Urgent - FTB Help Needed

Trishu

Dear all,

We are a first time buyers, me and my husband both together earn 65+ per annum and are in permanent jobs.We have loved a house and very much willing to buy the house although we are not staying in this country for long time.The house is newly built (3 years old) and located in one of the best residential areas of the town.We will be selling the house before going back to our country after 5-6 years. If we rent a similar house in the same location costs about £1000 PM. This house was previously sold in 2005 for 230K. The owner of this house is very desperate to sell ( due to debts) and hence reduced the price to 225K . The attached ( exactly same / twin houses) house was also on sale for 259K and is now STC. We started our offer from 210K and now owner is agreed to 220K as the price of the house is already down by 10%.

Current market conditions says the house price crash has just started and end of next year is probably the good time to buy. This puts us in dilemma wether to go ahead with this house or not. Is it really worth waiting for another year or so although we are not sure of getting the same kinda house in the same location

Any views and suggestions are much appreciated and will certainly help us to make our decision.

Many thanks,

Trisshh

becky_rtw

Sorry to hijack but:
Newbie...W2MM...I dont think you're allowed to have links in your sig - Board Mod can you confirm please!

Trishu

Ways2MakeMoney.org.uk wrote: »

I agree that the house price crash has just started. The best thing to do is to work out the numbers. Work out how much you would pay out in rent versus how much you would save by buying. Then work out the worst case house price drop from here. Say 20% to 30%. That is the amount of money that you could gain or lose. You can reduce that amount by buying and holding for longer possibly renting the house out if it is in a good area. I hope this helps.

Thanks for the suggestion.

We have already done the calculations keeping in mind that the value of the property is 220K at present. At the end of 5 years if this property value is raised by 15% we will be in good position. Its hard to predict how much this property will be appreciated at the end of 5 years!? Do you think its realistic assumption that the property would be appreciated by 15% on the current value (220K) in next 5-6 years.

sdooley

Trishu wrote: »

Do you think its realistic assumption that the property would be appreciated by 15% on the current value (220K) in next 5-6 years.

No.

Not because it couldn't happen but because no-one knows the answer. If the crash were like last time you'd be lucky to break even after 5 years. If it's like Japan you could be in negative equity in 15 years time. If inflation takes off 15% could easily be possible (but if you're not on a fixed rate mortgage you could be in trouble).

penguine

Given that you plan to sell in 5-6 years, it seems risky to get locked into the property market at a point when prices have just begun falling. New builds may also be more susceptible to price falls than other properties, as they may have been more overpriced to begin with.

Also, your personal circumstances may change and you may want to return to your own country sooner than you're anticipating now.

GDB2222

Trishu wrote: »

Dear all,


We will be selling the house before going back to our country after 5-6 years.

Current market conditions says the house price crash has just started and end of next year is probably the good time to buy. This puts us in dilemma wether to go ahead with this house or not. Is it really worth waiting for another year or so although we are not sure of getting the same kinda house in the same location

Lots of people are saying that prices will fall another 20%-30%. That includes a member of the Bank of England's Monetary Policy Committee. So, this house will be say £50k cheaper in 2 years time. If this one has sold by then, another similar one will be available. Don't get suckered into buying now. My own view is that if you buy now you are far far more likely to be looking at a capital loss in 6 years time than a 15% gain.

Trishu

GDB2222 wrote: »

Lots of people are saying that prices will fall another 20%-30%. So, this house will be say £50k cheaper in 2 years time. My own view is that if you buy now you are far far more likely to be looking at a capital loss in 6 years time than a 15% gain.

Ppl say the house price crash is gradual and can take upto 2 years to reach the bottom. Folloing this downfall, by when do you think the property value starts raising ?

GDB2222

Last time there was a major crash, prices started dropping in 1988 and only started rising again in 1996. Took about 3 years after that to get back to 1988 levels.

bubblesmoney

Trishu wrote: »

Ppl say the house price crash is gradual and can take upto 2 years to reach the bottom. Folloing this downfall, by when do you think the property value starts raising ?

from what i read elsewhere, during the last crash in uk property prices took 9y to recover and factoring in inflation it took 14y i think. japans crash seems to have lasted forever.

but even i am buying (finalising a deal) at the moment and mostly gearing to sell in 5y maybe. buying now is risky but i decided to bite the bullet based on my personal circumstances and being able to take a hit if things dont turn to plan. if u cant afford a loss then dont take risks. property price seculation is gambling and in gambling be prepared to lose (a lot) if u want to win. in buying a property the magnitude of the risks depends on the right price. if one buys at a bargain compared to todays prices then any losses might be minimised or if u r lucky you might break even or make a profit. only u can decide what risks u can take. if u cant afford a 20-30k (10%) then think real hard if u want to but now. remember losses might be bigger or smaller, just like profits. also aother factor to consider if u can sell house fast before u want to leave the uk. and if u r in negative equity then can u afford to make up the losses from other savings and still leave the uk as planned in 5-6y as u have planned. if u will be in negative equity and havent paid off the mortgage by the time u want to leave then selling might be difficult if u cant make upfor the shortfall in sale price to mortgage loan value.