Buying a house is now cheaper than renting one

Only if the Halifax gives you a mortgage on reasonable terms. And what about inheritance tax?

One size dosent fit all

Renting is good for sum buying is good for others

I have customers who do not want to rent and let me tell you why that is

If your unemployed you have your rent covered 100% by LHA in the North of England

No large deposits to find

No Large legal fees to purchase the house

No Large repairs Bills

No Building insurance to pay

Flexability in seperation of partners

The down side is you could lose your home 28 days notice But when you rent you can ask for a long tenancey(I would be Happy to give longer tenanceys but short hold is a blunt tool and needs reform )

I have met sellers who have told me buying a house is the worsed thing they have ever done I met a couple who have not had centralheating for two years because they cant aford a boiler

So buying is not for everyone

and renting is not for everyone

Its all about choice

'Halifax estimates that there were around 510,000 home purchases with a mortgage in 2011, the lowest annual total since 1974 and 6% lower than in 2010.'

Doesnt seem to bode well for house prices. With high house prices and large deposit requirements together with doubts over the direction of the UK and global economies, I certainly would not be buying at this point in time.

Oh, if only a 3-bed would rent for £716 here! Obviously, the barrier to buying is the huge deposit required. So, coupled with the maintenance costs and responsibility for a property in an uncertain economy and job and property market it is not rational to buy a (probably) depreciating asset at the moment. In this case I agree with dyslexic landlord, as far as I can understand her.

I think the high deposit requirement really is just a reflection of the higher risk for the banks. If banks thought house prices were going to go up, they would be offering 100% mortgages like in the last 10-15 years as the risk to them in case the buyer cannot keep up mortgage payments is low. The fact that they demand higher deposits really is an admission that house prices may well fall further, despite the comments they put out like this trying to get encourage people to buy again.

I know its quite a time ago but in 1968 you could buy a house for what it now costs to rent for a month. I remember 3 houses for sale in the same street in the Midlands in a popular town and the most expensive was £1100. The cheapest was £680 ono. Human greed in encouraging house price increases over the years has made it very unfair for today's young. For tax purposes I took out a small mortgage but could have paid cash. How many could say that today. How times change and not for the better.

No earth shattering revelations in this article, its stating the obvious. It doesn't take rocket science to work out that in an economic downturn, people feel insecure and renting a home gives them more flexibility in case of job loss or a relocation. The last thing you want is being forced to sell your home in this climate. Lets not forget that quite a few are in a negative equity situation, some are stuck with second mortgages on their homes. The banks are hedging their bets by demanding high cash deposits, we may not see 100% mortgages for some time. Over here in Holland, the banks are providing 100% mortgages but only on the quick sale value of the home (execution value) which is usually 70% of the purchase price.

Oh for heavens sake Halifx you simpletons. You reckon buying a property to save £100 a month when it could be losing value at £1000 a month for the forseeable and the cost of buying and selling could be £10000+. Great advice, Northern Rock 2 here we come.

Two very important points not mentioned which make private home ownership a good investement include no tax when the property is sold and a council tax scale which considerabley undervalues residential property.

Also, taking out a mortgage fixes a specific amount of debt, which can then be paid off using inflated currency over the typical 25 year term.

Western governments are trying to inflate their way out of the high debt they took on from failed banks, so it is considered likely inflation will continue at a relatively high rate.

Even considering all the repair and other costs, home ownership is still a good deal.

Also, a home provides a place to live in addition to the financial benefits, which other classes of investment do not.

Warren,

You say: Western governments are trying to inflate their way out of the high debt they took on from failed banks, ??? That was chicken feed in comparison to the cost of the public sector debt. Even in the boom years, prior to the bank crisis governments borrowed 35% of GDP to fund their expenditure. Now it is more like 48%

Gerogebundle

Buying is most certainly not cheaper than renting if you sink your life's savings into buying a property and it then sinks in value

You could quite literally see the value of your life's savings disappear within weeks if there is another property slump...which is highly likely given the weak economy

Buying property nowadays is very high risk activity

Far better to rent and look at other asset classes for investing spare cash - gold, share, commodities, farmland...forget buying houses

It's not greed that pushes house prices up - it's inflation. In 1965, we went into Connells after looking at a new estate and said "We'll have that one in the corner". It was £3,850.

The guy in Connells turned round and put a pin in that plot on his site plan to show it as reserved.

He then asked me how much I had and how much I earned. After I'd answered, he said "Sorry, you can't afford it." and removed the pin from the site plan.

We bought another leasehold house for £3,300 - but my salary was only £1,000/year.

There is a lower limit for house prices and that's the cost of replacement. All of the components have to be paid for, tradesmen won't work unless they are paid and builders won't build unless they expect to make a profit.

Mr/Ms Stonebanks articulates many of my own responses to the person who claimed it was all about greed. He doesn't, however, mention another important factor, which is the cost of land. As land gets scarcer it gets dearer, and this price rise is outpacing inflation. Sure, our first house (which was on a main road and shook as lorries passed, had 9ft x 10ft rooms and a tiny garden at the end of next door's) only cost £2,300, but my salary at the time was £7 a week and I had been working for 7 years then.

When I began working (1965), a decent starting salary was £20 per week (£1050 pa), a new Ford Cortina was £1000 and a newish three-bedroomed semi in a South of England suburb could be had for £3,500. Fast-forward twenty years and the figures were £12K, £12K (Sierra) and £70K (S of E). Twenty years more and we have £18K, £15K (Focus anyone?) and £220K. So the ratio between annual salary and cars has been more or less maintained, whilst housing has rocketed from 3.5 times earnings, through 5.8 times to the current 12.2 times earnings. A Guardian comment recently said: “Too many people have too much to lose from a falling housing market, but it means excluding a generation.” Can anyone out there (economists and government ministers excluded) tell me how it happened and how we can solve the problem?

Some other factors to consider:-

Whether we rent or buy, where we live is primarily a home, we all need a home but this often seems forgotten in the arguments which tend to look at the investment issues.

1) Purchased Property: Most people like to make improvements to their home either inside the property or in the garden. To make this investment worthwhile requires security of occupation over a longish period and the best way to ensure some level of security of occupation (given job/income stability) is to purchase the property.

2) Rented Property: Yes this has the advantage of flexibility but generally caused deterioration of the property over time as tenants will generally not invest in improvements or take great care of theproperty or garden as they expect to be residing for a limited time so it is not worthwhile. My experience as a landlord (in the past) has been that every few years I have had to make these investments myself to maintain an acceptable standard for reletting.

So really apart from the affordability issues it really comes down to how you view your home and whether you want to invest in making improvements or not. Ownership in a the economic environment since the 1950's has become the preferred and aspirational route and as a result the population has made enormous investments in home improvements. This investment has partially at least driven the economy, as we can see from the explosion in home improvement centres such as B&Q which in the current climate suffering greatly.

Before that time and going back into the 19th century most people rented over long periods of time, did not spend much on the property other than redecorating when necessary. Buildings were generally better built and could withstand this type of occupation for which they were designed (hence the large numbers of surviving Victorian and Edwardian Villas and Terraces).

The lesson here is that your home should not be viewed as an investment, it is a home. It is also not (for most people) going to provide a pension either as the current generation (bay boomers) are all retiring now and there just will not be enough property to downsize into so prices of flats, bungalows etc will rise accordingly, especially in desirable areas where retirees like to move to.

Just a few thoughts!!!

I agree that renting is better for some people and buying for others.

There has been a lot of comments explaining why renting is better, but buying also has a lot of perks.

It completely comes down to the individual, such as buying a car, some people can afford to buy a car,

but to maintain it stretches them financially, and you wonder really if it is worth the hassle for them.

You then have people who can afford to buy a brand new car, and for the value to halve as soon as you put the key in the ignition.

It’s the same with houses, yes there is maintenance, which many home owners do not do, they just wait for things to break and end up with a big bill.

Renting can be hell, especially if you end up having to move every year or so, you have to take time off work to search for homes, then to pack, move and unpack.

Sure you can move house in a day, I have done it, but if you add the time packing, unpacking, etc, it can be well over week. Throw in crazy agency fees, finding deposits (short term loans)

until you get your previous deposit back….. Then throw in a family with little ones…….

You just need to weigh up what is right for you, the worrying thing is, I see nothing changing for at least the next 5 years……….. so these decisions are not going to get any easier for anyone…

Just make sure you do the maths and tripple check them, then wait a few months and do it again and again........

I think we all agree its a balance we need a good PRS and a good first time buyer market

its not one or the other

as from my point of view I like nothing better than seeing 1st time buyers buying homes next to the ones I rent it brings the area up and in genaral they do put in more effort in keeping the place smart

the problem at present is there are no 1st time buyers so landlords are buying but the cycle will change it always has and always will

Peter Young's comments about home improvements also have considerable relevance to the inflation argument. The house we sold after living in it for 25 years was not the house we bought, so comparison of the prices paid represents a lot more than mere inflation. We built a bedroom and second bathroom over the adjoining garage, installed a new heating system to replace the warm air original, added to the size of the garden and replaced bathroom and kitchen as well as adding a conservatory. The people who now own it have incorporated the garage into the living accom. and built a detached garage at the other side, so what it would sell for now would reflect all those improvements and extensions. I can think of streets where every house has had a loft conversion, most with en-suites. It seems to me that inflation is only half the story when thinking about house price increases over the years. Of course, all this work means fewer small, unimproved homes for FTBs.

There are two types of inflation. Wage inflation, when working people try to increase their buying power by obtaining more money for their work, resulting in higher prices to recover the extra wage costs, and inflation caused by governments or Central Banks diluting the buying power of their currency which is no longer pegged to the value of gold. The result is that a four storey house I bought in Islington, London in 1968 for £7,500 is now costing £750,000.

The process will stop when our currency will become confetti money as governments will have to increase their debt to finance all their commitments which they promised in election manifestos. Under the heading of helping the poor and the disadvanted, they ruin the financial prospects of the entire nation, including the poor and disadvantaged. Why do we fall for all this crap?

Georgebundle