Right time to buy?

RichKi

Hi,

I'm a newbie on these forums, so please be gentle.

My partner has recently qualified as a nurse and will soon be earning a full time salary. We both currently live in a 2 bed terrace that I own but we'd like to buy a place together.

With all the confusion in the market at the moment and the number of houses that simply don't seem to be selling, I'm worried that buying now would be a dangerous move.

I'm confident that I could sell this property to a first time buyer and reduce the buyers "chain" a little, but should I wait?

I'm sure this topic will be of interest to many and any advice would be much appreciated.

Regards

Richard

want2bmortgage3

If you can afford to buy a property you like between you now, then do so. in 10 years time you wont regret being in a nice house and have a lower mortgage payment than those who waited years thinking prices would come down more.

ad9898_3

RichKi wrote: »

Hi,

I'm a newbie on these forums, so please be gentle.

My partner has recently qualified as a nurse and will soon be earning a full time salary. We both currently live in a 2 bed terrace that I own but we'd like to buy a place together.

With all the confusion in the market at the moment and the number of houses that simply don't seem to be selling, I'm worried that buying now would be a dangerous move.

I'm confident that I could sell this property to a first time buyer and reduce the buyers "chain" a little, but should I wait?

I'm sure this topic will be of interest to many and any advice would be much appreciated.

Regards

Richard

I think that you will have to be very realistic in what you try and sell your house for but you will more than recoup this when you come to buy. If you want to buy now remember prices are falling and experts' views are that this will continue for at least 2 years before a long period of stagnation. My opinion is offer at least 30% below asking price on anything you look at, this way you can then cushion yourself against the economic woes that are undoubtedly ahead of us.

macaque_2

want2bmortgage3 wrote: »

If you can afford to buy a property you like between you now, then do so. in 10 years time you wont regret being in a nice house and have a lower mortgage payment than those who waited years thinking prices would come down more.

This is bad and lazy advice. In order to predict which might turn out to be the better option in 10 years time, you have to do the maths. Here is a very rough and ready way of weighing up the two options.

First: determine estimate your net savings
Net savings = owner outgoings - rent
Owner outgoings = cost of interest + cost of building maintenance
When you calculate the interest, you should base it on 100% mortgage (because your deposit has investment potential).

Second: estimate the capital gains or losses
Home Capital gains/losses = purchase price + expenses - selling price
Renters investment gains = Compound interest on savings

Here is a worked example based on 5 years
Property price = £175,000
Rent £600 per month

Owner outgoings = (175,000 x 0.06) + (175,000 x 0.01) = £12,250
Rental outgoings = (600 x 12) = £7200
Annual savings by renting = £5050

Capital gains/loss = (175,000 + 175,000 x 0.02) - (175,000 - [0.3 /175,000]) = (56,000)
Renters investment gains (5% compound) = £4050

At the end of 5 years, the home owner would have lost £56,000 in the value of his home and have no money in the bank.
The renter would made no losses and have £29,000 in the bank.

In other words the renter would be better off by £85,000 after 5 years. They would also have the advantage of no house to sell when purchasing a property.

morg_monster

If you go to the house price forum you'll find lots of threads like this and lots more information and opinion on whether its the right time to buy. but don't just repost this thread there- you will get slaughtered by certain posters as there's always one or two threads asking exactly this question!!