When will people buy.

agentyumi

When will it be worthwhile to buy?
by: John Stepek

To be honest, this early in the game, it's very hard to say when buying will make sense again. According to James Ferguson at Pali Stockbrokers, the three post-war crashes (1973-77; 1979-82; and 1989-95) have each lasted as long as the preceding booms.
This boom lasted for 11 years - so that would mean as much as a decade of falling property prices. You might laugh - but take a look at Tokyo if you think that's too downbeat. I reckon that at the very least we're looking at a good few years and another 20% fall or more from here.
And even when prices bottom out, another boom may be a long time coming. Now just because house prices aren't rising doesn't mean property can't be a decent investment, as long as you can get a good enough rental yield. But for most people, the death of the "instant millionaire landlord" dream will leave them wondering what they ever saw in property.
And that in itself will be a good indicator that it's time to buy - when people are so sick of property that they despise and ridicule anyone getting into the market. The best indicator I can imagine - and I'm serious about this - is this: once you start seeing headlines in the money sections of your Sunday newspaper along these lines: "The end of boom and bust - why British house prices will never rise again", then it's time to call your mortgage broker.
John Stepek is the deputy editor of MoneyWeek

michaels

Very much my view - however I think although it will be not that difficult to buy on the start of the upslope (assuming of course no 'double dip' etc) the best bargains are actually bought at well below asking price just before the market turns - once the market has turned sellers will lose that desperation of 'must sell now or it will be worse in a week' which results in acceptance of very low offers

GDB2222

sympatex wrote: »

6months on we went to see two houses yesterday which were at 2004 prices. One of the vendors had bought for 245k in Aug2004, roll on to Sept2008 and its on at 240k. We didn't know the number before we went so we only know this after we went, we had hoped to negotiate down to nearer our budget of 220k but this i don't think will happen given the fact they are already accepting a loss after 3years of HPI and 1year of falls.

You cannot plan for the unexpected though!

If prices fall further, you may need to ask any vendors when they bought their property. If they say any year after 2003, then you can assume they won't want to sell to you for less than they paid. As prices continue to drop, that becomes 2002, 2001, .....

Mind you, I hadn't realised that prices have fallen back to 2004 levels generally?

sympatex

GDB, they haven't generally around here (camberley) that wasn't what it was meant to come out like. Just on this occasion these two houses were at 2004 levels.

ad9898_3

Mmmm well I would like to buy in Dec 2012, my endowments that I took out when I was 17 will come in then..... and with them and my savings I should have 100k, but if prices went stupid again I would have jump in sooner, I have 10k now and should be able to save 10k p.a

Dont forget their will be lots of would be buyers who cant

missed mortgage payments
missed cc payments
neg equity
lack of deposit

all of the above will cause your mortgage application to be filed.... in the bin.

GDB2222

sympatex wrote: »

GDB, they haven't generally around here (camberley) that wasn't what it was meant to come out like. Just on this occasion these two houses were at 2004 levels.

Were they new-build in 2004?

manhattan

Quote: by Justpurchased

I was wondering when some people will look to buy. (No this is not a wind up)

Are people waiting until they have a large enough deposit? Have around a 25% deposit for the type of house we will be considering
Set a date when they think the bottom will be reached? no date set but possibly 2010
Going to buy when prices start to rise? anytime after a decent correction
Or just waiting for the right property at the right price (anytime)? kind of
Never will, happy with renting? not happy renting but our time will come
Any others?

I am just interested how people have set there selves up for entering/re-entering the market.

beingjdc

At the moment, I'm happy with our rental. It's still cheaper than buying even with price cuts - just over £1200 a month to rent compared to £285k to buy somewhere similar, which would be almost £1500 interest on a mortgage.

Renting forever is a bad deal for as long as we have governments committed to at least some inflation, and I don't see that going away. Therefore eventually I'll buy again. As to when...

I'd be surprised if it was much more than two years away, but for as long as I have a good rental, for as long as buying futures in housing is possible at a 20% discount to the price of actual houses, I don't see the point.

When I get my next job (been in this one three and a half years now, albeit with a promotion in there, it feels like a long time), I'll look at the area I land in and see what it's worth doing, and whether it's realistic of me to think I'd have a 25% deposit (or 40% if it's not in London) to unlock better interest rates, or whether I have to accept that I have more like the 15% (London) or 25% (other places) that I have amassed so far.

Of course there are unknowables in there. If a rich relative dies tomorrow and leaves me everything, and then my dream house comes up at auction for an amount I have in cash, I might jump.

sympatex

GDB2222 wrote: »

Were they new-build in 2004?

No they were (are) 3bed Victorian semi but this has had 2 extentions in its previous life. (not by current owners). It had doubled in value by the time it was bought in 2004 when the current owners bought it as i assume the extentions were added by the previous owner who got it in 2000 for 127.

This is a difficult road to judge as all the houses are very different (bungalows, semis, detached) all of different eras as well and some with extentions and some not. The only thing i can see is if we got it at 220 25k less than the current owners bought it for in 2004 so deduct 10% off 2004 prices we shouldn't lose massively if we can keep hold of the house!

wolfman

zippygeorgeandben wrote: »

Blimey Wolfman, a flat around the 250K mark?! Must be quite an expensive area of London.

Not really. If you take the average of most areas in London I think a 2 bed is at or above that price, or at least for the size we need. We've been looking at places like Wandsworth, Streatham Hill, Colliers Wood.

I'm just hoping the crash is around 25%, and flats get hit harder (which most people advise they will).