How to save for a house deposit 🏠


(Duncan) #84

It’s not about the last 70 years; it’s specifically about the last 10. House prices are affected by a lot of factors at all times, but my point is that the dominant one in recent history has been the prolonged near-zero rates, which has allowed for quite a lot of money to be created. So what happened before that is, largely, irrelevant because there were so many other confounding factors. But run it through your head for a minute. If interest rates are 1% (to the consumer), a person can afford to borrow X. But if interest rates are 5%, then they can afford to borrow a lot less than X. It’s not the only factor, and the pressures from Buy-to-Let loom large here, but I think it’s really easy to see just what has happened in recent history with historically low rates. Your 70 year data is irrelevant :wink:.

It’s strange that you would quote Molior supposedly in support of your argument, given that their data shows the exact opposite. Oops.

I don’t concede it because I never denied it! Because it’s obviously true from the data. But it’s assuming that the trend will continue that’s flawed.


(Duncan) #85

Yeah, this discussion is terribly simplistic. If you want both barrels I have plenty more :wink:. But it seems quite the job to convince people of the simple truth that housing is not a one-way bet, even if it has been for some time at the end of the 20th century.


#86

I guess it depends on how people are looking at it i suppose. I want my own place, because i want my own place and land. I don’t want to have to get permission to do anything all the time. Its not necessarily a monetary investment, though in the long run there shouldn’t be any huge down turns in valuation of a property. like anything things go up and down. I’m willing to accept the responsibility and everything that comes with that.

I think it also depends on things like where you live, life goals, etc.


(Duncan) #87

That’s actually a valid reason to differentiate between renting and buying. Section 21 is another good reason.

True, there is a general trend. But our times are, monetarily, rather exceptional. And market timing, at least for a first time buyer, is a significant factor because they are more exposed to a potential negative equity situation.


#88

I am currently starting the save for a house deposit and I can’t recommend the lifetime ISA enough. 25% extra a year! Plus I have a stocks and shares one so hopefully that will earn more interest than if I just left it in a cash isa (I am aware it is riskier)


(Matt) #89

The issue is there is no evidence at all that the dominant factor has been near-zero rates. It seems flawed to say that a factor that has seemingly never impacted housing prices now is, whereas there are other constants that would unquestionably explain the increase in housing prices. Occam’s Razor would suggest you’re over-thinking the situation.

I understand what you’re saying, but you’re failing to take into account that even at low interest rates, young people cannot afford to get onto the housing ladder: https://www.ifs.org.uk/publications/10505 Now, you may say “therefore they’ll be an excess in homes and prices will drop”. But no, that won’t happen. Why? Because the opportunity to invest in a second property and rent it is too good to ignore for many: https://www.telegraph.co.uk/news/2017/08/18/one-ten-british-adults-now-second-home-owner/ Even with higher interest rates, remortgaging a house or increasing rent would be used to offset any issues.

And the paper I linked you was used for that Bloomberg article…It actually shows that the housing glut is past it’s peak, and beyond that with the average price per foot of the properties being >£1,000 (average is £200), then the properties are hardly indicative of normal housing.


#90

I’m relatively young and am now starting to save away for a house-deposit (using a mix of both a fairly decent interest rate on a current account and the LISA (Stocks&Shares).

For me, I have rented since leaving home for University and the last two years whilst I have been working, and personally for me, buying a house just seems to be the better option. I can see the positives to renting - short commitment/ lack of depreciation or the need to pay for repairs.

But for me the actual tangible “owning” of the house means more, being able to do with the property what you want and at the end of the mortgage actually owning the house that you have built and been paying for, for the last X amount of years. I also feel like in a way renting is only helping someone else make money/ pay off their mortgage for that property so why would you want to do that when you ‘could’ own your own.


(Lewis King) #91

My ex and I bought a flat just over two years ago.

She broke up with me about 5/6 months ago and we’re splitting it/selling as I can’t afford to buy her portion out. I should come out of it with a fair deposit for my own flat… but I don’t know if I’m going to immediately buy again, too early to start looking now to be honest.

Looking back at it, I think I wish I was still renting purely so I could just kick her out and not have her in my life anymore, but I know I’m obviously skewed by the fact this breakup has gotten pretty toxic and sharing the flat still is a bit of a nightmare when you’re trying to move on.

I don’t think society is really built for the way I’m going down the ladder, you’re always meant to go up. I know I cannot gain from the first time buyer incentives now (no stamp duty, LISA, help to buy etc), but then again, didn’t use any of those to buy before…


#92

How did you save for your orignal deposit?
I hope it all works out for you in the end


(Lewis King) #93

Working since 17 in tech, so fairly well paid relatively to my rent at the time. Split deposit with my ex, but should come out of selling this one with enough for my own place, which would be nice.


(Lewis King) #94

Having said that, best tip for me was moving all my money into pots the day I got paid (been doing this for years, way before Monzo’s idea of pots) and it worked very well for me to see consistently that money increase on a monthly basis.


(Yen Pham) #95

Totally agree with you here @moneypenny! If I try to push frugality too far, it makes the whole thing unpleasant and unsustainable. I try to focus on “relatively affordable” luxuries – buying groceries for a nice meal, for example, instead of eating a mediocre meal out. I haven’t been very good at cooking for myself recently though! Your meal list is very impressive :heart_eyes:

This is also a really great idea that I’ll try out in future!