what is a property ladder? To me its a terrible show on H&G that my girlfriend makes me watch from time to time. Please explain what you mean.

He means owning vs renting. To be on the property ladder means you own your primary residence. The ladder aspect comes from the view that you'll use the current property as a step to get to a higher rung of property.

Firstly tahnks for all the repsonse, taking it all on board i can see the best option being just staying where we are and putting the savings away.

It just seems like such a buyers market that i would have liked to get on sooner, but after reading comments and doing a little more research it seems it hasnt bottomed out yet.

Also i live in derbyshire to answer the "where in uk are you?"

Thanks all... I think i may have been "brainwashed" as mentioned into thinking that getting onto the "ladder" is the be all and end all!

i see renting as dead money..?

renting really isnt dead money, especially when the alternative could be buying overpriced real estate or houses.

This!

I've seen so many people call renting wasting money, but I never see them say that about food (or other essentials like clothing).

This doesn't sound like a very good idea
Over stretching massively to invest in property caused a lot of people a lot of problems and the general consensus is that the market is far from bottomed out, especially given that the UK has only implemented 25% of the planned spending cuts - not to mention the impending eurozone implosion and the effect that will have.

I'd keep saving hard, as your level of deposit increases the market will continue to fall and you can really lowball some offers in a couple of years.

for a good mix of info/pessimism/realism/schadenfreude check out www.housepricecrash.co.uk post your plans there and see what they say. You should be doing some really heavy research on all this. gl.

last few posts on this have been soo helpful and really appreciated.

im now considering that the best options may be learn more about the market. stay where i am as its a nice enviroment at my partners mums house where we are staying and a good chance to keep saving.

i like the idea of getting a healthy amount of savings and be in the driving seat in a buyers market. the idea of being financially over streched is one that puts me off the whole idea. Coming back to poker i suppose its like being under rolled for the cash game your sat in - that sick feeling of slight dboubt and worry all the time!

thanks guys...all the input is great

also, what effects will the eurozone have on the housing maket - i know there will be some but you guys will more than likely be able to word it better for me ...

The main impact will be via reduced demand for UK exports, which will mean lower business profits, which alongside reduced business confidence will mean less job creation and wage increases, this will reduce demand for housing.

OP this is mostly echoing above comments but - its understandable that you are eager to get on the "ladder" as you are young, probably ambitious, and as ex military I'd hazard a guess that you like to "get things done".

But personally I think you would be better off veiwing the UK housing market as a treadmill rather than a ladder, its probably not going anywhere. The market is probably overpriced relative to historic multiples to income on average. There are obviously regional differences, and in your particular region there may well be some decent value properties. But demand for housing is just in too bad a shape (still egregiously high levels of personal debt, significant spending cuts still to come) to be worried about prices running away from you.

You've clearly put your original plan to bed now which is good, but if I read it correctly you wanted to find an investor from whom to borrow your required deposit, which is no different to taking out a 100% mortgage. Making a 100% leveraged investment only makes sense if you have a strong convinction that the price will go up AND you can afford the losses even if you turn out to be wrong. I doubt either of this criteria will be met for your average first time buyer in UK housing. If you wait a little time untill you can afford a deposit yourself you will save a lot a stress, and are unlikely to have seen a material increase in house prices in the meantime.

thank you for your reply. yes you seem to have me nailed under ambitious and a "get it done" type :-)

im going to slow down and not think that its a must to get me and my partner into our own house immediately.

I would like to say i have been really amazied by the level of details and tie you guys were willing to take to give advice and opinions.

My plan is to now just save, and look for a good opporunity when i / we can afford to put down the deposit ourselves and not have all the financial stress i have read young couples are putting themselves through to be on the ladder.

I have actually collected bits of posts i found helpful and printed them and will be showing my partner, as you all managed to convey you advice so well i would loveto share it with her.

thanks

The idea that renting is dead money tilts me to no end. I can afford to buy but renting is so much better yet trying to explain that to people just ends with them saying something retarded about equity. Most people never do a rent vs buy so they don't understand that for most people the difference between renting and owning is fairly small and that in some circumstances renting is considerably better. The only real advantage of owning used to be that it was forced savings for the undisciplined but even that is no longer true.

Dead money is a silly expression but it conveys the terrible mistake many made renting in the UK where in the past renting has been more expensive than owning - this has become far less true for the last generation or so but may become true again.

If you rent until retirement then (as a very rough approximation) the money saved renting instead of buying needs to have accumulated in investments to more or less equivalent to the value of a house. That's because if you imagine a 100% interest only mortgage for ~40 years you will more or less have a houses worth of equity just due to inflation. In the past this was simply impossible as there were no savings at all in renting.

I ignore real term movements in house prices as anyone who has the answer to that is far too rich to be bothered about whether they rent or buy their abode.

More tilting than 'dead money' is people who pronounce that it makes no difference if you own a house or are a tenant when you retire as in both cases you have to live somewhere. it makes a mega difference unless the tenant has saved a large sum of extra money.

Some good info in this thread.

One thing I'd like to ask though, a lot of you seem to say that buying property is not a good investment in the UK nowadays. Why is this so?

For example, if you could buy a flat outright for £70k and rent it at £500/month for 20 years+ that would seem like a good investment to me? Because you're creating the income stream from rent and your property will increase in value over a very long period of time. Am I way off here?

The first question I'd have is how realistic is that? I have no idea what the rental market is like. My rent is ~4% of the property value so getting 8.5% might be a little optimistic but I know nothing about the UK.

Second would be if it is a good deal why are you paying it in full? That makes no sense unless this is a unique deal.

Lastly even if you could get the 8.5% how does that compare to other investment options? Once you take off property taxes and maintenance your return is ~5% which is decent but not great -- especially when you figure that rental income in most jurisdictions does not get favourable tax treatment and you have to deal with tenants.

It would be an excellent return because its after inflation.

but we we cant assume 12 months a year rental and its pretty hard to get a deal like that in an area where rentals are solid. Its a mature market and there's a fairly straightforward relationship between rentals and mortgages, when it looks good its probably because the experts aren't convinced about the robustness of the rental market in that area.