From: "Tim" 
Newsgroups: uk.finance
Subject: Re: Am I stoopid for not buying a house?
Date: Sat, 30 Sep 2006 18:01:29 +0100

"bill" wrote
> For the past few years I've been fortuate in that I've had both
> the income and savings put asside so that *IF* I had wanted to,
> I could have bought a flat similar to the one I currently rent.
>
> However every time I do the math I conclude that the interest
> would be more than my rent - that fact combined with the
> hassle and risk of a house price fall has kept me from buying.
>
> House price correction asside, is it dumb for
> someone who could buy to choose not to?

In a word, yes.

In general, on average in the longer term, house prices *do* rise.
So you need to compare the interest payable, **less the house rise**,
against the rent you pay now.  Imagine that the house rises in value
(on average) at the same rate as the interest rate.  You pay £X
interest in the year, and have £X more equity at the end of the year!
So the effective cost is close to zero (altho' as an owner you now
need to pay maintenance costs - but this will be much less than rent!).

The only time renting would be better, is when "interest payable
less house value rise" (or "interest payable plus house value fall")
exceeds the alternative rent.  But this would *only* happen
during a "price correction", and you said to consider the situation
"House price correction asside"...