it's just a market driven by the fundamentals.
by Dubai @ 27/02/2008 7:32 am • Permalink •
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Real estate market is growing day by day. Everyone must think to buy their own house including me and you. Its better to buy before rising prices and even if you want to sell it after sometime you defiantly get more prices then buying. It is better to go for buying rather than renting.
by home buying guide @ 08/04/2008 9:38 am • Permalink •
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