For me, wanting to buy is not about an investment. I want somewhere secure and stable to live. The "dead money" aspect of rent versus a mortgage is just a bonus.<p>It must seem alien to most in the west the sheer lack of protection renters have in England (property law is devolved); it is based entirely in private contracts, and what law does exist is rarely if ever enforced. Just last week Parliament rejected an amendment requiring all rented property be "fit for human habitation". Rent rises are not capped and often used to evict tenants, the legal minimum notice for eviction is two weeks (this does not increase with time rented), the landlord is required to carry out repairs but notifying them of such can be grounds for eviction.<p>These may be the extremes of renting in England; however you can ask any renter about being charged outrageous contract fees, referencing fees and being screwed over on leaving over the deposit and "cleaning fees" (even when the property is left in a professionally cleaned state). There is little-to-no repeat custom in renting so they get away with it.<p>Little movement has come from either of the two main parties (Labour & Conservatives) to improve this, thus to have stable accommodation you have to look to buying.
It makes sense to buy a house because, over the long term, the value of houses goes up while the value of money goes down.<p>Even better, the real cost of mortgage payments keeps going down (thanks to inflation) while the real cost of rents keeps rising. My house would now rent for around 3x my mortgage payments, except I paid off the mortgage more than a decade ago so my rent is zero.<p>There's always a chance house prices could collapse, but that's unlikely in the UK. First, it's a small island with a rising population so there is real demand, mainly in the south of England.<p>Second, it's seen as a "safe haven" so foreigners are buying houses in the UK -- new developments are actively marketed in China, Singapore etc.<p>Third, if you buy a house and rent part or all of it out, the tenants will pay the mortgage for you, and they really have no choice. Governments supporting a "property-owning democracy" (a Conservative Party ideal) have made it harder to rent by selling off social housing, removing rent controls, giving tax allowances on mortgages etc.<p>Historically, on average, buying a house has been a one-way bet in the UK for around 50 years. It seems pretty much insane to imagine that this will always be true, but it has been true for my entire lifetime.
As a brit born a few years too late for this to be a sensible possibility at all I'm sick and tired of the social pressure from every angle telling me I'm not a real adult until I have a mortgage.
> <i>My parents rented the family home in Paris for 45 years, and although they did buy a seaside flat and a cottage in the country in the 1970s, their value has only kept pace with inflation</i><p>American home prices only started rising, in real terms, after WWII [1]. This is driven by people wanting to drive more income to buying land, i.e. treating land as a superior good. Growing government intervention is also a cause.<p>In the long-run, real house prices appreciate at the rate of inflation. This effect is stable across countries, cultures, and centuries [2]. It vanishes in the short term amidst the noise of credit markets.<p>Can't find the source at the moment, but the most fascinating study on the subject looks at asset prices in Austria-Hungary and surrounding states. The story is uncomfortably familiar. Decade after decade, credit-fuelled gains were safeguarded in the form of development restrictions. This served to transfer wealth to the landed elites.<p>[1] <a href="https://www.dallasfed.org/assets/documents/institute/wpapers/2014/0208.pdf" rel="nofollow">https://www.dallasfed.org/assets/documents/institute/wpapers...</a><p>[2] <a href="http://www.amazon.com/Houses-Historical-Analysis-Property-Prices/dp/1907994017" rel="nofollow">http://www.amazon.com/Houses-Historical-Analysis-Property-Pr...</a>
For some reason this is a really popular topic to drag up on a slow news day in the UK. The facts are that UK own-home ownership is actually quite average compared to other European countries and others around the world. Wikipedia has a helpful table [1] about this topic.<p>The UK ranks 37th lowest out the 46 countries included. France is nearly the same. Germany and Austria are the only two large European countries that are lower.<p>[1] <a href="https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate" rel="nofollow">https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...</a>
An Englishman's home is his castle?<p>Maybe it's simply that owning a home lets you do more with than renting one. You can add extensions, remodel much of it, potentially demolish the entire thing and rebuild it, that sort of thing.
<i>The old Catholic distrust of money and profits permeates our view. This is probably why generations of French people, my family included, have never fantasised about owning their home. We didn’t have to. It didn’t make any sense and wasn’t an ambition in life.</i><p>Spain is also a Catholic country and everyone has always wanted to own a home, as in the UK. Lately there are more rented flats but the reason is sky-high house prices and low income, not that people like renting.
A: because renting is so expensive. We have no rent caps in this country, so it's actually cheaper to pay off a mortgage than it is to rent. Plus you actually get to keep that money rather than having it line the pockets of a landlord. Plus house prices are increasing at a much higher rate than inflation. So it's a triple win.<p>I had to rent for almost 20/years before I could afford the deposit on a house, but I'm glad I finally could because I simply couldn't afford to rent any longer, even though I would've quite liked to.
The UK has historically been a society where the poor majority worked the land and rented from a few wealthy landowners. [0]<p>This builds a psyche whereby to own land becomes a social status.<p>Bring into that heady mix the likes of Maggie Thatcher's "right to buy" [1] scheme, whereby the lesser class (council house residents) are in a position to buy their homes at a fraction of their apparent worth, and suddenly you need to own your house or be seen to be less than those that do.<p>Then a new generation comes along and sees that their parents "foolishly" sold off a couple of houses years ago that would now have been worth a mint, and everyone must buy a house else be caught out like their parents.<p>Buy to let then brings in the mentality of "why would you give money to someone else to pay off their mortgage when you could be paying off your own?" and everyone must buy as early as possible.<p>Pure conjecture on my part.<p>0: <a href="https://en.wikipedia.org/wiki/Social_structure_of_the_United_Kingdom#History" rel="nofollow">https://en.wikipedia.org/wiki/Social_structure_of_the_United...</a><p>1: <a href="https://en.wikipedia.org/wiki/Right_to_Buy" rel="nofollow">https://en.wikipedia.org/wiki/Right_to_Buy</a>
So there's food, water, and shelter.<p>You can get by as a vagabond without a stable source of these - but let's assume that particular lifestyle doesn't appeal (I've tried it. Fun for a while.).<p>You can work, for an amount sufficient to subsist - and nothing more. A lifetime of work.<p>You can be independently wealthy. Not much to say there.<p>Let's say we're between 2 and 3.<p>How do you get towards 3, if you're in 2? Realistic options, no lottery wins here.<p>Well, you can save some of your income. Maybe that'll be enough, and maybe you'll eventually have enough to be able to rent until there's no more you.<p>You can try to improve your income. To do that, it helps if you're mentally fit. Having a table at home to eat at; having a computer setup if you're a remote worker; a nice bookshelf; whatever. Things help. It's hard to work for years on years in material discomfort to build a retirement fund.<p>So you own some of these things, and you rent.<p>Every so often, perhaps every year, all of that Stuff gets bundled up. Boxed away; sent in transit. You remove shelves; buff up floors; repaint walls. Then you sit and wait for the bill from the landlord.<p>Bugger, that's a hefty deduction. Next time, you'll be a bit smarter, I suppose. You won't drill that hole in the wall. You won't pester about the broken washing machine.<p>The cycle continues. Maybe you alternate material discomfort.<p>Eventually, though, you're probably going to get tired of it. Because fundamentally, you're doing all of this not because you want to, but because you have to - you can't rely on the landlord to provide you with stability.<p>What next?
Same situation in Norway. But the tax incentives are so many that if you can you should buy, from an economic perspective. of course there is risks. And if mobility / freedom is weighing more than money, maybe you shouldn't buy?
Can't pick just one comment to respond to. Short version: y'all are bonkers.<p>Assuming that home prices can only go up is harmless when that mortgage is manageable. But holding on through several business cycles is problematic when debt service is a high proportion of income. If you miss a few payments you'll learn that you never really owned the home.<p>Again, the harmless part I mentioned applies to many places but certainly not London.
I've always thought the point of owning a home is so that you have a place to live that is paid off when you retire. From what I've seen renting usually costs more than the mortgage + property taxes + insurance; of course there are still maintenance costs which are more ambiguous. But a large portion (~50%) of my "mortgage payment" is going into equity instead of going into a landlord's equity. If I wanted to rent and save enough to be able to rent during retirement (or to save enough to be able to buy my retirement home at retirement age) then I would have to be spending significantly more per month until retirement. Going into debt by taking a mortgage is a trade-off that makes sense to me given low interest rate and no depreciation in value (hopefully appreciation).<p>Edit: This is a US perspective but we've had the same question posed here.<p>Edit: The article's title is misleading. It conflates buying a home with irresponsible use of debt.
From an Australian perspective, this is an interesting read. I live in Sydney where houses are so unaffordable that it is cheaper to rent. Protection for landlords and tenants is pretty good and balanced, and in times where nutcases would gladly spend in excess of 60% of their monthly net income on a mortgage, I would rather wait and see until the market has settled. Analysts say the market is about to burst and that, for first time in history, it is considered more feasible to rent as opposed to buying and selling the property 30 years later (the NPV would be less than if I kept the money in a high interest savings account). Property is all the craze here, but soon the average Aussie will wake up with a huge financial hangover.
Debt: The First 5000 Years<p>Read it. All of this and so much more is explained within. The history of money, credit, coin, slavery...they're all related. It's a life changing book.
As an American, this is hilarious to read, given how high British mortgage rates are compared to those in the US, and how home ownership is so often considered to be "the American dream". Also, the brits I know (who do not live in London) aren't so cutthroat about money. Again, I think they'd accuse Americans of being that way.<p>But this may be true of Londoners.
This could be rephrased as, "Why aren't Brits happy to be landowner's serfs or banker's future target?"<p>Then, it's so ridiculous that it doesn't merit an answer. If they need help, there's tons of people from 2008 onward that can tell them all about the risk of the alternative.
So how do we explain this?<p>- Home ownership rates<p>37 United Kingdom 64.6<p>38 United States 64.5<p>39 France 64.3<p>Source <a href="https://en.m.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate" rel="nofollow">https://en.m.wikipedia.org/wiki/List_of_countries_by_home_ow...</a>
As a Brit in the US I don't feel the pressure is much different here.<p>It's a little resigned and accepting that in a big city you can't afford it, but it's still <i>expected</i> that eventually you'll move to the suburbs and have a home.<p>That's not surprising though as owning a home is generally about two things: financial responsibility and stability (obviously desirable), and actually <i>owning</i> the place that you live.<p>"A place to call your own".<p>Now we debate if that last one is actually useful but it's not hard to understand it. At this point it's a cultural force too. Also understandable.
That article just tells that France is more fascist than the UK and their government arbitrarily decided that their people are too dumb to manage their finances.