A great start would be getting away from the mindset that renting is somehow inferior to buying. There were plenty of what would now be categorised as middle class households in rented accommodation through the 1950s, 60s & 70s

I have never viewed buying a house as an investment. I never understood why people who only "own" one house would do so. It is a place to live and for me buying has been cheaper than renting an equivalent property. I have never gambled on the value of it going up. The fact housing prices have usually gone up over the years means little to me because I would be selling and buying in the same market.

However people do have to move house occasionally so where there a housing price crash then that would make it impossible for many who also didn't buy their house as an investment to move.

So ideally you want price stability but we will never get that in our supply and demand driven market unless there was just the right amount of housebuilding to stop the generally ever upward trend in prices and I don't see that happening.

If on the other hand you buy a house to rent then I guess you ought to do this based on your returns of the invested cash. So if you bought a house for £150K to rent, is the rent you will receive a better return on that money than investing it elsewhere? Basing your rate of return on rent + increasing value of the asset [iis[/i gambling. Mind you I am sure some people will still see property as a safer place for their money than a bank! Even if prices did crash the property is unlikely to be worthless and you could reasonably expect to continue getting some rental income off it.

Spot on! I'd happily rent, at least for a few years anyway. But it's just not worth it as the rental price is almost the same as the mortgage rate.

House prices need to be significantly cheaper, rental prices need to be massively cheaper. Think of the benefit to the economy if people weren't spending such a huge chunk of their income on housing.

I think the economic benefits work the opposite way. Personally I'd have got off the treadmill years ago if it weren't for the mortgage. At one time food was the main expenditure, now its housing. In the future it will probably be food, energy and housing.

Pain for the few for the long-term good of everyone. Call me Jeremy Bentham.

Agreed

Its incredibly expensive to rent. I've just sold my house and looking for somewhere to rent until we find somewhere to buy. I'd perhaps naively hoped that if we rented a house with a comparable value to the one we've sold, the rent could be paid by the interest on the sales proceeds. Not even close. Obviously the current depressed interest rates are a major factor, but given that they're not likely incease much for a while, it just makes the rental sector very pricey.

The solution is for lenders to stop equating loans to a ficticious formula that once was a reasonable guide to affordability but now is not.

Its time for lenders to do proper and fit assessements again, possibly to employ people fit do do such assessments and then trust those people to offer a home loan linked to the buyers income and age.

For example with my eldest and her partner at 24 years of age and both working in what a lender would class "professional" jobs, there is no reason why a home loan for them has to be limited to 25 years or three times their income, the absolute criteria should be their household budget which any lender should insist on - "show us how you are going to afford a £900 a month mortgage on your income" and then set the term, interest rate and total offer based on that.

In that respect I am pushing her towards The Nationwide in that they do still employ people who seem to know what they are talking about when it comes to homeloans, being as that is still a major part of their business model.

We're one of very few (any?) nations in Europe that do not have rent regulations.

And yet most other European nations have bigger rental sectors than exists in the UK, which presumably means that rent regulation (hardly a new thing) does not send prospective landlords off in a grand funk about not being able to make enough profit to make it worthwhile.

So on the one hand you say we need to stop seeing houses as an investment (which I agree with BTW), yet on the other hand you say investments can go down as well as up? A tad contradictory?

In any event it's not about investment. If you've bought a house you need to sell it for at least the value of the outstanding mortgage - break even if you will - unless you have sufficient funds to pay the difference. So in practice you're looking at people who have paid off all or the majority of their mortgage being the only folk who can afford to sell at the 'correct' price.

Not at all. What I was saying was that if you've bought something as an investment you should not reasonably expect the whole system to be rigged in order to preserve it's value.

The systems I was developing were in order that someone on the phone to someone applying for a mortgage could click a few buttons and get an automatic decision, thus taking the decision away from someone with experience of what was reasonable to an unblinking box stuffed full with rules the institution specified.

At least now I'm doing something socially responsi..... Oh.

Again, looking toward our continental neighbours, it is not uncommon to find 50 or even 75 year mortgages. Quite often the children of deceased parents inherit a partially-mortgaged liability, instead of a freehold asset.

When my mother died, I persuaded my old man to switch to an interest-only mortgage, to save himself a few bob each month

Nationwide will accept a mortgage agreement up to the principal borrowers 70th birthday, which is what I did to drop the repayments when our household income went into freefall about four years ago - lost 60% of income overnight - I've left it at that because the master plan is that I won't still be paying the mortgage at that age - assuming that I retire at the "normal" age then thats when this house will be sold with only a small amount left owing on it and a smaller retirement hole in the ground purchased with our own equity.

I couldn't give a damn what the house is worth, the next one just has to cost whatever equity I have in this one when I want to retire.

Its a plan.

And what if you haven't bought it as an investment? Is it just 'tough luck' for you as well?

If you have not bought it as an investment then you won't be expecting to make any money out of it.
Conversely, if you are looking to make money out of it, then it IS an investment.
If the overall market prices go down, so will the price of the next house you want to buy.

As I pointed out earlier, this only works if you've paid down your mortgage enough to be able to afford the sales price shortfall.

Good point and allows me to mention that even if you don't intend it, owning a house becomes an investment anyway.

The few? I think a housing price crash would bring pain for more than a few which is part of the problem.

I think people have forgotten what happened when prices crashed in the 90's. I bought my first house - a one bed 'starter home' - just before the market imploded. I sold it 4 years later for roughly half what I paid for it. As I'd taken an endowment mortgage (they were all the rage back then) I had to pay the full difference between purchase and sale price myself. Luckily both my wife and myself had good jobs and no kids so we'd been able to save enough to do this. Wiped out our entire life's savings though, and we've been recovering from that blow ever since.

Many others will not be in the position to do what we did and will be unable to sell unless they can make at least the outstanding balance on their mortgage. And since there were so many high LTV mortgages sold this will be close to their original purchase price.

Just one more reason why the housing market is so slow. Too many people who simply can't afford to sell for what new buyers can afford to pay. It's a mess.

I worry for young people today that are still obsessed about getting on the property ladder asap "as an investment".

Sure if you want somewhere to live, have a family etc, buying a house is fair enough but for young people early in their career the sacrifice of mobility is often a bad financial decision. House prices are not going to rise like they did between the mid 1990s and late 2000s any time soon, because the two things that drive house prices up - rising wages and rising loan to income ratios, are not going to happen this decade at least.

Also a lot say they want to buy because they want to avoid "dead money" by renting but they then underestimate how much their landlord pays for the upkeep and maintenance of their property, which when they buy a house themselves, they will start being liable for.

If someone wants a place to live, especially for a family, and can get a mortgage then go for it but I think when you get people rushing to get a house early in their 20s because they are chasing the prospect of a capital investment that will give them large gains over the years I think a lot are going to be disappointed.

Isn't that a key part of the problem, though: that we're worried about 'the market' and not whether people have somewhere decent home and affordable live?

Unless you're suggesting that we build enough council housing to supply everyone who needs accommodation then the housing market - in the sense of the sale and purchase of houses - is always going to be important. The issue is not with having a housing market, it's with the way that market operates.

Well, I certainly think what Labour has mooted this week is a nonsense.

I think that we need rent regulation – and a massive social housing building programme.

Even if the market improves quickly, it still doesn't deal with the fact that we have a shortage of housing.

My suggestion of peppercorn leasing of land and rents that reflect the build cost only - even at 50% of "market" rate, they'd still be an attractive investment and would lead to a readjustment of the rental market. Potential losers would obviously be those who rushed into Buy to let but hey, investments can go down as well as up eh?

[url=http://www.bbc.co.uk/news/uk-england-london-19793965This certainly won't help matters[/url