By Michael Epstein
Going back to the “Good Old Days” if you could afford to buy a property you did.
This gave a family stability and security and an asset to pass on to the next generation. It was seen as a waste of money to pay out on rent.
When property prices rose, it was never more than by inflation (be it wage or consumer inflation)
Indeed the old fashioned building societies were very strict in their lending criteria, which meant that only a certain amount of strictly limited money could be made available for a mortgage and crucially a building society could only lend from its available funds (the savers deposits) The effect of this was to put a brake on house price inflation.
For generations this worked very well. Then the banks got greedy!
What if they lent more money?
More money chasing the same property must increase the value of the property?
And as prices push up so more money needs to be borrowed, which means the banks lend more and of course because they are lending more they are earning more.
Desperate to compete, building societies changed their rules and some borrowed to lend.
The seeds of destruction, which led to the banking crash were now in place.
In my view this was the trigger point for all the scandals that have beset the housing market.
When the market reverts to a situation where you buy a house because you want to live in a house that you own, sanity will be restored.
History is littered with examples of investments that can only increase!
I am getting out of property and buying Dutch Tulip Bulbs!
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Many of us have invested heavily into our properties and have tried hard or continue to try hang on to them for as long as we can. We do this as a form of security, pension planning as part of our hopes in our old age more comfortably when we might or are very likely to downsize. However there can exist many problems with this idea – downsizing to a half or quarter the size property does not mean you pay half or a quarter of your soon to be home for you land up paying DISPROPORTIONATELY more or and b) you, like myself, find that your’ interest only mortgage’ set up by your ex-husband leaves you in a precarious place to have these monies to re-pay before even making the choice to move home let alone incur all the costs of moving from estate agents, solicitors etc etc……the quandary is do we not bother to invest in another property or do we rent and invest in tulips bulbs? We live in such uncertain times, the ceaseless end of options are there but the roooooot or my certainty in moving my life forward financially at the age of 55 is a worrying one as my hopes are still to leave my children with some money too…