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As the property crash continues, do we think that the attitude displayed in the following link might become more prevalent? There are some very good points raised:
Saying “my house is an investment” forgets the fact that a house has all the qualities of the ugliest type of investment:
- – Illiquidity. You can’t cash out whenever you want.
– High leverage. You have to borrow a lot of money in most cases.
– No diversification. For most people, a house is by far the largest part of their portfolio and greatly exceeds the 10% of net worth that any other investment should be.http://www.businessinsider.com/why-i-am-never-going-to-own-a-home-again-2011-3#ixzz1H5kSZETI
Perhaps attitudes will change, and folks will just see houses are somewhere to live, or do we think that housing will always end up in these boom/bust cycles?
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Advantages of buying a House.
. Roof over ones heads and to prtoects ones family. ( Natural instincts )
. The only capital expendiutre for which long term finance is avaivlble at a resonable cost.
. With the right kind of financial instrument to purchase the House it can support the changes which may occur in the owners lives.
. It also allows to be place as security in the event one wishes to raise finance for business, school fee, childrens weddings etc.
.Gains made on the House is also tax fee.
.Hedge against inflation.
. Securing the future of the off Spring ( The expression Bank of Mom & Dad would not have come about without this )With so many advantages, flexibilty, and long term gains it not surprising that the return are less than some other riskier investments and not forgetting what ever gains one makes it will be from some one else’s money.
The purchase of a House has to be done with mind & not heart. Remember gain is made on the price you buy at & not at what you sell at. If one buys a house as an investment it is important to have staying power & the gearing % has to be managable allowing for the market movements. In times of high inflation getting a 25 year loan at a competative rates can pay handsome dividends. I for one would not pay off any Capital & if I need pass the property to the next generation with a loan value of 25 years ago & the current value of the House. THe benefectors will still be quids in. This way I can also negate Inhertance tax.
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@shakeel wrote:
Advantages of buying a House.
. Roof over ones heads and to prtoects ones family. ( Natural instincts )
. The only capital expendiutre for which long term finance is avaivlble at a resonable cost.
. With the right kind of financial instrument to purchase the House it can support the changes which may occur in the owners lives.
. It also allows to be place as security in the event one wishes to raise finance for business, school fee, childrens weddings etc.
.Gains made on the House is also tax fee.
.Hedge against inflation.
. Securing the future of the off Spring ( The expression Bank of Mom & Dad would not have come about without this )I guess this was the motivatin so many Brits got into trouble buying way overvalued properties in the period 1998-2007. The buying propaganda was too strong.
Let’s see:
” Roof over ones heads and to prtoects ones family. ( Natural instincts )”
What about renting a property for half the money of what the mortgage would be? Isn’t this fulfilling natural instincts?
“With the right kind of financial instrument to purchase the House it can support the changes which may occur in the owners lives”
In the current situation, when moving house becomes a liability. NObody sells and nobody buys. When moving, one either cuts the prices to the bone or one becomes accidental landlord.#
“It also allows to be place as security in the event one wishes to raise finance for business, school fee, childrens weddings etc. “
MEW-ing was the road to perdition for many people. Once you do it once, you go the full monty and use the UK house to buy Spanish, caep Verde or Turkey properties…
” Securing the future of the off Spring ( The expression Bank of Mom & Dad would not have come about without this”
Good old cash would also be good.
I am all for buying properties, but for not more that 3.5 yearly salary. Which about 50% of the current UK prices…
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