PooterGeek

11 Comments

1. chris
   Posted 19Sep05 at 09:21 | Permalink

   I still have a TV but we hardly watch it any more. It lives in the bedroom for us to watch selectively.
   Whilst having some major building work done we had to go without TV. We’ve never been happier.
   The only “problem” is that we never recognise “celebrities” in the newspapers any more.

2. Tim Newman
   Posted 19Sep05 at 09:34 | Permalink

   I grew up without a TV, my mother refusing to allow one in the house. We were provided with books instead, hence nowadays I can read, write, and spell.

3. Linda Grant
   Posted 19Sep05 at 09:42 | Permalink

   Hmm. My experience is the exact opposite, Damian. It’s all a matter of timing.

4. PooterGeek
   Posted 19Sep05 at 10:07 | Permalink

   Exactly. Most of the time in Britain buying property is the best investment you can make. Usually, if you can afford it, taking out a mortgage is much more sensible thing to do than renting. Presently it is not.

   There are two senses in which timing is important.

   My parents’ generation, living in a time of high inflation, did well to buy the most expensive property they could afford because compound increases in their incomes inflated the initial purchase price away. When you take home £500 a month, £200-a-month mortgage payments can hurt, but they become far less painful once your salary increases to £1000. They also benefited hugely back then from, frankly regressive, mortgage interest tax relief. Inflation is, however, dead. (And inflation is, anyway, an anomalous and mostly post-war phenomenon. Over most of this country’s history it has never really existed.)

   Secondly, if you buy in one of Britain’s busts, when house prices are low relative to incomes, you have also been wise because, eventually, another boom is likely to come along and boost the paper value of your home.

   But we are now at the tippy-toppy turning point of the biggest single peak in UK property values ever. Over the past year London has had its biggest fall in sale prices since 1992. And there is scarcely a whiff of inflation around to rescue recent buyers from the terrifying prospect of paying a massively increased proportion of their lifetime earnings for their homes.

   Unless something fundamental has changed about the property market—several million unaccounted for immigrants all lurking in a ditch somewhere waiting to buy, say—property in the UK is over-valued. Hysteria works both ways so I would bet a large sum that the inevitable fall in house prices will be as excessive as the crazy rise that preceded it.

   At a time like this it is extremely dangerous for Channel 4 and other broadcasters to put out programmes like the one I linked to, advising first-timers to take terrible financial risks to buy into what has become a pyramid scheme. Worse, this time it’s global. Even the mild-mannered Economist thinks we’re all doomed. [WARNING: Linked article contains some of the most frightening graphs ever published.]

5. Matthew
   Posted 19Sep05 at 16:18 | Permalink

   I’ve rented all my life, and agree with most of the arguments here, particularly ‘dead money’, as if giving money to a bank in the form of interest isn’t ‘dead money’.

   However I think a distinction needs to be made between buying houses as a speculative investment, and buying one to live in.

   The latter seems to me rarely a terrible idea, even at current elevated prices. Not doing something you want to because you think prices are overvalued is no less speculation than buying one primarily because you think they’ll go up, and possibly as futile. Ever since the spread-betting firms launched their house price indices people have been betting they’ll fall, and they’ve lost a lot of money, and there are few signs of a crash. According to the ODP even in London house prices are up 1.8% over the last 12 months.

   Renting does now, finally, appear to be cheaper. But not much - on a two-bed flat where live a mortgage rate of 6% equalises the cost. Mortgate rates aren’t 6%, but that doesn’t include the costs of repairs etc, which are usually underestimated and must add 1-2% annually.

   Also of course there is the matter of repayments. But irrationally as it is, many people i know like the idea that it enforces some discipline on one’s savings.

6. Beth
   Posted 19Sep05 at 23:31 | Permalink

   Several bulging bank accounts? You only grow more interesting, Damien.

7. Beth
   Posted 19Sep05 at 23:33 | Permalink

   or Damian…lol

8. PooterGeek
   Posted 20Sep05 at 00:04 | Permalink

   Beth, you are a shallow woman. But I am willing to overlook this defect if you are hot.

   (Besides, I am also unemployed, with skills so specialised that I have never had a job I can fully explain to my parents. PooterGeek plc is asset poor, cashflow negative, and has mostly operated in an industry niche that, right now, is sharply contracting. I noticed on Saturday, however, that Royal Mail is recruiting for Christmas.)

9. morgan
   Posted 20Sep05 at 10:38 | Permalink

   Damien/Damian. The devil’s in the detail.

   The joy of renting is that I can live in better places than I can ‘own’ with a mortgage. Some years ago I bought a raised ground floor flat in a period building in SW15 which turned out to be a badly botched conversion. Sound seepage was so bad, I could hear my upstairs neighbour on the phone to her mother. It wasn’t all bad: when I couldn’t hear her, for instance, I could always rely on the hearty baritone chuckle of the man downstairs to see me through. I toughed it out for two years before selling it - not without a certain amount of guilt - to some poor booby. I made 80k and parked the money. I now live in a flat over looking the river. My rent has risen by just £10 a week in 3 years and if anything goes wrong I just call my landlady and it’s sorted out within 24 hours. People call me odd for not buying a place but I couldn’t be happier.

10. Ian
    Posted 20Sep05 at 12:30 | Permalink

    Seeing as once you get on the mortgage ladder you’ll most probably get stuck on it for the next 20-30 years, I don’t see why looking at the current state of the market is anything to put you off, you’ll probably go through a “bust” at some point in that time.

    In my own experience, I bought my first property during the last peak, when interest rates were 15%, and suffered a £12,000 negative equity for many years until I sold, but it provided a base for subsequent properties, the next one yielding a considerable 100%+ profit (which promptly got pumped into house #3).

    Tragedy and farce have eventually placed me, and my partner, in the enviable position of considering a combined property, using both our investments, that will be mortgage free and worth a shedload. I’d never have got here if I’d rented my first property.

    I don’t think timing matters at all due to the extreme long term prospects, but leaving yourself out of the mortgaged property market for an extended period means you’ll _never_ enjoy the beneficial opportunities that are quite likely to happen in the 20+ years that follow.

11. Jody Tresidder
    Posted 20Sep05 at 20:15 | Permalink

    Cheer up, Pooter. Here’s a spoonful of schadenfreude at my expense. Bought - with boostrapped difficulty - into the Cambridge property market (cunningly before the market peaked around 16 years ago) shortly before a job forced a move to the US. General appluase from our families for our financial long sight.
    All our friends whistle softly if ever the topic of our Cambridge property comes up. “Hey, Gates sneezes in the direction of Cambridge - your nest egg doubles, right? Golden postcode!!Clever you!!”.
    It’s not a negative equity situation, so much as a weirder hiccup. Just the one bloody street in the city that’s got stuck in a non-gentrification rut.
    I tend to think of our house fondly, though, like the Charlie Brown Pigpen character with a little dirt cloud hovering in permanent proximity