Debate House Prices


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Inflation, Inflation, Inflation...

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  • economic
    economic Posts: 3,002 Forumite
    im wondering whether i should buy now or wait for a correction/slowdown. i recently sold my flat (wanted to sell for a number of reasons mainly the location). i want to buy for myself to keep into retirement however prices are expensive in the nice locations.

    should i wait or not?
  • mwpt
    mwpt Posts: 2,502
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    Filo25 wrote: »
    I am one of the muppets buying in London now as well, fully aware that a correction to London values may well be just around the corner.

    The problem I have as a FTB is that there just aren't that many areas of London left that I am willing to live in that are still affordable, another 20-30% rise would knock me out of the market altogether.

    Even though I am pretty optimistic on rates remaining low I fixed for 5 years, just to avoid remortgaging in the short term in case there is a significant correction and I don't want to be trapped on SVR if that happens.

    Ultimately its a property I intend to own until retirement (unless we get an opportunity to upsize but not a major priority) so short term moves aren't of too much interest to me anyway, obviously would prefer not to buy at the top of the market but who honestly knows if this is the top of the market or not.

    We aim to be overpaying on the mortgage significantly within a few years, so if there was a modest pullback we might even use it as an opportunity to move up in the market. If rates went to 10% at the time of remortgaging, we could still pay that, and I REALLY don't think that is going to happen in the forseeable future.

    Sounds very familiar. I bought in 2014, under I guess quite similar circumstances. I'd tried to wait for a correction, which never materialised in London (at least in the areas I was looking). Then after watching the boom from 2013 onward I re-evaluated everything and just decided I needed somewhere as a hedge of being "priced out forever" (*).

    I was incredibly nervous that I'd be buying right at the top but years of waiting just forced me into it. Almost two years later, I'm still happy with the home. I don't think we can continue with 10% HPI so my expectation is the cheaper parts of London will continue to experience relatively high HPI while some areas look to be almost fully priced (an anecdotal opinion).

    (*) The mythical housing ladder doesn't work when HPI is 10%. Ultimately, if prices keep inflating the way they are, I will be priced out of ever owning something that I would settle down in for the long term. In which case, for my personal finances, HPI might as well be 30% if it's 10% because I'd eventually sell up and either leave the country or move out west.
  • mwpt
    mwpt Posts: 2,502
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    cells wrote: »
    dont worry about it its probably the right thing to do.
    Prices may be high but mortgage rates are low which should help pay down the debt sooner and the interest be a smaller burden.

    This is untrue. It is better and easier to pay down a mortgage quickly while prices are lower and rates high, than the reverse.

    https://docs.google.com/spreadsheets/d/153OCXcQ2Upt4EeUoOI3SdnT88wS70js9sBB2dNxItXk/edit?usp=sharing
  • cells
    cells Posts: 5,246 Forumite
    mwpt wrote: »
    This is untrue. It is better and easier to pay down a mortgage quickly while prices are lower and rates high, than the reverse.

    https://docs.google.com/spreadsheets/d/153OCXcQ2Upt4EeUoOI3SdnT88wS70js9sBB2dNxItXk/edit?usp=sharing


    yes if you overpay

    If you pay the normal amount on a 25 year mortgage, the mortgage with the low rates see more paid upfront so that by year 5 the mortgage with the low rates means you own more of the house and have less of the debt
  • Mistermeaner
    Mistermeaner Posts: 2,956
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    economic wrote: »
    im wondering whether i should buy now or wait for a correction/slowdown. i recently sold my flat (wanted to sell for a number of reasons mainly the location). i want to buy for myself to keep into retirement however prices are expensive in the nice locations.

    should i wait or not?

    maybe, maybe not
    Left is never right but I always am.
  • economic
    economic Posts: 3,002 Forumite
    thanks for the great advice!! lol
  • mwpt
    mwpt Posts: 2,502
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    economic wrote: »
    thanks for the great advice!! lol

    How old are you? Do you currently house-share? Best bit of advice I can give any new prospective buyer is that if you are currently, or are willing to house-share, think of the income you can get by owning the place and being picky about your lodgers. It almost becomes a no brainer to buy a place in an area where you can easily get a lodger or two. Not only are you paying off capital on your property but the lodger fees probably cover the interest and then some. It's like living somewhere for free.

    Of course, prices may come down next month, or next year, who knows, but if you're sensible you can ride it out or even use it as an opportunity to trade upward.
  • economic
    economic Posts: 3,002 Forumite
    im in my early 30s. living with my parents at the moment rent free whilst i look for somethign to buy.

    i actually did have a lodger for 6 months. i wasnt very picky and managed to earn a decent amount from my spare room (£850 a month).

    i will be doing the same only my lodger will be my bro who i get along with very well.

    i want to buy soon just wondering if its worth waiting a bit longer(few months) for it to be a buyers market and so can get something good for cheaper.
  • cells
    cells Posts: 5,246 Forumite
    economic wrote: »
    im in my early 30s. living with my parents at the moment rent free whilst i look for somethign to buy.

    i actually did have a lodger for 6 months. i wasnt very picky and managed to earn a decent amount from my spare room (£850 a month).

    i will be doing the same only my lodger will be my bro who i get along with very well.

    i want to buy soon just wondering if its worth waiting a bit longer(few months) for it to be a buyers market and so can get something good for cheaper.


    one of the 'good' things about property is that it takes about 2 months to sign on the dotted line. That 2 months gives you time to see how the market is doing, if prices are up 2-3-4-5% then its easy to commit if prices are down you can walk away or ask the seller for a discount

    it will also take some time to find somewhere you will go for so if you start looking today it might well be 3 moths before you get the keys maybe longer if its leasehold
  • economic
    economic Posts: 3,002 Forumite
    yes the market can changed a lot in a very short amount of time.
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