OK we have seen that in the US. Buy without thinking of what can happen in the future.

Your comments here are not really responding to John but rather putting forward an argument against buying in general in the UK in this market it seems. As a landlord looking at investment alternatives of which real estate is one I agree that it is better to rent than to buy in most cases today as the net return is simply not there for the landlord.

I've read the Economist report but I do think that the "window" of overvaluation will close quite a bit when rents rise steadily, property prices stay put and the perceived adequate return (expected ratio of rents to valuation) for a landlord goes down, as I think it should.

As an example, I have been looking to sell Uk property as I can get a better, and tax free, return elsewhere and with less general grief (usually) and less worry about inheritance tax and will planning. HOWEVER, I did not get much interest in my area (as is typically now the case) but thought that in today's investment climate the tax-free alternatives were probably not as safe and rosy as they might be to justify making the sale in any event. SO I'm "happy" to take a lower return on the real estate investment for the relative safety offered in the same way that investors are buying into US treasuries even though they offer minimal return. All meaning that right now with the investment choices available owning real estate is looking very good so the adequate return should be lower in the Economist study on over-valuation.

Note that the Economist says that US and Canadian real estate were both still over-valued and that Irish real estate was 20 percentage points less-overvalued than the Uk's (32%) which would seem to be ludicrous in my view.

The French (or at least many of them) have a mentality that a house is somewhere to live and not something to bought and sold like shares on a stock exchange. I, for one, do not feel comfortable renting but at the moment, due to my long absence from the UK, it is a viable alternative to jumping in feet first and buying the wrong property in the wrong area. I find it extremely hard to find a suitable property in an area I am not totally familiar with.

This is my fear also.
I do however see a lot better selection of homes for sale than for rent.
I agree with the French in that buying a home is to have a place to live rather than playing monopoly.
I've heard of people who have lived in the same home for five generations. Imagine that.

Cheers

yes, the uk had that as well - we called them Lords, then it was the neuveau riche who got their money from tea and slavery.
meanwhile the common serf only had a tied cottage which went with the job, when you got old or infirm you had to move in with relatives or live in an alms house or poor house.

regretably the French seem to have a better sense of roots than the average Brit.

Not much has changed then!

Here is an article in today's press that provides one slant on the UK housing market. I am sure the government is loving this high inflation as it will eventually make house prices look reasonable and the national debt look respectable:


http://www.thisismoney.co.uk/money/m...ices-soar.html

If you can get the mortgage, I still think it is cheaper to buy.

Indeed, IF property prices can reasonably be expected to rise around 3% per annum for the foreseeable future and rents are rising by an equal amount then yes it makes more financial sense to buy but if you are paying near 6% per annum for your fixed mortgage because you can't scrape up a decent deposit the attraction diminishes greatly. If you have cash then there now seem to be few better alternatives than buying that I can see.

ok i'm an old duffer who had it easy when it came to house prices being so low when i first bought.........
salary £40\wk, mortgage interest 8%, deposit needed min 10%, took 2 years to save
oh yes and we had to live as well
we still have some of our original furniture. !

so why is it in the current "I want everything NOW" environment, everyone seems to think that owning a house is a human right. ?
they come out of uni and complain as still living with mum and dad, have no money to put down as a deposit, and see owning a property as the next stage on a list they seem to have hidden somewhere.

once we stop giving people things they "want" instead of "need" perhaps there will be more properties sold, and everyone will be happy.

but please, please, please - lets not go back to the toxic period of 100% mortgage, but if we give you another 10% you can get loads of new furniture etc for inside the house, and what about another 10% as it would be nice to have a new car on the drive.
and then the wife gets pregnant.......

I think that we are already close to a return to that 100% mortgage.

The return of the previously vaunted mortgage products (low %age fixeds, trackers and 100%s) is going to play a big part in the return of some sort of stability to the property market but this time around things are not going to be so cheap. We have to remember though that the BOE rate is now next to zero and is now expected to remain near that level for a good while yet so the banks are making the margins they "need".

We already touched on this want and need bit a few days back as being the reason young FTBs just have to have their house even if it is not really up to scratch in terms of quality or would pass muster if their parents were looking to buy that self-same house when it was their time.

I recall pitching the possibility that renting was a better bet than buying in some cases a few months back on here. I was initially met with stubborn resistance all round before a few appeared who had thought the same way and others did their own research and saw that it could make sense.

It's a crying shame that home ownership has been pitched as the great dream, particularly to those who actually simply cannot afford the commitment in terms of cash and the immobility that it creates.

I will admit that there is now an acute shortage of suitable housing all round though and this does make things more difficult.

well having a 3 bed semi for sale, well looked after late 60's property, fully up to date heating etc, at a price many would find laughable, on the edge of the Fens.
one of almost 20 in the area at the same price, have had 2 visits. one admitted she hadnt considered a house that big was never seen again, the other made an offer at the bottom end of our "needs" bracket which was expected. he then spent the next 6 weeks trying to get the price down again and again. when he tried misrepresenting the surveyor's report to demand more £thousands off I pulled the plug. the agent was distinctly on the side of the buyer rather than the seller.

as the thread says Location, Location, Location.

Renting makes perfect financial sense in this climate because you can get a much better return on your money elsewhere. Personally, I would rather invest the money in my small business than in a house. I get a far greater return.

In the UK, you can also generally rent a better house than you could afford to buy.

But, I continue to struggle with the uncertainty around renting (when the landlord decides he wants to sell for example) and the inability to fix things you don't like about the house.

I personally feel that it is precisely because that is not the case, that UK real estate has shown the resilience that it has.

Fine, if one has a small business then one can put one's cash there but even then one normally forms a limited liability company and at least attempts to get the finance from the bank - that is primarily what limited liability companies are for. Small business owners are not Mr Average UK prospective property buyers or renters.

Those who would have put their cash into stocks back around 2000 are OFF that idea for the foreseeable future, there is zero return in banks, savings, Govt Savings and in life policies, so property is considered a fair bet, especially for one's children or from a pooled resource.

Renting can be attractive because the numbers can pan out that way in certain locations but it does seem that we could again be getting into a period where cash buyers or those with a decent deposit and good mortgage terms, who can negotiate hard bargains from the vendor, may be having their way for a good while once we get over a further soft period of about a year.

I realize that most people are not small business owners, but I am and I was discussing my situation. For me, renting is the smarter financial option rather than having my money tied up in a house.

As for borrowing money rather than using my own - I'd never borrow money from a bank unless I have to. Each year, we invest money in our business and each year we get a better return than from anything else we could do. (Well, except for those Apple shares that my husband insisted we buy years ago at $12 a pop - those were pretty good ).

After the last financial crash wiped out so many people's pensions and home values, I realized that the only thing you can count on in life is yourself. So that's where I choose to invest my money.

I have invested in Blue Chip dividend stocks for years and done okay. Reinvesting the dividends at a lower share price when the markets are down has proved a good, if not overly simple, strategy. With the pension funds, it is more than likely the high management fees that have wiped them out and not the market gyrations.

Back to property, I notice many of the new high priced developments in the UK now have around 40% "affordable housing" units incorporated into the development. I would be interested to hear people's opinions on this because there is no shortage of failed social engineering experiments in the UK.