Why Am I Better Off?
Discussion
When speaking of house prices the media always present rising prices as good news and falling prices as bad.
Notwithsanding the fact that rising house prices are clearly bad news for those not already on the property ladder could anyone explain to me why, as a current home owner, I am better off?
I bought my current property in 1993, for x thousand pounds. I have just agreed to sell it for three and a quarter times that sum. I would now like to buy a larger property in the same area. Because property prices have gone up by three and a quarter times, the price difference between my current place a larger one is three and a quarter times as much. Estate agents fees are three and a quarter times as much, as is stamp duty for my new place.
Perhaps the answer is that I should be pleased because I have an advantage over people who paid more for properties like mine.
Notwithsanding the fact that rising house prices are clearly bad news for those not already on the property ladder could anyone explain to me why, as a current home owner, I am better off?
I bought my current property in 1993, for x thousand pounds. I have just agreed to sell it for three and a quarter times that sum. I would now like to buy a larger property in the same area. Because property prices have gone up by three and a quarter times, the price difference between my current place a larger one is three and a quarter times as much. Estate agents fees are three and a quarter times as much, as is stamp duty for my new place.
Perhaps the answer is that I should be pleased because I have an advantage over people who paid more for properties like mine.
The only way you will ever benefit from rising prices is if (a) you are looking to downsize or (b) you are moving to a significantly cheaper area. A fringe benefit of rising prices is that as the value goes up, so does your equity in the property, which gives you a more attractive "loan-to-value" ratio, which can secure you slightly better interest rates.
Your post is interesting given that prices have actually been falling for almost a year now and are about to go YOY negative.
And yet the media still portray house prices as rising. Same as they refer to a robust economy, low unemployment, and public sector reforms, all compete rollox IMO.
And yet the media still portray house prices as rising. Same as they refer to a robust economy, low unemployment, and public sector reforms, all compete rollox IMO.
Incorrigible said:
The only way you will ever benefit from rising prices is if (a) you are looking to downsize or (b) you are moving to a significantly cheaper area.
C) You own more than one property
I can't beleive people don't do this more
I'm waiting for prices to slump to do exactly this. So long as they don't drop below what I am mortgaged for on the current one I don't care how far the drop.
timmy30 said:
Your post is interesting given that prices have actually been falling for almost a year now and are about to go YOY negative.
And yet the media still portray house prices as rising. Same as they refer to a robust economy, low unemployment, and public sector reforms, all compete rollox IMO.
you've obviously not been looking at all four house price surveys then
they are measured in different ways and can give wildly different impressions on the state of the housing market - for instance, one might measure asking prices (which are frequently reduced, leading to what appears to be a drop in prices) while another might measure sale prices, while another might measure completion prices
NikB said:
miniman said:
The only way you will ever benefit from rising prices is if (a) you are looking to downsize or (b) you are moving to a significantly cheaper area.
C) You own more than one property
I can't beleive people don't do this more
I'm waiting for prices to slump to do exactly this. So long as they don't drop below what I am mortgaged for on the current one I don't care how far the drop.
even if they do drop below what you're mortgaged for it has no effect on you at all unless you want to move...
If they continue rising at the pace they have (not just in the last year but the last 5) in 10 years only 1 in 3 30 somethings will have the ability to buy.
And thats not a family home, thats any home at all...
Odd isnt it, when it comes to the roads and transport there is absolutely no way that they can build out of the problem but they are apparently going to try when it comes to housing.
And thats not a family home, thats any home at all...
Odd isnt it, when it comes to the roads and transport there is absolutely no way that they can build out of the problem but they are apparently going to try when it comes to housing.
minimax said:
Your post is interesting given that prices have actually been falling for almost a year now and are about to go YOY negative.
And yet the media still portray house prices as rising. Same as they refer to a robust economy, low unemployment, and public sector reforms, all compete rollox IMO.
you've obviously not been looking at all four house price surveys then
they are measured in different ways and can give wildly different impressions on the state of the housing market - for instance, one might measure asking prices (which are frequently reduced, leading to what appears to be a drop in prices) while another might measure sale prices, while another might measure completion prices
The surveys are all meaningless. Use Land Registry figures, or use nethouseprices to see actual selling prices.
Those idiots at Wrongmove are a classic with the 'I wish my house was worth this much' index.
Still good luck, fill your boots. UK property looks expensive using every valuation method you can think of......but well they've doubled over 4 years so it's bound to double again right?
Plotloss said:
If they continue rising at the pace they have (not just in the last year but the last 5) in 10 years only 1 in 3 30 somethings will have the ability to buy.
And thats not a family home, thats any home at all...
Odd isnt it, when it comes to the roads and transport there is absolutely no way that they can build out of the problem but they are apparently going to try when it comes to housing.
you are correct..answer is to get everyone on the housing market right now, but of course not enough stock available for that so....prices go up...and FTB's are screwed again.
the housebuilding scheme is mainly based on building flats on land that was previously factories or warehouses or even perhaps bigger houses...problem is that they are almost trying to socially engineer the housing market..flats are only popular outside the city centres with two particular demographics..most people want a house not just a 'dwelling'
timmy30 said:
timmy30 said:
Your post is interesting given that prices have actually been falling for almost a year now and are about to go YOY negative.
And yet the media still portray house prices as rising. Same as they refer to a robust economy, low unemployment, and public sector reforms, all compete rollox IMO.
you've obviously not been looking at all four house price surveys then
they are measured in different ways and can give wildly different impressions on the state of the housing market - for instance, one might measure asking prices (which are frequently reduced, leading to what appears to be a drop in prices) while another might measure sale prices, while another might measure completion prices
The surveys are all meaningless. Use Land Registry figures, or use nethouseprices to see actual selling prices.
Those idiots at Wrongmove are a classic with the 'I wish my house was worth this much' index.
Still good luck, fill your boots. UK property looks expensive using every valuation method you can think of......but well they've doubled over 4 years so it's bound to double again right?
not really what I meant, i'm not trying to talk up the property market at all.
the rightmove property price index is worthless though I agree!
historically property has doubled every 7ish years but past performance is not a guide to the future
I must say though, across the SE and london over to the SW and wales, and up to nottingham including essex/east anglia the property market is on the turn, our group had the best 3rd quarter for 5 years this year, and year to date there have been an average of 1,000 more first time buyers registering every week than last year. so it's definitely not all doom and gloom
minicity said:
Why am I better off?
You said it in one; you're already on the ladder. Try trying to buy your first house in a market where prices are racing away at 15% growth per year at times. Mine is due for completion in January, the last two years have been hell saving every
in' penny to get one. It's no fun.Why are you better off? Well despite your cost to change you're currently paying a relatively small mortgage. Lets say you paid £100k for a property now worth £350k and you wish to move to a £500k property - you still only need a total mortgage £250k to do this and will be living in a fantastic house with £250k equity in the property should you wish to indulge yourself in a Ferrari.
Having purchased early last year I probably live in a much smaller house than you do currently and have twice the mortgage. Envious? No a bit....
Still, hopefully prices will rise again over the next few years and I'll find myself "better off" due to these rises in due course! I doubt it though. And as someone else said, I don't suppose your house value increase really matters unless you want to move, but it does give you access to a cheap and easy loan!
Having purchased early last year I probably live in a much smaller house than you do currently and have twice the mortgage. Envious? No a bit....
Still, hopefully prices will rise again over the next few years and I'll find myself "better off" due to these rises in due course! I doubt it though. And as someone else said, I don't suppose your house value increase really matters unless you want to move, but it does give you access to a cheap and easy loan!
When you first get on the property ladder you have to make sacrifices because you might be paying say 1 weeks wage for 1 months mortgage, if you spend all your working life paying a mortgage then you would have to move house once or twice and still keep paying 1 weeks pay for 1 months mortgage.
But surely there comes a point when you want to live a little, you can`t take it with you when you die, and you work to live not live to work.
I`v lived in my house now for 25 years and i think i am too old for this area now.
If i stay here much lomger i think the kids will look upon me as a Victor Meldrew character and start winding me up.
If i buy a flash car and a speed boat because i`m not paying a mortgage then people will get jealous, its human nature.
How many times have you heard about a couple in their 50`s moving house only for the husband to drop down dead within 6 months.
Chearful soul don`t you think.
This is only my opinion but if you end up living in a really nice house you become a snob and then down sizing does`nt seam such a good idea, who wants to mix with the rif raf?.
Instead of taking out another mortgage and so moving house 5 years ago we bought a little place abroad and are looking to retire early with the profit from this house..
Thats why you are better off because you can do something like this later.
Don`t follow the herd, Do your own thing.
Your kids will have a great time spending their inheritance.
But surely there comes a point when you want to live a little, you can`t take it with you when you die, and you work to live not live to work.
I`v lived in my house now for 25 years and i think i am too old for this area now.
If i stay here much lomger i think the kids will look upon me as a Victor Meldrew character and start winding me up.
If i buy a flash car and a speed boat because i`m not paying a mortgage then people will get jealous, its human nature.
How many times have you heard about a couple in their 50`s moving house only for the husband to drop down dead within 6 months.
Chearful soul don`t you think.
This is only my opinion but if you end up living in a really nice house you become a snob and then down sizing does`nt seam such a good idea, who wants to mix with the rif raf?.
Instead of taking out another mortgage and so moving house 5 years ago we bought a little place abroad and are looking to retire early with the profit from this house..
Thats why you are better off because you can do something like this later.
Don`t follow the herd, Do your own thing.
Your kids will have a great time spending their inheritance.
Poor old number 3! Hate to be a pedant....but his flat isn't worth £500k, it's worth what he can persuade someone to buy it off him for. Oh dear.
The ability of people to invest at the peak in over valued markets never ceases to amaze me, nor does the fact that someone who spends days, nay weeks, pouring over reviews, articles etc when deciding what TV to buy for £250 will proceed spend about 20s deciding what fund to purchase for their £7000 ISA.
Or worse still will commit themselves to a 1/4 million pound debt as though they were buying a small car, they then looked puzzled if I ask them why they are so bullish on the UKs economy. After all what's that got to do with the price of houses
The ability of people to invest at the peak in over valued markets never ceases to amaze me, nor does the fact that someone who spends days, nay weeks, pouring over reviews, articles etc when deciding what TV to buy for £250 will proceed spend about 20s deciding what fund to purchase for their £7000 ISA.
Or worse still will commit themselves to a 1/4 million pound debt as though they were buying a small car, they then looked puzzled if I ask them why they are so bullish on the UKs economy. After all what's that got to do with the price of houses
bmw114 said:
How many times have you heard about a couple in their 50`s moving house only for the husband to drop down dead within 6 months.
Plenty of times
In my younder days I worked in the bank and opened many an account for couples retiring from London only to be adding 'deceased' to the account a few months after the husband keeled over after all the extra activity trying to do the place up.
Fortunately now, with house prices so high in London, many couples can now afford to retire with money left to get tradesman in to do the work.
minicity said:
When speaking of house prices the media always present rising prices as good news and falling prices as bad.
Notwithsanding the fact that rising house prices are clearly bad news for those not already on the property ladder could anyone explain to me why, as a current home owner, I am better off?
I bought my current property in 1993, for x thousand pounds. I have just agreed to sell it for three and a quarter times that sum. I would now like to buy a larger property in the same area. Because property prices have gone up by three and a quarter times, the price difference between my current place a larger one is three and a quarter times as much. Estate agents fees are three and a quarter times as much, as is stamp duty for my new place.
Perhaps the answer is that I should be pleased because I have an advantage over people who paid more for properties like mine.
A very good point - that I have made repeatedly over the years to friends who have got very excited as the "value" of their property went up.
Of course the reality is that you are actually worse off if you try to buy a house a rung up the ladder as it has proportionately gone up the same, but because it is/was of higher value in the first place the gap has widened.
As a country we could really do with a slow but significant re-adjustment on property values across the board.
just to throw a spark in to the tinder box, here's a link from an email I just got about house prices....for all you doom-mongers out there 
www.mortgageintroducer.com/news/newsarticles.asp?unqueid=14868
www.mortgageintroducer.com/news/newsarticles.asp?unqueid=14868
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