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adverb: to competently express interest, surprise, disbelief, or contempt

Spectator sports

I read in the Metro that the Bank of England thinks London house prices will fall 30% after Brexit. When that happens we should buy a house.

Beaker. Image credit: Muppets Wikia.

Panic like Beaker. Image credit: Muppets Wikia.

As is her wont, my lady wife casually lobbed a hand grenade amidst my well-laid plans.

Outwardly I feigned indifference, grunting noncommittally.

On the inside I was panicking like Beaker from the Muppets, whenever that sadistic Dr Bunsen Honeydew approached him with a car battery, jumper leads, and a promise that “this should only hurt a bit”.

Demolition derby

On my first visit to Paris I climbed the Arc de Triomphe. While the views across the city are certainly striking, it was the bird’s eye view over the Place Charles de Gaulle that was unforgettable.

A roundabout with 10 unmarked traffic lanes, 12 exits, and no road rules is a recipe for car crashes just waiting to happen!

Arc de Triomphe. Image credit: Pixabay.

Place Charles de Gaulle surrounding the Arc de Triomphe. Image credit: Pixabay.

Attritional behaviours

The London equivalent of the Parisian accident waiting to happen is Hatton Gardens. This is a street lined with jewellery shops specialising in diamond engagement rings, where the bank balances of generations of gentlemen suitors have gone to die.

Loved-up newly engaged couples arrive at the first store hand in hand, all smiles and laughter.

With each successive shop visited the body language deteriorates.

Smiles become strained. Forced. Painted on. Then lost altogether.

Laughter becomes strained. Slightly hysterical. Before vanishing entirely.

Hands that were previously glued together are withdrawn, transforming into tensely crossed arms.

Shoulders slump.

Lips quiver.

Eyes tear up.

The initial leisurely pace becomes a forced march. The ladies determinedly stalking ahead. The gents resignedly skulking behind.

By the time the formerly happy couples complete the loop, terms of endearment like “darling” and “my love” have degenerated into sniping and character assassination along the lines of “cheap bastard” and “moneygrubbing bitch”.

The bartender at the pub nearest the end of the Hatton Gardens does a roaring trade soothing the injured prides (and emptied wallets) of those gentlemen suitors.

The most common refrain? To curse the depression era De Beers advertising campaign which made up the “rule” that engagement rings should cost a month’s salary. Then curse De Beers again for their follow up marketing campaign in the “greed is good” 1980s, which doubled that “rule” to two month’s salary.

Engagement ring. Image credit: Pexels.

Hatton Gardens, where bank balances go to die. Image credit: Pexels.

Spectator sports

The Parisian demolition derby and the Hatton Gardens gauntlet are entertaining spectator sports to watch, but far less enjoyable to actively participate in. I suspect that witnessing my house hunting misadventures would fall into that same category.

I have learned to dread those moments when my lady wife decides we should resume our sporadic house hunt. Over time I have become conditioned to a state of learned helplessness, much like Seligman’s dogs. Sometimes there are only bad choices!

Weeks spent vigorously debating whether a housing budget is determined by how much I am willing to afford versus the maximum obtainable mortgage “approval in principle” figure.

Months of lost weekends and evenings attending viewings. A seemingly endless parade of overpriced properties located in neighbourhoods that are near (but rarely in) nice locations to live.

The endless debate around whether London is just a milestone or actually the final stop on our somewhat nomadic globetrotting adventures. Having school-aged kids has certainly slowed things down on that front, but if I am honest the prospect of becoming an elderly Londoner holds roughly the same appeal for me as visiting a proctologist who has cold hands.

Like a nuclear winter, the homeownership whim eventually passes.

Housing: trophy or investment?

Since I left home as a broke university student more than 20 years ago, I have lived in at least a dozen different homes.

Collectively that experience has taught me a few hard-won lessons:

  • Moving house is disruptive, expensive, and no fun at all.
  • The degree of compromise required when choosing where to live increases by a power of magnitude with each additional member of the household.
  • Life happens. We may like to believe we are in the driver’s seat, but it often feels more like we’re passengers on a rollercoaster.
  • Foreverplans are the imaginings of incurable optimists. Along with perpetual motion, skyhooks, and superheroes, they should exist… but I have learned to live with disappointment.

Two of those homes I owned. The remainder I rented.

On balance renting incurs less matrimonial disharmony. Tenants can settle the remodelling and decorating arguments with a definitive “we can’t” rather than seldom accepted “I won’t”.

Putting that particularly tricky ultimate destination question in the “too hard” basket for now, the remainder of the ownership debate boils down to the following clash of perspectives:

Should a home be located, configured and decorated with a view to impressing the Joneses?

Or

Should a home be located in an area that will increase in value faster than the prevailing market? Provide opportunities to create value? Be decorated to maximise enjoyment while not designing yourself into a corner (or making the property difficult to sell)?

In short: is a house a trophy or an investment?

Given those options represent opposing ends of a spectrum, where is the optimal happy place that satisfies both perspectives as far as possible?

Wise heads would observe that as long as a house is a home, providing a warm safe place for its occupants to sleep, then the rest is just a matter of perspective.

Cynics would add that the proverb “happy wife (or husband), happy life” is more correlation than causation, however the inverse is invariably true!

home ownership from a tenant’s perspective

Home ownership is an interesting financial equation. Consider the following comparisons:

Buy a property, pay down the mortgage over time, and eventually you will own it outright. From that point onwards your rent is effectively “free” for the remainder of your life.

Rent a property, pay down the landlord’s mortgage, and eventually they will own it outright. You had to pay rent the week you moved in, and you will continue having to pay rent every week until you move out.

Buy a property and you have an asset to leave to your loved ones when you die.

Rent a property and leave your loved ones the obligation to hire a professional cleaner before the exit inspection.

Buy a property and you have to finance and manage the hassle of repairs and maintenance.

Rent a property and you indirectly pay for those repairs and maintenance. You also have to deal with unreliable tradespeople visiting your home and making a mess. However the decision to hire craftsmen or cowboys is made by your landlord, a group renowned for their deep pockets and short arms!

Buy a property and you can make it your own. Decorating, renovating, improving, extending.

Rent a property and your home design instincts are limited to furnishings alone.

Buy a property and you are on the hook for any major repairs.

Rent a property and you can escape at the first sign of trouble, incurring minor costs.

Buy a property and you are also buying into the benefits and problems of the neighbourhood.

Rent a property and you can readily move if that neighbourhood gets too much to handle.

Looking through that list I think the main takeaway is:

renting buys flexibility while avoiding accountability, but at the opportunity cost of forgone accumulated equity.

Buy… but only if you can buy well

If it was a simple question of owning an asset or not, then generally it would better to own. The financial discipline of building equity via mortgage payments is a form of enforced savings.

That said many homeowners make terrible buying decisions:

  • Buying in a terrible location.
  • Buying a terrible property.
  • Paying a terrible price, then compounding that problem by over-capitalising via terrible renovations.
  • Burning money on terrible decorating decisions that look pretty but add no value.
Edith Macefield's house. Image credit: Ben Tesch.

Many homeowners make terrible buying decisions. Image credit: Ben Tesch.

My personal preference has been to own self-financing well-located properties, where the numbers add up and the growth prospects are promising.

I then choose to rent where I prefer to live, making this purely a lifestyle decision.

This provides the best of both worlds: equity accumulation while enjoying flexibility and choice.

The chances of a single property meeting both sets of criteria are small indeed!

Generally I wouldn’t be willing to afford to buy where I choose to live, and I have little interest in living where I have chosen to buy.

The one exception to this approach was the time when I purchased a flat we were renting. The landlord needed to sell, but my lady wife dug in and refused to move. While this “investment” worked out nicely in the end, it would be easy to forget that even fools will float in a rising market!

If you aren’t content with where you live, and (usually) happy at the prospect of returning home each day, then it is worth reevaluating your housing priorities.

You’re only as trapped as you choose to be.

Sounds simple, no? I’ve told a story, articulated a reasonably compelling argument that (unsurprisingly) supports my worldview, and even concludes with a slightly condescending call to action.

And yet…

My plans receive a punch in the face

Not long ago I visited some friends in Paris. They live in a rabbit-warren of a house near Versailles, the place they settled down after their own globetrotting adventures some three decades ago.

Over the years they have renovated and extended as interest and/or finances allowed. Building a flat above the external carport. Buying the neighbour’s unused garage, and turning that into another flat. Enclosing the rear courtyard between the house and garage, to create a sprawling triple glazed dining area.

The house wouldn’t win any awards. Indeed, any architect producing such a design would be drummed out of the profession for attempting to combine the works of M.C. Escher and Salvador Dali whilst under the influence of an excessive quantity of hallucinogenics.

What the house did have was a real feeling of “home”.

An eclectic collection of furnishings and decoration, rather than the bland conformity of cheap disposable flat packed furniture that is the staple of tenants everywhere.

A constant stream of friends and neighbours dropping by for a coffee or a chat, the product of having made an effort combined with remaining in a single place for more than a year at a time.

The couple also have a holiday house on a river in the south for France, near the Spanish border. They can ski from their back door in the winter, yet are only a short car ride away from the beach in the summer. A wonderful escape when big city living gets to be too much.

Neither of these properties would have ever made financial sense.

Both would easily fail my assessment criteria.

And yet… I find myself surprisingly drawn to some of their lifestyle choices.

A home where their children and grandchildren can happily visit.

A home with enough space to indulge whatever pastimes or hobbies they enjoy.

A home they happily grew old in.

Could this merely be my equivalent of keeping up with the Joneses? Or perhaps there is something more to it?

all fun & games until someone loses an eye

When the result of the Brexit referendum was announced, I found myself getting angry.

It wasn’t the fact that a vast populous of English gormless lackwits had just kicked the largest financial own goal since the Dutch traded Manhattan for Pulau Run.

Economic own goal. Image credit: Georg Holderied and GoodFreePhotos.

Economic own goal: trading Manhattan for Pulau Run. Image credit: Georg Holderied and GoodFreePhotos.

That was hardly surprising, they are the same people who:

  • watch reality television
  • go on “all inclusive” package holidays to exotic locations teeming with people from… England.
  • spend more each month on pay television football subscriptions than they manage to save
  • purchase shoddily built off-the-plan leasehold housing built on well-documented floodplains… then seek to blame others for the service charges and flooding.

No, upon reflection what I was pissed off about was losing the right to live, work and study anywhere in Europe. This wasn’t something I had gained by some accident of birth, it was something I had actively sought out and invested a ridiculous number of years jumping through onerous visa hoops to obtain.

It wasn’t until it was (likely) gone that I realised I had a vague general intention of ending up living on a beach or a lake somewhere on the Mediterranean.

The lifestyle on offer is broadly comparable to that offered by the many coastal towns in Australia… only with better food, more reasonable summer temperatures, and the absence of an expensive 8+ hour flight to get to anywhere else.

Face fear and confronting uncertainty

And yet…

The sense of panic that arose when my lady wife’s nesting instinct kicked in turned out not to be caused by the familiar arguments, frustration and indecision over London property prices.

This time it was fear.

Fear that my carefully constructed array of passive income streams would be destroyed by a mortgage large enough to pay off the national debt of a small banana republic.

Fear that the hard-won control over how I invest my time would be sacrificed to service that mortgage.

Fear that I would become even more financially anchored to Britain’s uncertain economic future, as opposed to enjoying a tenant-like flexibility and freedom to escape.

Fear that my barely formed thoughts of indulging in a comparable lifestyle to my Parisien friends would remain an empty pipe dream.

It turns out that “too hard” basket question about ultimate destinations probably can’t be avoided for all that much longer. Pretending problems don’t exist has never been particularly effective at making them go away… no matter how many C-suite executives wish it were so.

Time to strap on the helmet, run that gauntlet, and try to win the demolition derby. I forecast stormy weather ahead!


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8 Comments

  1. [HCF] 31 December 2018

    A timely post again 🙂

    I totally agree (and experienced it myself) with your Buy/Rent list. Controversially I also share your friends’ idea bout a home. Your reasoning is totally valid and could be applied to any situation. In theory. I was facing this when we were investigating our options to move out from our (ok, technically it was my wife’s) flat in downtown. With an energetic 1.5 year old we got fed up with the concrete jungle and wanted more space. We were open to rent a house somewhere in the suburbs. The problem was that we did not find any. So we opened up our minds for buying also and after some hunting we found one. It had all we needed and we are living there for four years now. Basically I like the house, it does not have any serious shortfalls which could not be cured. But it seems I have seen too many superheroes die lately… and our “forever” plans started to shaking. The next year will tell if it will collapse altogether and if that will happen indeed, then “rinse and repeat” the whole process. So my suspicion is that I also have to strap on that helmet soon. Somehow, a part of me is looking forward to that battle. As they say “calm seas never made a good sailor”, right? 🙂

    • {in·deed·a·bly} 31 December 2018

      Thanks for sharing your experiences HCF. Good luck with the next year, hope things go your way.

      The ironic thing is I actually quite enjoy the thrill of the hunt when searching out good investment properties. All numbers, little emotion, hardly any arguing! Unfortunately a series of regulatory and tax regime changes in the UK have made local residential real estate a less attractive asset class to invest in recently, so I haven’t scratched that itch for a while now.

      Things seem to get infinitely more complicated when you have to live there however! It is like one of those sliding tile children’s puzzles: finding a property that is good (enough); in a location that works for each of primary school and high school and work commutes; at an agreeable price.

  2. Red kite 31 December 2018

    To me a house is neither a trophy nor an investment, but a home – like your Parisien friends. So to me the aim is to find a house you love in a place you love to live, and make it your home. I don’t really think too much about the economics of it, other than affordability, and paying off the debt as fast as possible (we’ve had no mortgage for maybe a decade). I live in a part of the country where house price growth has been non existent, or even negative, for many years now, and earlier gains much less than London and the south east, which I am sure has shaped my views. I also absolutely love living here and have no desire to start again somewhere else – I am sure again another result of my life experience. My upbringing was the opposite of non-nomadic – we have just sold the house I was born in, following the death of my remaining parent, and the region I live in now is the only place I’ve lived apart from my student days. How boring, perhaps? I just think I’m lucky to have found a place I love, that works from all the practical aspects of family and work life, and be able to live here.
    I’m interested in your view of settling in London. I have recently been musing that if you own a home there (I realise you don’t), it doesn’t seem a bad place at all to grow older – so much going on and free and fantastic transport to boot from age 60. Not to be sniffed at!

    • {in·deed·a·bly} 31 December 2018

      Thanks for sharing your story Red kite, and my condolences for your loss.

      I applaud your attitude, congratulations on finding a place in the world you love.

      My philosophy has always been that “home” is wherever you live (providing you choose to make it so), regardless of whether you own it or rent it.

      A transient existence leads to not accumulating a lot of “stuff“… if you own it, you’ll need to pay to move it, and it’ll often get lost or broken along the way. Same with furniture. Not much point spending big on things that probably won’t fit in the next property. This wasn’t driven by by a zeal for minimalism, but rather out of damage mitigation. I suspect that approach has a used by date (likely already in the past) however!

      When it comes to owning property I’ve tended view things through an investment lens. Even the couple of times I have (briefly) lived in my own properties, I wanted the capital I had invested in them to work for me just like any other investment. A good investment strives to generate both capital appreciation (rise in value, when compared to the prevailing market) and also throw off free cash flow (or in the case of owner occupied housing, remove the need to pay out rent/mortgage interest).

      I probably should clarify my London point. London is a fabulous city, offering amazing opportunities for work and play. At the moment I live in a great part of London, where public transport renders car ownership unnecessary (even inconvenient), and in a strange quirk of demography it offers world class healthcare and education for free. I am appreciative and grateful to have ready access to those capabilities, something the vast majority of Londoners do not get to enjoy.

      However London for a less mobile elderly person doesn’t appear to be so much fun. Both my neighbours are older folks who live alone, and neither has close family nearby. Once you can’t walk far, or have trouble stepping on/off a big red bus, then London becomes hard work.

      So the problem isn’t London, it is me. It just isn’t the place I want to end up. It is a big city, with all that means. Fast. Crowded. Noisy. Polluted. A world away from waking up to the sound of ocean, or stepping out my back door and being on a beach.

  3. Nick @ TotalBalance.blog 31 December 2018

    Only 3 things matter, when buying a home: Location, location and location 😛

    I realize that “people like us” (the numbers-people) can’t really turn off the internal calculator – regardless of the size of the item we’re purchasing. For most people, a house will be the biggest “investment” of your life. It thus make sense to think twice about your strategy.

    I too hate moving, so when we moved from our “beginner-home” to our “forever-home”, I really hoped it would be our forever home. 1 year later it’s apparent that our current home most likely won’t end up being our forever home, for numerous reasons.
    Denmark is relatively small, so knowing which areas are great, less great or up-and-coming is fairly public knowledge (we even have geo-websites that help “score” neighborhoods – which makes finding a decent location a lot easier than it used to be). So I’m certain that I will be able to sell my house again, should I choose to do so. I’m however extremely uncertain, if I should choose to do so now, or give it a few more years (we like living here), since it has become clear to us that our current home is too expensive (it’s not that we can’t afford it, I would just prefer to put a lot more money in my FIRE project). It would seem we chose to skip a step – moving directly from our beginner-home to our maybe-forever-home, choosing a place that we could just afford – rather than one we were just comfortable in (we could have chosen something at 3/5 the price, and still be in a very nice home!).
    Oh well, such is life. My loathe of moving i most likely going to outweigh my disdain for working (short term at least) 😛

    I hate when people remodel a home, and don’t respect the original architecture.It really piss me off! There’s so many houses in Denmark, where its occupants have effectively ruined its market value by their lack of taste. Then again, if they are happy with it, so be it, Those houses will most likely be bought up and demolished to build a new tasteless, soul-less (but maintenance free) lego-house 😉

    I never realized that brexit was such a huge deal for you guys. I figured it would kind of all sort itself out eventually. Maybe it will, who knows? 😛 I’ve only recently started dreaming about my future retirement home. So far we’re sticking with the crappy danish weather, but man do I dream about a house in the south right now!

    • {in·deed·a·bly} 31 December 2018

      Sounds like a wonderful problem to have Nick, a house you love that is potentially too nice!

      Consider all the options before you decide to sell. The transaction costs on property are vast, and there are often methods you can use to extract accumulated equity that don’t require selling up.

      With a bit of luck common sense will prevail and Brexit will get called off as comedically bad idea. Hopefully we’ll find out before much longer!

  4. youngfiguy 31 December 2018

    Random collection of thoughts:
    – The Ye Olde Mitre off Hatton Garden is a cracking pub.

    – Talking of renovations, De Beers moved out of their glorious antiquated offices round the corner on Charterhouse Street. It’ll be modernised, probably removing it’s rabbit-Warren inefficiencies, to be Anglo’s new HQ.

    – London is wonderful. But it’s noisy, smelly, loud. Not a place to relax. I understand why you think about moving. Mrs YFG and I went through the same thought process.

    Happy new year.

    • {in·deed·a·bly} 31 December 2018

      Thanks Mr YFG.

      I’ve visited that pub a couple of times (though only once as a traumatised gentleman suitor). Never ventured to the De Beers offices though, my diamond budget didn’t warrant a visit to head office I’m afraid!

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