Thanks so much for your kind words, Kristall. Glad you enjoyed it.

This is definitely some of the best consumer/investment journalism I have read for quite some time.

Thanks Alex and Stefano for your incredibly insightful replies.

Thanks for the great info, Stefano!

Indeed, Glasgow looks like a good deal to me mainly because it has not yet seen the huge growth other towns have experienced. But it doesn’t lack anything when it comes to the fundamentals – jobs, demand from growing population, bigger than Edinburgh yet close distance to it etc.

I have friends living there and the vibe of the city is trending too. Maybe Airbnb there would also work well, given it doesn’t have the 90-days restriction London has.

I have family in Glasgow, so can add a few tidbits here.

Their purchase in 2011 has increased on average 3% a year, for 7 years (according to Zoopla).
Now, their 4 bedroom house is in an up and coming suburb, under a 10-minute walk to a nursery, primary school, and secondary school. A 7-minute walk to the railway station, a 5-minute drive to the shops (and a David Lloyd fitness center) and a 20-minute train ride to the city center. These factors of course influence the housing growth in that particular pocket.

Great demand and a lack of supply are also driving growth in the Glasgow area. Back in 2011, there was an abundance of land in the Southside. There have been countless developments built since then.

They only paid 3% stamp duty (SDLT) back in 2011. Since then, the Scottish government has changed the rules. Whereas, the rest of the UK is now more cost-effective with regards to SDLT. Hence, sales at the top end of the Scottish market are little more stagnant than they used to be.

With the steady year on year growth, you probably wouldn’t go far wrong with an apartment up to the value of 250K (2% stamp duty), in the right area of Glasgow.

Such an insightful comment Alex, thanks so much.

The point I’m trying to make in this article is that you’re more likely to experience a higher upside (and in hindsight call it a bargain) when buying in a cheap market. Now the million dollar question is “what makes a market cheap?”

This is the hardest part. Hopefully metrics such as average house price to salaries ratio and rental yield help us get a better view. For example, Liverpool, Glasgow, Greece look quite promising at the moment.

I’m just speaking purely from the maths point of view here because buying a house to live in is another story with lots of emotions involved. Maybe it’s worth creating a standalone post on how rent compares to buying.

Many people, as you rightly said, compare the whole mortgage payment to total rent while missing the fact that it’s the interest payment you should compare it with. Another common misconception is when people look at rent vs mortgage payment and neglect the return your £100k deposit can make if not locked in the house equity. In my experience that’s simply because buying a house is the only investment people make. For a booming housing market that’s fine, because the house appreciates and everyone is happy but in a bearish or average market, how high is the opportunity cost?

After all, it’s a matter of risk taking and getting a mortgage for the long term is a safe bet :)

I think that prices might go down a bit more and it will correspond with Landlords being hit by increasing taxes and Brexit uncertainty…

BUT, athough you may have made a good decision not to buy 18 months ago, I still think it makes sense to buy in the long run.

When doing a calculation If I put £100,000 deposit on a house worth £400,000, my return is on what I invested which is £100,000? the mortgage is on £300,000 but that is a cost on my initial investment. Hence why they say to never buy cash, not my dad’s thinking admittedly but my dad worked very hard for his money “Rich dad, Poor dad”

And as you rightly put it in a previous blog, interest repayments vs the rent is the right way to look at it, or if you look it as i do, I wouldn’t be able to afford the rent my current place but I can afford the mortgage. When I remortgage in 2 years time, rates need to have outpaced the repayments for my new repayments to be higher.

Also, I recently noticed that a lot of articles make comparisons between rent and mortgages but base it on 25 or 30 years. what happens afterwards is also very important as we are very likely to outlive the mortgage. The point I am making is that once the mortgage is paid, i only pay maintenance but I would still need to pay rent as before out of my pension without a mortgage.

What about further price falls? As long as i don’t stretch myself, buying a bigger house is possible if prices fall as the percentage drop on the bigger house will be the same but the amount by which it reduces will be bigger.

Interest rates will increase, that’s a certainty, and increased regulation may happen, but as long as it isn’t a return to the 1960’s and 70’s rent controls, I agree with you that I can see a market where prices will continue to increase slowly by 2-3% each year but that may or may not be in line with inflation.