Property prices in England are just ridiculous. The national AVERAGE house price is £170,000($330,000)and I live in the southeast which is the most expensive region . I am reaching the age where Im thinking of investing in my own house but there is just no way I could do it.
Is anyone else pissed off with lunatic property prices, or has anyone payed next to nothing and would make a small fortune if they sold up now?

I'm mildly pissed off. I'd thought of buying a shithole, doing it up in my spare time and not living there. I'd get cheaper council tax and wouldn't need to pay gas/electricity/phone that way.

Although I am a student, haven't gotten off my arse to get a job and currently have about £9 to my name.

Maybe I still could do that. I'll have to investigate.

The kind of money I was thinking gets you the odd one out in a block of boarded up flats these days, though. :(

Yeah my nan paid 9grand for her 2 bedroom terraced house in 1980ish, one in her row sold for 160,000 and that was last year. The house gets divided up between my mum and uncles in the will and so I wont see any of it.
I have to start from scratch, but its not going to happen.

Yeah my nan paid 9grand for her 2 bedroom terraced house in 1980ish, one in her row sold for 160,000 and that was last year. The house gets divided up between my mum and uncles in the will and so I wont see any of it.
I have to start from scratch, but its not going to happen.

No doubt the gov will take 40% when the time comes.

Is it still at £200k or have they lowered it already?

you say 'investing' in a house. that is exactly the reason the prices are so high. people are buying up properties they dont need solely to restrict supply, and therefore increase the value of the land.

all land should be communal

all land should be communal

So should women, but in real life land and women costs money.

...but there is just no way I could do it.
Is anyone else pissed off with lunatic property prices, or has anyone payed next to nothing and would make a small fortune if they sold up now?

If you talk to your parents and grandparents, they'll tell you that people were saying that back in the ol' days ....same words, same complaints, just different price figures.

Baron Max

If you talk to your parents and grandparents, they'll tell you that people were saying that back in the ol' days ....same words, same complaints, just different price figures.

Baron Max

You don't quite understand.

People are increasingly taking out mortgages four or five times their salary.

There isn't enough affordable housing (in London anyway).

Recently, the government funded an apartment block and only teachers/NHS staff/etc were meant to be able to buy the flats. Some 'buy-to-let' guys bought half the place up and sold them on at vast profit to non government staff.

If you talk to your parents and grandparents, they'll tell you that people were saying that back in the ol' days ....same words, same complaints, just different price figures.

Baron Max

No they were not priced out this much. The average wage has risen to about 3 times the 1980 level, my nans house has risen 18 fold in the same time.
Let me guess, you are one of the lucky ones who bought a house in the time when property was within everyones means, yeah? Hence the arrogant patronization. Im 27 years old and am capable of understanding market economics.

You don't quite understand. People are increasingly taking out mortgages four or five times their salary.

There isn't enough affordable housing (in London anyway).

So? Don't live in London. See? Just one lousy comment and I've solved all of your problems, huh?

Move to Afghanistan ....I hear the cost of mudhuts is way down. Well, those that ain't close to the poppy fields, of course.

What y'all are into is exactly the same things that people have been struggling with since civilization began umpty-eleven years ago. That's exactly why cities are spreading outward, away from the high cost of living. But it's all foolish ....since it all catches up anyway.

Bite the bullet if you can, and buy whatever you want that you can afford, where you can afford it. Check the bankruptcy laws, and I'll bet you can get out of major debts like that without too much trouble.

Baron Max

So? Don't live in London. See? Just one lousy comment and I've solved all of your problems, huh?

Move to Afghanistan ....I hear the cost of mudhuts is way down. Well, those that ain't close to the poppy fields, of course.

What y'all are into is exactly the same things that people have been struggling with since civilization began umpty-eleven years ago. That's exactly why cities are spreading outward, away from the high cost of living. But it's all foolish ....since it all catches up anyway.

Bite the bullet if you can, and buy whatever you want that you can afford, where you can afford it. Check the bankruptcy laws, and I'll bet you can get out of major debts like that without too much trouble.

Baron Max

Im not a frigging sand monkey.
There is nowhere in England you can go now(check the property websites, the cheapest you can get anywhere is about 40grand), so you have no solution. You may have bought your house for a couple of bags of beans, but there is just nowhere affordable(and Im talking really affordable, not what estate agents tell you is affordable)for many first time buyers any more. Its not the average price thats the problem, but the entry level prices that come with it.

Well, Imaplanck, I guess you just shit outta' luck then, huh? I guess you'll just have to become homeless and a ward of the state. I mean, what else is left? Suicide, of course, but that's awfully messy for those that find your body.

Hey, I have an idea ....get a job where you make, say, $1,000 per hour ...that should help, shouldn't it? :D

Life throws many curves toward us, and those that can avoid them usually make the grade. The others fall by the wayside. Which are you going to be?

Baron Max

Well, Imaplanck, I guess you just shit outta' luck then, huh? I guess you'll just have to become homeless and a ward of the state. I mean, what else is left? Suicide, of course, but that's awfully messy for those that find your body.

Hey, I have an idea ....get a job where you make, say, $1,000 per hour ...that should help, shouldn't it? :D

Life throws many curves toward us, and those that can avoid them usually make the grade. The others fall by the wayside. Which are you going to be?

Baron Max
You've made a packet on your house haven't you?
;)

So? Don't live in London. See? Just one lousy comment and I've solved all of your problems, huh?

Move to Afghanistan ....I hear the cost of mudhuts is way down. Well, those that ain't close to the poppy fields, of course.

What y'all are into is exactly the same things that people have been struggling with since civilization began umpty-eleven years ago. That's exactly why cities are spreading outward, away from the high cost of living. But it's all foolish ....since it all catches up anyway.

Bite the bullet if you can, and buy whatever you want that you can afford, where you can afford it. Check the bankruptcy laws, and I'll bet you can get out of major debts like that without too much trouble.

Baron Max

Twat.

you say 'investing' in a house. that is exactly the reason the prices are so high. people are buying up properties they dont need solely to restrict supply, and therefore increase the value of the land.

all land should be communal

Bad economic thinking. Investors are buying up property because of the increased value that property had due to an already existing demand. Of course, by speculating, they help drive up the price a little, but at great risk. When the market slacks off, every investor left holding a piece of extra property loses a ton. It is happening here in the US as we speak.

The real reason that real estate prices have blossomed is because GDP/Capita is through the roof. People are more wealthy than ever before and renters are looking to become buyers. I suspect the creator of this thread is in that boat.

I was just able to purchase my first house three years ago, right in the middle of the boom, and that boom was there precisely because of people like me. The US economy is going gangbusters, even with Katrina and gas prices doing all they can to twart it. The reason is probably the horrible monetary policies of the federal reserve. They lowered interest rates way too much after 9/11, which is giving us a bit of a runaway economy at the moment. It led to huge increases in new vehicle purchases, and millions of first-time home buyers. Minority home ownership in America keeps setting new records.

And since demand is outstripping supply, prices have increased.

Oh, and communal land ownership has been tried. Doesn't work so well. The first settlers in America nearly starved to death because of communal land ownership. It sounds great on paper, but it goes counter to innate animal impulses. Sorry to be the bearer of bad news...

Blame immigrants.

And before anyone complains, it seriously is because of immigration that property prices are so high, it's a fact.
You can't complain about me saying this.
So, blame immigrants.
And don't feel guilty about it.

(sorry, I'm a bit touchy after getting an infraction the other day).

So? Don't live in London.

i agree there. apart from the slightly reduced travel costs, residency in cities or town centres is pointlessly expensive. town centres are places that people go to buy things. there is no need for anyone to actually live in that area.

I tend to agree. Rural land can still be quite cheap.
In fact I'm buying 3000 acres in northern new south wales for $130K AU, but that will just be for weekends.

I don't know what the situation is in England. But here in America, the reason that housing prices are so ridiculous in urban regions is that people are not allowed to do their jobs at home. Even though most of us spend our entire workday huddled over a computer and talking on the telephone, two devices that we all have at home, we are required to "go into the office" every day and do it there.

The rationale is that there's no substitute for face-to-face contact, 75% of communication is non-verbal, etc. etc. Yet I know of one company already whose building is so crowded due to high land prices that they had to convert all of their conference rooms into office cubicles... so nobody can actually attend face-to-face meetings any more!

The real reason for this is that commuting is responsible for something on the order of 25% of America's petroleum consumption. If people were allowed to work at home the energy companies' profits would fall. In the 1990s telecommuting became widespread and many companies had policies mandating people to work at home at least one day a week. Then the Inbred Scion of the Texas Energy Industry cheated his way into the White House and suddenly Corporate America started discouraging telecommuting.

It will be interesting to see whether this will change if the Bush Dynasty is finally toppled in 2008.

So if you're angry that it costs so much money to live in London or New York or Toronto... ask yourself why the hell you even want to live in London or New York or Toronto. Doesn't everyone you know say they'd much rather live out in the country? Modern computer and communication technology will allow you to live out there and still get your job done. It's your stupid boss who makes you come and work in the bloody office.

Living in an expensive area of the United States, I can sympathize. However, we also have the benefit here of having many places with relatively cheap land.

The Southeastern states have really good property rates, as does Maine. Out West many states, excluding Colorado, have great land for cheap, but many areas are pretty isolated. One could probably find some pretty damn cheap land in Montana, but one would litterally be over a thousand miles from a city with a population over 100,000.

Doesn't everyone you know say they'd much rather live out in the country? Modern computer and communication technology will allow you to live out there and still get your job done. It's your stupid boss who makes you come and work in the bloody office.

They say they do, but obviously not enough to go without the convenience of urban life.

Besides, if everyone moved out to the country, would it still be the country? Are you really suggesting that the world homogenize itself? Don't you think diversity is a better outcome? How would we ever know the benefits of either the city or the country if we didn't have both to sample?

I think you are using your heart for too much of your logic, instead of starting with few assumptions and working up to something.

Property prices in England are just ridiculous. The national AVERAGE house price is £170,000($330,000)and I live in the southeast which is the most expensive region . I am reaching the age where Im thinking of investing in my own house but there is just no way I could do it.
Is anyone else pissed off with lunatic property prices, or has anyone payed next to nothing and would make a small fortune if they sold up now?
I live in Victoria, BC. The average house price here is $500,000. Canadian dollars, that is... :eek:

So... you are lucky! :eek:

That was the national average, though.

In London the average is £275,000+ ($620,789 Canadian)

http://news.bbc.co.uk/nol/shared/spl/hi/in_depth/uk_house_prices/img/uk_house_prices_2_416.gif
(bbc - http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm)

Pretty close...

Perspective, people. Yeah houses were way cheaper decades ago, but would you want to be living back then? Times are more interesting now I think. And lots of stuff is less expensive now. Those starting their careers today are 20+ years younger than those sitting on a pile of paper equity in their houses. Would you rather be young & poor or older & wealthier? A lot of that paper money is going to burn up in the crash anyway.

Some practical advice for those starting out: forget London. Live in a smaller place with an easier commute and cleaner air. You'll make less money but have a higher standard of living. Lots of other people your age will do likewise, so you'll have company.

I am reaching the age where Im thinking of investing in my own house but there is just no way I could do it.
Is anyone else pissed off with lunatic property prices, or has anyone payed next to nothing and would make a small fortune if they sold up now?
I bought a house ten years ago and would have a nice chunk of change if I sold it. But I'd have a higher net worth now had I instead been renting a decent place that whole time and saving the difference. Houses are expensive to maintain, insure, and sell. Plus there's property taxes, akin to rent. I think they should be treated more like an expense than an investment, especially since the boom times are rare. There's a lot to be said for the convenience of renting, earning interest instead of paying it, and using the public park for a yard.

Besides, if everyone moved out to the country, would it still be the country?
Yes, at least until the population doubles a few more times.

I bought a house ten years ago and would have a nice chunk of change if I sold it. But I'd have a higher net worth now had I instead been renting a decent place that whole time and saving the difference. Houses are expensive to maintain, insure, and sell. Plus there's property taxes, akin to rent. I think they should be treated more like an expense than an investment, especially since the boom times are rare. There's a lot to be said for the convenience of renting, earning interest instead of paying it, and using the public park for a yard.
Yeah well, I once said that houses should be treated as expenses when you live in them, but nobody listened to me.... :rolleyes:

Yeah well, I once said that houses should be treated as expenses when you live in them, but nobody listened to me....

There have been very few times in history where the value of a house didn't appreciate over time ...and almost always at a far greater rate than a savings account!

If you can, name a few times in history where your ideas proved true! ...that homes did NOT prove more valuable over time than the money you put into it. Please ...I'd love to read about it.

Sure a house is an expense, but it's not much different to a savings program where you put x-dollars into the bank. The only way a house can't be viewed as a great investment is if you're wanting to only have a good time and waste your money doin' it.

Baron Max

I agree, the house prices are ridiculous.
In Latvia we have the highest rising house prices in the world and one of the lowest sallaries in Europe.

Any way, why buy when you can rent?
I know there are disadvantages, but there are also advantages.

....but there are also advantages.
Like what? Paying someone elses' mortgage?

Like being mobile and having more money to invest in other stuff early in life.

I guess its different here. Monthly rental can be as much as a monthly mortgage payment in lots of areas.

I guess its different here. Monthly rental can be as much as a monthly mortgage payment in lots of areas.

but with rent you are not stuck.

I suppose.

I can move my current mortgage to another house though.

Baron Max,

I suppose it all really depends. You really have to analize the whole thing very carefully. Something like this:

Check original cost
1) a) How much does it cost to rent?
b) How much does it cost to buy the same house? (downpayment)

Check Revenues
2) a) What is the income you can get from renting? (I guess you get 0)
b) What is the income you can get from owning? (0, but you may rent the basement)

Check Expenses
3) a) List all expenses you get from renting
- .... none...!
b) List all expenses you get from owning
- mortage
- maintenance
- hot water (you may add that because when you rent, that is often paid for)
- property taxes

Check government benefits
4) Does the government give incentives either way?

Check salvage value
5) a) rent is 0
b) write down the estimated salvage value of the house


Now... add up all the as, add up all the bs and compare!
And if you want, you may also present value the whole friggin' thing!
That should give you an idea on which one is a better investment...

And you may also play with your estimates!!!



Also.. let's talk a little bit about cashflow. Rent is usually much cheaper then buying a house, in terms of monthly bills. So why don't we calculate the difference between the cashflow from rent and the cashflow from buying. Then, pick up that difference and calculate how much you could get if you would invest that money through a savings account, with compound interest (that is, that monthly difference would become the monthly payments). Remember to make the "n" equal to the number of years that you would otherwise have used to pay out your mortgage. Then present value the whole friggin' thing. How does it look like?

Cashflow is very important. If you don't have it, you can't pay the bills. And as much you have in your pocket to work with, as much power you have in your hands. The revenues from the house must outweight the expenses, and the opportunity cost must also be calculated.

Also, you have to remember that when you buy a house, YOU DON'T OWN IT. That's it. You only own the portion that you already paid- that is, the downpayment. Most of the house is actually owned by the bank, or the financial institution (poor you) that you are dealing with. The amount you own is showned in your equity section, while the amount of your mortgage is showned in the debt section, which shows that the bank actually owns most of the house. As you pay the mortgage (has to be the principal part, on top of the interest) you slowly acquire the house. So if your mortgage is for 20 years, it will take you 20 years to actually own the house.

Speaking of that, you also have to remember that a good rule of thumb is a 70/30 relationship between debt/equity, at the most. You have over 70% of debt, you are likely in big shit. Unless you are using that leverage very well, you are actually going downhill. Since 10% is a standard amount of downpayment, a 10/90 debt/equity ratio is very dangerous. If that is your case, Baron Max, I would suggest you to revalidate your investment strategies and swich financial advisors.... :D

I charge $200 per hour, btw... :D

A house can only be a good investment if you receive a positive cashflow from it. That cashflow must include all the houses expenses, including mortgage and taxes. If you live in the house, chances are you are not able to get a positive cashflow. So it is a bad investment.

You can also say that the house is going to appreciate and you would be able to sell it later. Well, first of all, the housing market is like any other- it doesn't always go up. Second, capital gains are not that great in the housing market, unless you own a "fixer-upper", or you are able to appreciate the value of the house and trade it right away. But that is not the case when you are living in the house. The reason why capital gains are not very good in the housing market when you live in the house and hold the house for long is because the current negative cashflow offsets the capital gains in the future, even with inflation. The costs associated with holding the house until it appreciates as much as you desire are also very high.

So... in short... when you live in a house, the house is not an investment- it is an expense.

Oh, and btw, as an accountant, I know fairly well the classification rules. An issue that we have as accountant is whether we should classify something as an expense, or capitalize it as an asset. And here is basically the rule:

Definition approach
Straightforward. Expenses are increased through the reduction of an asset, or the increase of a liability. In this case, it is obvious that the house would be an expense because you reduce cash (asset) to pay for it and you increase mortgage (liability) as well.

Matching approach
If there is an obligation to pay, as a result of a transaction, then it should be recognized as a liability. In this case, the mortgage is an obligation to pay and, therefore, the house must be classified as a liability (and all related current transactions must be recorded as expenses).


In short, you can only captalize something which has the sole purpose of increasing cashflows, and will most likely do so. For instance, you cannot capitalize advertisement because you don't know whether it will generate revenues or not or whether the revenues generated are a direct reflection of the expenditure.


I hope this settles that issue... :rolleyes:

:D

Also.. let's talk a little bit about cashflow. Rent is usually much cheaper then buying a house, in terms of monthly bills.
Cashflow is a huge hidden cost to owning a home, I agree. One of my personal financial performance measurements is how long I can go without a job. If I sell my house and rent a decent place, I can survive at least five times longer. And with owning, cashflow is at greater risk due to calamities where the home insurance pays for only a portion of the repairs.

Also, you have to remember that when you buy a house, YOU DON'T OWN IT. That's it. You only own the portion that you already paid- that is, the downpayment.
Indeed, you own only a portion of the portion that's paid off. For a paid-off house, you own only about 90% of the equity, because you'll lose some 10% in a sale to broker's commissions, taxes, and other selling-related costs. The more you owe, the smaller the percentage of the equity that's yours to keep. A brand new homeowner would lose almost half of a 20% downpayment in a sale.

Other hidden costs: loss of liquidity (it's relatively hard to sell a house) and loss of diversification (a house ties up a lot of money in one asset).

As an investment, homeownership requires a big up-front premium, ongoing maintenance & insurance costs, and the hidden costs listed above, in return for the scant chance that you'll do better than alternative investments in the long run. In other words, it's not a good investment. But when you include the fact that you get to enjoy the investment by living in the house, the equation changes significantly.

Cashflow is a huge hidden cost to owning a home, I agree. One of my personal financial performance measurements is how long I can go without a job. If I sell my house and rent a decent place, I can survive at least five times longer. And with owning, cashflow is at greater risk due to calamities where the home insurance pays for only a portion of the repairs.
Worse then that. They get their actuaries together and try to pay the smallest amount they possibly can. In fact, if you don't tell them you started smoking and the house burns down, you have no insurance, as far as they are concerned. And they also try to trick you when they send one of their agents to talk with you. So... you can get really screwed...


Indeed, you own only a portion of the portion that's paid off. For a paid-off house, you own only about 90% of the equity, because you'll lose some 10% in a sale to broker's commissions, taxes, and other selling-related costs. The more you owe, the smaller the percentage of the equity that's yours to keep. A brand new homeowner would lose almost half of a 20% downpayment in a sale.

Other hidden costs: loss of liquidity (it's relatively hard to sell a house) and loss of diversification (a house ties up a lot of money in one asset).
Yes, yes! I forgot those...

And I bet most people don't amortize their houses... :rolleyes:


As an investment, homeownership requires a big up-front premium, ongoing maintenance & insurance costs, and the hidden costs listed above, in return for the scant chance that you'll do better than alternative investments in the long run. In other words, it's not a good investment. But when you include the fact that you get to enjoy the investment by living in the house, the equation changes significantly.
I can also pick up my rent money today and buy myself a playstation 3. That would be enjoyable too! Doesn't mean it's wise. ;)

They say they do [want to live out in the country], but obviously not enough to go without the convenience of urban life.The conveniences of urban life are not what they used to be since the advent of the internet and FedEx. My wife and I live literally in the forest (at least when I'm not working in this miserably inconvenient urban environment of Washington DC). We have cable TV, high-speed internet, Amazon and e-Bay like everybody else. We do our shopping and get our entertainment and socializing online. It's only ten miles to the nearest town of 18,000 with its university and the clubs, museums, restaurants and quaint shopping that radiate out from it. It's only 25 miles to the county seat with a Costco and a real mall. And those are really quick drives in rural traffic. Sure there are times when we want to attend an arena concert or simply experience the je-ne-sais-quoi of the city, and it's only a half-day drive to San Francisco--the Paris of North America--with its regional population of ten million.Besides, if everyone moved out to the country, would it still be the country?I admit that depends on which country we're talking about. America's population density per square mile is still very low. If we all spread out uniformly our houses would be too far apart to walk, and in my current "country" location they are much closer than that.Are you really suggesting that the world homogenize itself? Don't you think diversity is a better outcome? How would we ever know the benefits of either the city or the country if we didn't have both to sample?First you suggest that most people would choose to live in the city even if they had the choice, now you're saying that everyone would leave the cities and destroy the countryside. :) Fortunately I think reality is comfortably in-between. There are certainly people who love being squeezed into Manhattan, although they might love it more if that odd combination of squalor and snobbery that comes with rent control dissipated with the population pressure. (Somebody thought housing prices were high in London?) Most humans are pack-social animals, the number who would want to live like we do with just each other and our dogs would hardly spoil the pristine countryside. People naturally congregate into towns small enough to have no congestion but large enough to have diversity, good food and live entertainment.I think you are using your heart for too much of your logic, instead of starting with few assumptions and working up to something.I've noticed a cultural component to that vector. In America, at least, immigrants tend to concentrate in the cities. Perhaps some of that is just the critical mass necessary to have grocery stores with foods from home, night clubs with music from home and sidewalks filled with the language from home. But I also think some of it is culture from lands much more recently urbanized and not yet jaded with it. It will be amusing if "mainstream" anglophone America becomes a virtual community spread across the countryside in small towns linked electronically, while the cities turn into giant expat centers.

OMG... I just realized I posted something to Baron Max, but wrote "Roman" instead.... :eek:

I guess they are equally dumb... :D

Bad economic thinking. Investors are buying up property because of the increased value that property had due to an already existing demand. Of course, by speculating, they help drive up the price a little, but at great risk. When the market slacks off, every investor left holding a piece of extra property loses a ton. It is happening here in the US as we speak.

...

Over here it is predicted by all the finacial experts that this will never happen this time(only the gormless dream otherwise), well atleast to bring prices back within any reasonable range. We went through a patch of stagnancy recently but no drop and prices are rising once again. With the government adjusting the bank of England base rate to keep prices stable and low housing production versus high demand it is making it even more ominous for first time buyers of my generation.

Over here it is predicted by all the finacial experts that this will never happen this time(only the gormless dream otherwise), well atleast to bring prices back within any reasonable range. We went through a patch of stagnancy recently but no drop and prices are rising once again. With the government adjusting the bank of England base rate to keep prices stable and low housing production versus high demand it is making it even more ominous for first time buyers of my generation.

I feel for you, I really do. All I can suggest is setting a financial time-table. Get yourself a very safe investment account and put as much money in it as you can each month. Get rid of your cell phone and any movie channels that you have (best to get rid of your cable or sat TV totally). Get your phone bill down. Eat at home almost exclusively. If you were to catalog your expenses for the entire month, I promise you will find $200 - $300 of waste. If you could get that into an account, in 4 years you could have about $20,000. Perhaps more, depending on if you can get 10 percent or so from the account.

I know it sounds like a chore, but once you get used to your new routine, and you see the money grow, it gets easy. I spent over five years working my ass off with very little outgoing expenses in order to buy my first house. When I sold it, I made over $70,000 and put every penny of that into a better house. Now I'm living in a house that's worth around $300,000 that I only paid $200,000 for, and I should have it completely paid off this year. I'm only 31, which means that by my 32nd birthday, I could be sitting on $300,000 in savings, plus my $25,000 savings account which I have built-up for emergencies. And I make less than $40,000 a year roofing houses.

So, trust me, it can be done. But you have to almost enjoy the hardship. If you do, it will make the payoff even more delightful, believe me.

I feel for you, I really do. All I can suggest is setting a financial time-table. Get yourself a very safe investment account and put as much money in it as you can each month. Get rid of your cell phone and any movie channels that you have (best to get rid of your cable or sat TV totally). Get your phone bill down. Eat at home almost exclusively. If you were to catalog your expenses for the entire month, I promise you will find $200 - $300 of waste. If you could get that into an account, in 4 years you could have about $20,000. Perhaps more, depending on if you can get 10 percent or so from the account.

I know it sounds like a chore, but once you get used to your new routine, and you see the money grow, it gets easy. I spent over five years working my ass off with very little outgoing expenses in order to buy my first house. When I sold it, I made over $70,000 and put every penny of that into a better house. Now I'm living in a house that's worth around $300,000 that I only paid $200,000 for, and I should have it completely paid off this year. I'm only 31, which means that by my 32nd birthday, I could be sitting on $300,000 in savings, plus my $25,000 savings account which I have built-up for emergencies. And I make less than $40,000 a year roofing houses.

So, trust me, it can be done. But you have to almost enjoy the hardship. If you do, it will make the payoff even more delightful, believe me.

Thanks and I hope you dont take offence when I told you that I laughed out loud. Maybe 15 years ago you could have got on the property ladder in England for £11,000, but in 4 years time?!? :eek: Youre not understanding that the conditions mean there is more chance of living on the moon in 2011 than getting on the housing ladder in England for that kind of money. OK you can argue that no one predicted the Wall street crash either, but the chances of something like that happening in a given period of time are pretty near negligable.

Thanks and I hope you dont take offence when I told you that I laughed out loud. Maybe 15 years ago you could have got on the property ladder in England for £11,000, but in 4 years time?!? :eek: Youre not understanding that the conditions mean there is more chance of living on the moon in 2011 than getting on the housing ladder in England for that kind of money. OK you can argue that no one predicted the Wall street crash either, but the chances of something like that happening in a given period of time are pretty near negligable.

I thought you guys had the same sort of first-time home-buying options that we have in the States.

And granted, you aren't going to get your dream home, but there are areas around London that you could afford to live. Maybe not the way you would want to live, but there are lower-class home-owners in every major metropolitan city.

I just did a quick search at hotproperty.co.uk and found tons of stuff around London for under $250,000 (I'm using dollars, I hope you can pretend that it is pounds, so don't down-convert like you did in your last post. I assume you are being paid in pounds, investing in pounds, and buying a house in pounds. Forgive me for using a dollar-sign, I'm a yank). If you can get 10% down, and have a job, you can own a home. Of course, in a city, you are probably better off buying a condo, flat, or loft.

And laughter is healthy, but pessimism will keep you down forever, man. Set a goal and get to it. Seriously, you can do it. Forget about all those newspaper articles you keep reading about how awful the real estate market is. London rags are worse for your mood than the weather there.

I thought you guys had the same sort of first-time home-buying options that we have in the States.

And granted, you aren't going to get your dream home, but there are areas around London that you could afford to live. Maybe not the way you would want to live, but there are lower-class home-owners in every major metropolitan city.

I just did a quick search at hotproperty.co.uk and found tons of stuff around London for under $250,000 .
Huh? so now you want me to save in 4 years for 250,000 (undefinded western currency:rolleyes: )


(I'm using dollars, I hope you can pretend that it is pounds, so don't down-convert like you did in your last post. I assume you are being paid in pounds, investing in pounds, and buying a house in pounds.
I was merely converting you calculations from dollars into pounds using the current exchange rate. If you actually take into account that you have higher salary to cost of living ratio in yankerville, I think it was actually a rather conservative convertion. Beside even if you say £20,000 it makes no difference to the relevance.

Next hick step forward to offer patronization, please!

Huh? so now you want me to save in 4 years for 250,000 (undefinded western currency:rolleyes:

Why did you completely ignore his comment that followed ...."If you can get 10% down, and have a job, you can own a home."?

You don't have to save it all ....just 10%, and sometimes less, to own a $250,000 home. Why did you purposely ignore that comment, then rant against his good advice??? Why??

And then, worse, make the following comment: "Next hick step forward to offer patronization, please!"???? Totally uncalled for and demeaning.

Baron Max

Why did you completely ignore his comment that followed ...."If you can get 10% down, and have a job, you can own a home."?

You don't have to save it all ....just 10%, and sometimes less, to own a $250,000 home. Why did you purposely ignore that comment, then rant against his good advice??? Why??



Because he wasnt suggesting just saving for a deposit, hes anology was that he save $20,000 to buy his whole first house. Why are you so dumb? Why did you completely fail to realize that its the whole property price that is impossible to afford for many first time buyers? and before you come back with another idiotic reply - Yes that does include the impossibility to afford with a mortgage aswell.

And then, worse, make the following comment: "Next hick step forward to offer patronization, please!"???? Totally uncalled for and demeaning.

Baron Max

No it is totally called for when patronizing idiots such as your self give ridiculous advice to a problem, without even the brain power to realize that your so called solution was thought of long ago and is no solution.

Why did you completely fail to realize that its the whole property price that is impossible to afford for many first time buyers? and before you come back with another idiotic reply - Yes that does include the impossibility to afford with a mortgage aswell.

Then they should try to buy a cheaper home ...one that they can qualify for. What's so difficult to understand about that???? We can't always have what we want ....and rightfully so!

Baron Max

Then they should try to buy a cheaper home ...one that they can qualify for. What's so difficult to understand about that???? We can't always have what we want ....and rightfully so!

Baron Max

Jesus fucking christ! I told you before I am talking about the cheapest homes. We are not all well payed enough for even the bottom rung.

Jesus fucking christ! I told you before I am talking about the cheapest homes. We are not all well payed enough for even the bottom rung.

So they can't afford to buy even the cheapest homes in all of England??? Wow, that's pretty damned poor, alright! Sure am glad I don't live in England.

Baron Max

So they can't afford to buy even the cheapest homes in all of England??? Wow, that's pretty damned poor, alright! Sure am glad I don't live in England.

Baron Max

Yes there is a good proportion of those type of people in England now, as opposed to only beggars and crack whores that couldnt afford to a mortgage when you were young. Well done! you have finally grasped the joke that is 21st century UK property buying from scratch.

... no one predicted the Wall street crash either, ...Not true. - I have predicted 17 or the last 2 crashes!:D

I tend to look on the blackest (except for Paul Dixon) possible future and then be happy many times when it turns out to only be a small rain storm. - Just thought I should admit this somewhere, would say more, but must quit now - it is starting to get very dark again.;)

Because he wasnt suggesting just saving for a deposit, hes anology was that he save $20,000 to buy his whole first house. Why are you so dumb? Why did you completely fail to realize that its the whole property price that is impossible to afford for many first time buyers? and before you come back with another idiotic reply - Yes that does include the impossibility to afford with a mortgage aswell.Actually in America people who do not pose a very low credit risk are usually asked to put twenty percent down. It looks like you probably fall into that category.

As was suggested, the universal solution here is a condominium. Do they have those in Englad? Basically an apartment built or reengineered to be self-sufficient with laundry facilities and often even its own stand-alone HVAC (heating and air conditioning system). You can usually buy a condo for about one-third the price of the smallest house in the same neighborhood. This makes it easier to qualify for a lower interest, low down payment mortgage. It's the typical way that young people make their entry into the real estate market in the more expensive urban areas.

If the cheapest houses in your neighborhood cost $750,000, you can probably buy a condo for $250,000. That requires $25,000 down and a monthly payment of around $1,200, including insurance and property tax. Most couples with two jobs and no children can afford that.

The down-side is that they don't include more than a sliver of land (and even that is owned and managed communally by the homeowners' association) so most of your money is going into the building, which depreciates instead of appreciating. But if you buy in the right neighborhood the increase in value of the real estate will still outpace the amortization of the building.

At the very least when you own a condominium you don't have a landlord who can increase your rent periodically.

Fraggle, as someone who bought a flat a year ago, I am fairly up to date on UK mortgage practise.

Basically, they will happily take 5% down, but they'll want proof of earnings so that they know you can mostly afford the mortgage payments. They will actually give you 100% mortgages, I've heard of even 105% mortgages or worse before now, but they are not widespread. THey wont expect you to put 20% down, and they're desperate enough for business that they'll take most people on unless they are uneployed or something.

The usual multiplier was 3 times salary. There are persistent stories of some lenders lending up to 5 times salary. Over the past 20 years the average mortgage length has changed from 20 years to 25 years. This reflects the growing gap between what people are paid and what the houses sell for.

Condos are no solution at all. There is no money in them. House builders build only what they want to do to get teh maximum return (I know your familiar with this thing called capitalism) and hence they build small poky flats with one bedroom and sell them for 200,000 pounds.
(And I'm not joking)
LEt me repeat- things in the UK are totally diffferent from the USA.

The other half of the problem is that thanks to Mrs Thatcher and her inheritors Major and Blair, people who live in council houses have the right to buy them. This means that council housing stock, which used to be a useful service for low paid people, is at an all time low, meaning that huge numbers of people have trouble finding anywhere to live, and it is also impossible for councils to offer homes to key workers, since they dont have any houses spare.

Huh? so now you want me to save in 4 years for 250,000 (undefinded western currency:rolleyes: )


(I'm using dollars, I hope you can pretend that it is pounds, so don't down-convert like you did in your last post. I assume you are being paid in pounds, investing in pounds, and buying a house in pounds.
I was merely converting you calculations from dollars into pounds using the current exchange rate. If you actually take into account that you have higher salary to cost of living ratio in yankerville, I think it was actually a rather conservative convertion. Beside even if you say £20,000 it makes no difference to the relevance.

Next hick step forward to offer patronization, please!

Man... I'm looking back over my posts to see where I was rude or patronizing, and can't find it. I also couldn't tell where I was suggesting you could save a quarter million units of currency in 4 years.

I actually took the time to look at real estate in your area and give what I felt was my best advice. And you are rude to me in return?

I am honestly stunned. You have set a new bar for me in the lowness of Internet forum anti-sociability.

Man... I'm looking back over my posts to see where I was rude or patronizing, and can't find it. I also couldn't tell where I was suggesting you could save a quarter million units of currency in 4 years.

I actually took the time to look at real estate in your area and give what I felt was my best advice. And you are rude to me in return?

I am honestly stunned. You have set a new bar for me in the lowness of Internet forum anti-sociability.

If you dont see your patronization thats probably because you are a fuckwad moron and also have no concept that the days of saving for 4 years to buy a house are well and truely gone.

If you dont see your patronization thats probably because ytou are a moron and have no concept that the days of saving for 4 years to buy a house are well and truely gone.

I never said such a thing, and please stop being rude just for the sake of lashing out at someone.

I said that if you saved for 4 years you could afford a 10% down-payment on a house. I stand by that comment.

The problem is, it would take a ton of change-of-habits to cut this money out of your current budget, and if you are the kind of person that calls someone a moron for trying to give you some hard-won advice, then you are probably a long way from tackling the sort of program that I advocated. And I say this with full respect for you as a person, and the admission that I could be wrong about your character, but I can only go on what you have given me. And you come across as very rude and pessimistic, which are not two of the qualities that make for an easy pathway towards home-ownership.

I wish you all the luck in the world.



Edit: For the "fuckwad moron" comment, I felt obligated to report your post, but I don't like doing so without letting you know publicly that I did so.

...because you are a fuckwad moron ....

I'm getting it now ...although rather late in the thread. You just wanted to complain, bitch n' moan. You didn't want any help or advice, you just want us to all agree with your complaints and your bitchin' n' moanin'.

So .........I agree with anything and everything that Imaplanck says! ...whether its right or wrong or otherwise.

Sincerely,

Baron Max

Baron, you have conviniently ignored my posts. Why? :rolleyes:

Baron, you have conviniently ignored my posts. Why?

Didn't notice them ....so that means that they had virtually no effect on me in such a way as to respond. If you'd like me to respond to some specific point, you're welcome to copy it and re-post it ....if you think I might still be interested.

But I must warn you, most of your posts seem like just so much radical bullshit, that I find myself completely turned off. You seem to have little to no firm grasp on reality ...which makes me shake my head in amazement.

Baron Max

The way people are running the property ladder at the moment is very simple. They buy properties and get mortgages for them then rent the properties at around the morgage price per month.

Simply renters pay somebody else to buy the house. On top of this the UK government did propose giving 10% to first time buyers on their first property, although you could ask an awful lot of questions about what your rights are if it ever came down to a court warrant (Would they need one to enter your premises if they own 10% of it?)

I know that some people did start looking to Eastern European properties after certain countries joined the EU, however the problem there is a number of the locals in those countries don't want to see the same over inflated house prices considering their populous not necessarily earning enough to buy houses at such ludicrous prices. So purchases in such countries are often met with great hostility.

All I can suggest is look at "Lease Purchase" deals where you might have the opportunity to purchase a property after spending a certain amount of time there, with that in mind you can only hope the prices stabilise (although if they drop it will be 92-94 all over again.)

Streyder, its called a council house!

There aren't many "Council Houses" left now Guthrie, Since the tenancy agreements with option to purchase were usually about 20 years. Most of the ones purchased are prior to that offering period because the elderly person that rented it died etc. Although I think they also had Fixed rent schemes so at the change of tenant was the only time they could be altered.

There are places where houses are really cheap, however it really is dependant on if you want to live in the North of England around old Mining Towns where rows of houses sit derelict.

I pointed that out up thread, Stryder. Possibly I didnt make my sarcasm obvious enough.
The problem with living in the North of England is the lack of jobs.

I pointed that out up thread, Stryder. Possibly I didnt make my sarcasm obvious enough.
The problem with living in the North of England is the lack of jobs.

But the reason that North England doesn't have jobs is because nobody lives up there! :bugeye:

Oh right.

Where do we live then?

But I must warn you, most of your posts seem like just so much radical bullshit, that I find myself completely turned off. You seem to have little to no firm grasp on reality ...which makes me shake my head in amazement.

Baron Max

I ignore his posts for the same reason.

Didn't notice them ....so that means that they had virtually no effect on me in such a way as to respond. If you'd like me to respond to some specific point, you're welcome to copy it and re-post it ....if you think I might still be interested.
No effect on you, eh? I guess maybe you are too uneducated to understand the complex world of finances... :rolleyes:

Here it is:
"Baron Max,

I suppose it all really depends. You really have to analize the whole thing very carefully. Something like this:

Check original cost
1) a) How much does it cost to rent?
b) How much does it cost to buy the same house? (downpayment)

Check Revenues
2) a) What is the income you can get from renting? (I guess you get 0)
b) What is the income you can get from owning? (0, but you may rent the basement)

Check Expenses
3) a) List all expenses you get from renting
- .... none...!
b) List all expenses you get from owning
- mortage
- maintenance
- hot water (you may add that because when you rent, that is often paid for)
- property taxes

Check government benefits
4) Does the government give incentives either way?

Check salvage value
5) a) rent is 0
b) write down the estimated salvage value of the house


Now... add up all the as, add up all the bs and compare!
And if you want, you may also present value the whole friggin' thing!
That should give you an idea on which one is a better investment...

And you may also play with your estimates!!!



Also.. let's talk a little bit about cashflow. Rent is usually much cheaper then buying a house, in terms of monthly bills. So why don't we calculate the difference between the cashflow from rent and the cashflow from buying. Then, pick up that difference and calculate how much you could get if you would invest that money through a savings account, with compound interest (that is, that monthly difference would become the monthly payments). Remember to make the "n" equal to the number of years that you would otherwise have used to pay out your mortgage. Then present value the whole friggin' thing. How does it look like?

Cashflow is very important. If you don't have it, you can't pay the bills. And as much you have in your pocket to work with, as much power you have in your hands. The revenues from the house must outweight the expenses, and the opportunity cost must also be calculated.

Also, you have to remember that when you buy a house, YOU DON'T OWN IT. That's it. You only own the portion that you already paid- that is, the downpayment. Most of the house is actually owned by the bank, or the financial institution (poor you) that you are dealing with. The amount you own is showned in your equity section, while the amount of your mortgage is showned in the debt section, which shows that the bank actually owns most of the house. As you pay the mortgage (has to be the principal part, on top of the interest) you slowly acquire the house. So if your mortgage is for 20 years, it will take you 20 years to actually own the house.

Speaking of that, you also have to remember that a good rule of thumb is a 70/30 relationship between debt/equity, at the most. You have over 70% of debt, you are likely in big shit. Unless you are using that leverage very well, you are actually going downhill. Since 10% is a standard amount of downpayment, a 10/90 debt/equity ratio is very dangerous. If that is your case, Baron Max, I would suggest you to revalidate your investment strategies and swich financial advisors.... "

AND

"A house can only be a good investment if you receive a positive cashflow from it. That cashflow must include all the houses expenses, including mortgage and taxes. If you live in the house, chances are you are not able to get a positive cashflow. So it is a bad investment.

You can also say that the house is going to appreciate and you would be able to sell it later. Well, first of all, the housing market is like any other- it doesn't always go up. Second, capital gains are not that great in the housing market, unless you own a "fixer-upper", or you are able to appreciate the value of the house and trade it right away. But that is not the case when you are living in the house. The reason why capital gains are not very good in the housing market when you live in the house and hold the house for long is because the current negative cashflow offsets the capital gains in the future, even with inflation. The costs associated with holding the house until it appreciates as much as you desire are also very high.

So... in short... when you live in a house, the house is not an investment- it is an expense.

Oh, and btw, as an accountant, I know fairly well the classification rules. An issue that we have as accountant is whether we should classify something as an expense, or capitalize it as an asset. And here is basically the rule:

Definition approach
Straightforward. Expenses are increased through the reduction of an asset, or the increase of a liability. In this case, it is obvious that the house would be an expense because you reduce cash (asset) to pay for it and you increase mortgage (liability) as well.

Matching approach
If there is an obligation to pay, as a result of a transaction, then it should be recognized as a liability. In this case, the mortgage is an obligation to pay and, therefore, the house must be classified as a liability (and all related current transactions must be recorded as expenses).


In short, you can only captalize something which has the sole purpose of increasing cashflows, and will most likely do so. For instance, you cannot capitalize advertisement because you don't know whether it will generate revenues or not or whether the revenues generated are a direct reflection of the expenditure.


I hope this settles that issue... "

But I must warn you, most of your posts seem like just so much radical bullshit, that I find myself completely turned off.
I'm sure finances are pretty radical... :rolleyes:

You seem to have little to no firm grasp on reality ...which makes me shake my head in amazement.
I have no firm grasp on reality? You are a complete retard! You cannot grasp any simple thing people throw at you. You are completely unable to learn and accept that you don't know much yourself. Several people around feel the same way. Of course Roman is an exception, because he is just like you... :rolleyes:

But anyways... you simply completely ignore any evidence that is thrown at you, or any logical argument, and you reply with absolute nosense. Your lack of brains is just astonishing, to say the least.

I ignore his posts for the same reason.
You are just as brainwashed as he is. :rolleyes:

It's funny how easy it is to just accept what the politicians, and the news corporations tell you, eh? Like... just accept everything! Questioning is just too much for our brains right!? It hurts so much to think, eh!? :rolleyes:

http://www.sciforums.com/showthread.php?t=60770

You just like to be wrong... :)

Even the horrendous Enron scandal really resulted in little damage to the society as a whole.
I could look it up, but at least 1000 people lost their retirement money, so yes, society got a big hit. It was even bad by dollarvalue, if you multiply those accounts one by one...

Society has lost millions of lives to car accidents.
Of course wrong analogy, again. The difference is that the war wasn't necessery, changing position from point A to point B is... And try to walk from NYC to LA...

Man, I appreciate your trying, but you will NEVER win an argument against me... :)

I see Baron Max is still an idiot.

The sad thing is that one would think that after 8000+ posts here he could learn something or at least was able to construct a logical argument... Sad, really sad...



:rolleyes: