{"id":980,"date":"2019-02-23T02:00:11","date_gmt":"2019-02-23T02:00:11","guid":{"rendered":"https:\/\/adamfayed.com\/?p=980"},"modified":"2024-05-24T06:34:08","modified_gmt":"2024-05-24T06:34:08","slug":"i-can-afford-to-buy-but-i-dont-want-to-get-on-the-housing-ladder-heres-why","status":"publish","type":"post","link":"https:\/\/adamfayed.com\/it\/financial-planning\/i-can-afford-to-buy-but-i-dont-want-to-get-on-the-housing-ladder-heres-why\/","title":{"rendered":"I can afford to buy, but I don’t want to get on the `housing ladder`. Here’s why."},"content":{"rendered":"

Understand why some people can afford to buy but choose not to get on the housing ladder and discover alternative international income-generating assets<\/a>.<\/p>\n

I can afford to buy a house, but I don\u2019t want to buy.\u00a0 <\/span>For some, that is an amazing statement.<\/p>\n

I come from a culture (the UK) where `an Englishman\u2019s home` is his castle, and people speak about a `housing ladder`. \u00a0<\/span><\/p>\n

China, Singapore and Hong Kong arguably have a bigger cultural obsession with housing.<\/p>\n

I am often asked by people I know `why` I don\u2019t want to buy, as if not buying needs justifying.<\/p>\n

The main reasons I don\u2019t want to buy is:<\/p>\n

    \n
  1. I have looked at the figures inside out – sure, sometimes housing beats stock markets.\u00a0 <\/span>Some housing markets at certain times will beat stock markets, for example US Housing beat the S&P from 2000-2010 and Australian housing beat the markets for 10 years or so until 1-2 years ago. However, over a lifetime investing (40-50 years) housing has always lagged markets.\u00a0<\/span><\/li>\n
  2. The direct costs are high – that reduces net gains.\u00a0\u00a0<\/span>Take the UK as an example.\u00a0 <\/span>The costs of buying (stamp duty) is charged at 0-12% upfront.\u00a0 <\/span>The only way to avoid it is to buy the cheapest houses.\u00a0<\/span>\u00a0There are also the lawyers and other fees.\u00a0 <\/span>The upfront fees, therefore, can be 5% or higher. Then there is the annual fee for owning (known as council tax) which can cost 1%-2% per year. In comparison, you can get access to markets for 0.03% per year.\u00a0 <\/span>That isn\u2019t to mention maintenance costs.\u00a0<\/span><\/li>\n
  3. The indirect costs are high – time is money. All those hours spent viewing houses, and renovating the house all add up.\u00a0 <\/span>Another indirect cost is your lack of flexibility.\u00a0 <\/span>If you can\u2019t accept a pay rise due to your house and not wanting to relocate, that can be a huge cost. \u00a0<\/span><\/li>\n
  4. The risks are relatively high – but this one depends on the market.\u00a0 <\/span>If you are buying in a developed country with strong legal systems, the risks aren\u2019t super-high. In most developing countries, the risks are much higher. Remember most countries have confiscated property in the last 40\u201350 years.<\/li>\n
  5. It is an illiquid asset – if I want to sell land or property, it could take 6 months or longer. \u00a0<\/span><\/li>\n
  6. There is a more efficient way to purchase property – Real Estate Investment Trusts (REITS) have the following advantages.<\/li>\n<\/ol>\n