Housing shortage (UK specific)

All the different ways of solving the shelter problem. To be static or mobile? Roots, legs, or wheels?
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guitarplayer
Posts: 1300
Joined: Thu Feb 27, 2020 6:43 pm
Location: Scotland

Housing shortage (UK specific)

Post by guitarplayer »

I am now trying to rent a place in Scotland. The competition for renting flats even in remote areas is surprisingly fierce.

UK folk who have interest in the real estate market - do you think this shortage is a short term phenomenon or a long term trend? DW and I could afford to buy a small place, the question is whether it makes sense.

take2
Posts: 317
Joined: Wed Jan 09, 2019 8:32 am

Re: Housing shortage (UK specific)

Post by take2 »

If you’re planning on staying in the same location for the medium to long term (5-10 years) it almost always makes sense to buy.

FWIW I’m closing on a home in a HCOL part of U.K. and even with high stamp duty the break even for me renting vs buying is <5 years.

I have no clue about long term housing shortage or how it’s going to pan out. I personally wouldn’t invest in rental real estate in U.K. but that’s more due to unfavourable tax issues, dislike of illiquidity, and sufficient exposure to rental RE already.

However if you’re doing this for personal housing I’d recommend to treat it as a necessary consumer good and not an investment. It should be as simple as evaluating your projected fixed costs for rental vs purchase over the course of your expected duration in that location.

Run some cases with continued high inflation for the next [2-3] years to see impacts of rental increases. Alternatively you could negotiated a longer term lease with fixed price increases ahead of time. Evaluate the opportunity cost of tying up your capital, i.e projected investment income loss vs. fixed cost savings from buying (if any).

The trickiest part is evaluating how long you’ll be there but thats obviously personal. The trade off between buying and renting usually comes down to your risk appetite of flexibility and liquidity

chenda
Posts: 3289
Joined: Wed Jun 29, 2011 1:17 pm
Location: Nether Wallop

Re: Housing shortage (UK specific)

Post by chenda »

I agree with take2.

Whilst there is a shortage in certain areas, there are housing gluts in others. How that will change over the long term is hard to predict, although I would not anticipate any major changes in regional economic disparity for the foreseeable future.

ducknald_don
Posts: 322
Joined: Thu Dec 17, 2020 12:31 pm
Location: Oxford, UK

Re: Housing shortage (UK specific)

Post by ducknald_don »

The only possible fly in the ointment is rising interest rates. The current high cost of housing is predicated on low interest rates. If interest rates keep climbing then we may see a fall in house prices.

However I may be a little biased on this having lost a big chunk of money when house prices fell in the early nineties.

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