Neil Dawson
UTC Legend
Depends on what they are needed for?Ban second homes.
Depends on what they are needed for?Ban second homes.
There's no doubt us silver generation have had a lot of advantages - house price boom, free university education, health care that worked.
It is true we were able to save for a deposit by not spending on lots of things. And (probably) that it seems to be the norm for 20s / 30s nowadays to spend much more on phones cars holidays gyms entertainment - but still could not build a deposit even if they didn't spend on these things.
Out of all the complicated interlocking factors, there are two self-evident things that need to be done: build more homes, and develop a secure long-term rented sector like other countries have.
The growth in house prices always fascinates me because I think we tend to overestimate it. Here's why I say that, and happy to be proven that my math is wrong (I know, "maths" to you folks).
We bought our current house 25 years ago. Price has quintupled over the period. Scale that back to quadruple for significant renos which enhance the potential sales value.
Using the rule of 72, the house has doubled twice in the period. So, taking the half life of 12 years ............ 12 x 6 = 72. Then do it again for the 24 years.
So, basically, my thinking is that we made about 6% per year on the value of the house over the period. Tax-free here, as there is no tax on a principle residence. Ignoring estate fees and commissions. Not bad, but certainly not exhorbitant.
Anyone see a flaw in my calcs??
Thats an interesting chart.Compares us with some countries in which home ownership isn't as large in the culture as here, but interesting all the same. 2000 - 2008 was pretty wild.
Thats an interesting chart.
Now I am not trying to making any political point but the steepest and longest rise on that chart is the Blair gov't of 1997 - 2007, I didn't expect that. Easy credit at the time ?
Agree, there are opportunity costs and we also don't measure the costs of utilities, property taxes, maintenance etc.I think you're missing the cost of not owning. If you take the money invested in a mortgage and put it somewhere else, you still need to pay to rent somewhere. So owning the house is a bill you have to pay anyway that also happens to be a growing investment for those that can afford to buy.
I'd also not underestimate the whole capital gains aspect if you invested in another product.
I think you're missing the cost of not owning. If you take the money invested in a mortgage and put it somewhere else, you still need to pay to rent somewhere. So owning the house is a bill you have to pay anyway that also happens to be a growing investment for those that can afford to buy.
I'd also not underestimate the whole capital gains aspect if you invested in another product.
Theres always much in it at times from what I've read over the years, from various sources. Past decade rates have been low, but if you're borrowing a few hundred k and paying interest on that and having to maintain it, something you don;t need to if renting... plus funds remain somewhat liquid, when not invested in property.
Obviously in many countries you have security of owning your own place versus renting which counts for a lot, but it's not always the guaranteed home run I expect many perceive it to be if looking at it from a pure financial, investment perspective.
The same in Denmark, Housing organisations every where. You sign up and are then offered an apartment. Rents are cheap and you even get the state to pay someof it , if your income is small.To your last point, yes completely agree. When I used to live in Berlin and was considering buying a place, everyone was confused with me because hardly anyone tries or needs to buy property.
Unfortunately the government is doing all they can to drive landlords out of the market.There's no doubt us silver generation have had a lot of advantages - house price boom, free university education, health care that worked.
It is true we were able to save for a deposit by not spending on lots of things. And (probably) that it seems to be the norm for 20s / 30s nowadays to spend much more on phones cars holidays gyms entertainment - but still could not build a deposit even if they didn't spend on these things.
Out of all the complicated interlocking factors, there are two self-evident things that need to be done: build more homes, and develop a secure long-term rented sector like other countries have.
It is if, as he says, you take into account the fact that you can't avoid the cost of the alternative, i.e. renting. You have to pay either the mortgage or rental costs whatever happens.
You're missing my point. Depending on cost of rental, there have been points where you'd have been better off (financially), by renting and investing your money elsewhere versus buying at that point in time, and the extra costs/overheads that come with owning your home.