I’ve been a house owner since I was 27. I’m currently on my 3rd house, but I have decided I will be selling up and renting.
The reason is easy. Its not good value. For you who are currently falling off your seat, let me explain.
We are being told that buying a house is in investment in your future, and you’ll get your money back as house prices keep going up. They are not making more dirt, so buying land is a no lose decision and other cliches drive this idea.
So, I bought my first house for £20k in 1997. It rocketed in value to £34k in about 3 yrs, and I bought a different house for £50k. I sold that for £75k a couple of years later and bought the 3rd for £80k. Today its worth £120k, so I’ve made money, according to the gross figures. Where is the problem?
So in 20 years, I’ve made £100k say the innumerate. Not really. The house that was worth £34k in 2000, is worth £45k today. The house that is now worth £120k has a £60k mortgage outstanding on it. So in cash, I have £60k and no home. But I have paid well over £80k in mortgage payments over the last 20 years.
So having paid the full value of the house in mortgage payments, I still only own half of it. Granted, I have had somewhere to live over that time, but its hardly the investment it could be.
What am I doing instead?
My answer is to realise we are moving towards a subscription lifestyle. Nobody cares how wealthy you are, just that you have a monthly income to pay for your lifestyle. Having a huge house, but not being to afford the electric is not something I want. Therefore, I am putting my money into a pension de-lux. Whether this works, I can’t answer, but it should be better than my current option.