geared Posted October 8, 2013 Share Posted October 8, 2013 I was replying to Cyclone's assumption that if you sold your house you'd have to live in a box.. although rising prices mean I'd get more cash when I downsized.. In theory yes, as long as the price gap between the house you own and the house you would buy also increases (which it usually does). Still while alittle price increase is to be expected, massive jumps are bad for the economy as people over-reach themselves and can't service the mortgage. The bubble pops as it did in 2008 and everything falls on it's arse. Link to comment Share on other sites More sharing options...
Moosey Posted October 8, 2013 Share Posted October 8, 2013 I really did well when property prices went up. In 2001, I bought a two bed semi for £35,000. The mortgage was almost paid off, as I did quite well at that time. I sold the house in 2007 for £100,000. I only had about £10,000 on my existing mortgage, giving me £90,000 as a deposit on my new house. That means I only required a £100,000 mortgage, where as someone with no property would require almost twice that. As a result, I certainly benefited when prices increased. I only have/had one house. Link to comment Share on other sites More sharing options...
Cyclone Posted October 8, 2013 Share Posted October 8, 2013 Why? I could rent if I wanted...and have even more money in the bank...if prices rise I have more flexibility than if they fall... True, but we're definitely talking about a tiny proportion of people that are happy about price rises because they intend to sell up and rent. Link to comment Share on other sites More sharing options...
truman Posted October 8, 2013 Share Posted October 8, 2013 True, but we're definitely talking about a tiny proportion of people that are happy about price rises because they intend to sell up and rent. Even if I were to buy a smaller house after selling up rather than renting,my bank balance would get quite a boost..as I said before a rising market gives me a wider range of options.. Link to comment Share on other sites More sharing options...
Cyclone Posted October 8, 2013 Share Posted October 8, 2013 I really did well when property prices went up. In 2001, I bought a two bed semi for £35,000. The mortgage was almost paid off, as I did quite well at that time. I sold the house in 2007 for £100,000. I only had about £10,000 on my existing mortgage, giving me £90,000 as a deposit on my new house. That means I only required a £100,000 mortgage, where as someone with no property would require almost twice that. As a result, I certainly benefited when prices increased. I only have/had one house. I suspect that if we look closer you didn't benefit at all. Your 2nd house cost you £190k, over your lifetime so far you've had two mortgages, the first for 35k (you didn't say what deposit you put down). You paid off 25k of that mortgage by the time you sold. You took another mortgage for 100k to move up to a house worth 190k. Prices approximately tripled between 2001 and 2007. If they hadn't it would have worked like this; Took out 35k mortgage, paid off 25k, sold house for 35k, 25k deposit available. New house only costs 65k (no price rise remember). You put down a 25k deposit, your new mortgage would be 40k. Oh dear, price rises have actually resulted in you having £60,000 debt more in 2007 than you would have if prices had been static. This is exactly what I mean when I say that people don't really think it through. And you're a solicitor if I remember correctly, presumably a pretty intelligent guy. And yet you think that having a 100k mortgage was you benefiting from house price inflation! Personally I'd rather have that house and the much smaller mortgage. ---------- Post added 08-10-2013 at 11:53 ---------- Even if I were to buy a smaller house after selling up rather than renting,my bank balance would get quite a boost..as I said before a rising market gives me a wider range of options.. I'm not disagreeing with you, I'm saying that you're in a minority and that the majority, like Moosey, don't understand how house price inflation has cost them money. The only people who benefit are those who can and will downsize or otherwise sell and not replace with an asset worth the same, or those who own multiple properties (which has the same affect, they can be sold to realise a profit). Link to comment Share on other sites More sharing options...
Moosey Posted October 8, 2013 Share Posted October 8, 2013 I suspect that if we look closer you didn't benefit at all. Your 2nd house cost you £190k, over your lifetime so far you've had two mortgages, the first for 35k (you didn't say what deposit you put down). You paid off 25k of that mortgage by the time you sold. You took another mortgage for 100k to move up to a house worth 190k. Prices approximately tripled between 2001 and 2007. If they hadn't it would have worked like this; Took out 35k mortgage, paid off 25k, sold house for 35k, 25k deposit available. New house only costs 65k (no price rise remember). You put down a 25k deposit, your new mortgage would be 40k. Oh dear, price rises have actually resulted in you having £60,000 debt more in 2007 than you would have if prices had been static. This is exactly what I mean when I say that people don't really think it through. And you're a solicitor if I remember correctly, presumably a pretty intelligent guy. And yet you think that having a 100k mortgage was you benefiting from house price inflation! Personally I'd rather have that house and the much smaller mortgage. I see your point, and you're right, I'm a lawyer, not an accountant, which is now blindingly obvious! I hadn't thought of it in that way before, but I do see your point. Link to comment Share on other sites More sharing options...
Vague_Boy Posted October 8, 2013 Share Posted October 8, 2013 Because people can use their home and sell it on later. The problem is, anywhere else you buy will also have become more expensive.* So there's no real benefit to anyone who isn't downsizing. And those who follow the downsizing route may find that a lot of the cash they have "made" will need to be loaned out to their children, who can't afford to buy on their own at today's absurd prices. The Bank of Mum and Dad masks the crisis in the housing market [The Guardian, Friday 26 July 2013] * Actually if you move out of Sheffield, say to Rotherham, Barnsley or Chesterfield, you may get more for your money without downsizing. But the downside is, well, living in Barnsley. because they are greedily fingering their lapels. I'm better than you etc Ooohhh, someone's feeling chippy. Link to comment Share on other sites More sharing options...
geared Posted October 8, 2013 Share Posted October 8, 2013 Barnsley is alrite, Rotherham isn't that bad either. Could do with abit of demo work in the town centres to get rid of the horrid concrete abominations, but otherwise they're fairly nice places. Link to comment Share on other sites More sharing options...
avidcameron Posted October 8, 2013 Share Posted October 8, 2013 We DON'T shout for joy when the price of fuel, gas & electric and shopping bills increase, so why the opposite reaction when house prices increase? The majority who own a house feel richer,but the minority who do not feel poorer-its that simple.Most people do not sell fossil fuels and groceries to other residents. Link to comment Share on other sites More sharing options...
Cyclone Posted October 8, 2013 Share Posted October 8, 2013 The majority who own a house feel richer,but the minority who do not feel poorer-its that simple.Most people do not sell fossil fuels and groceries to other residents. The majority, are in many cases wrong. The minority (it's not actually a minority at all when you start to consider just 1 future generation), are at least correct. Link to comment Share on other sites More sharing options...
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