FTB expectations too high?

IveSeenTheLight

AnnaMonkey wrote: »

Hello!
I'm a FTB (well attempting)! I think many interesting points have been raised. I'm on an average salary, my OH is on less than me and we're in the process of trying to buy our own place. A one bed flat! The first rung.
We live in London so prices are a bit of a pain, and the place we're looking at is a (cheap) repo, otherwise we wouldn't even be thinking about buying now (the flat's in the block where we live now which is lovely, and we want to stay in this area). We've been saving for a while but still only have 10% deposit and if this place falls through we'll have to go back to saving as there isn't anything else within our price range near us. Our broker reckoned we could actually go for a higher priced place, but we both quite want to be able to live off our wage after monthly bills, not scrape through.
I have to say that even though I really want the flat one of the things that concerned me was selling it on - people do seem to want 2 beds and above now! I see it as it'll be our home and we're not doing it to try to get heaps of money from it.
I'm 26...and feel quite young to be a first time buyer too! shriek!

Congratulations on not being an FTB with too high expectations
I understand your concerns selling on, if other buyers expectations are too high
Whatever you choose, I wish you good luck with your home

penguine

AnnaMonkey wrote: »

Hello!
I'm a FTB (well attempting)! I think many interesting points have been raised. I'm on an average salary, my OH is on less than me and we're in the process of trying to buy our own place. A one bed flat! The first rung.
We live in London so prices are a bit of a pain, and the place we're looking at is a (cheap) repo, otherwise we wouldn't even be thinking about buying now (the flat's in the block where we live now which is lovely, and we want to stay in this area). We've been saving for a while but still only have 10% deposit and if this place falls through we'll have to go back to saving as there isn't anything else within our price range near us. Our broker reckoned we could actually go for a higher priced place, but we both quite want to be able to live off our wage after monthly bills, not scrape through.
I have to say that even though I really want the flat one of the things that concerned me was selling it on - people do seem to want 2 beds and above now! I see it as it'll be our home and we're not doing it to try to get heaps of money from it.
I'm 26...and feel quite young to be a first time buyer too! shriek!

Personally I would steer well clear of 1-bed flats. They quickly become unsuitable if your circumstances change, and they are the hardest properties to sell on after a crash. If you can't afford a 2-bed, consider watching the market and waiting. Property prices are falling, if you can increase your deposit while prices continue to drop you are pulling ahead on two fronts.

EdInvestor

penguine wrote: »

Personally I would steer well clear of 1-bed flats. They quickly become unsuitable if your circumstances change, and they are the hardest properties to sell on after a crash.

This is an excellent example of how expectations have inflated.Precisely the same thing was said in relation to studio flats after the last property market crash. But now it's 1-bed flats that are supposedly unsaleable.

AnnaMonkey

Thank you IveSeenTheLight! You made me smile!

And ARRRGH at penguine. If this flat falls through we'll defo just carry on saving, but with our situation it makes much much more sense to buy this if we can rather than 'waste' money on rent. (Without too much detail we live rent free atm but in under a year will have to move out so I'd take a mortgage over rent anyday - for a start it's less )

:T

fc123

Maisie11 wrote: »

What is the obsession with 2004 prices. What if the house was a wreck and someone did it up. Surely it wouldnt go back to 2004 prices.

My house is already back to mid 2004....and still falling slowly.
It is a 4 bed detached ordinary house in a not great (but not bad either) SE London suburb.

Had a Mouseprice list through of recent sales near to me.
Most had dropped at least 20% or more.

I believe any repo wouldn't be on it just conventional, mortgaged homes....could someone confirm that for me? Thanks in advance.


The value of a house is what someone will pay. You had an offer 5% below, and therefore, had the sale completed, that would have been the new value.
If you are off the market, you won't ever know what the value is until you put it on agian and it sells.

Different areas fall at different rates plus, it seems there is a sandwich effect.
The lower prices seem to have dropped more quickly.....I noticed that in the area we first bought 19 years ago...had a quick recky on RM.

The really top end stuff is falling also.

Those in the middle (£450k - £1 million say) seem to be reducing the slowest.
But reduce they will, just takes longer for the trickle down effect to work it's way through the system.

Same with the job market and small businesses.

fc123

EdInvestor wrote: »

This is an excellent example of how expectations have inflated.Precisely the same thing was said in relation to studio flats after the last property market crash. But now it's 1-bed flats that are supposedly unsaleable.

I remember friends in conversion 1 bed flats bought in late 80's or early 90's.
As the decade moved on, they earnt more in their work, paid down neg equity whenever possible and
1; bought the flat downstairs for a song at the bottom, then converted the whole property back into a house...the total price paid ended up being less than the whole house would have cost despite them having paid OTT for the 1st flat.

Another friend bought a decent 2 bed conversion in about '93 and in '96 bought the other flat...and had the whole house. Same thing, total cost less than the whole house despite paying a bit too much in 93.

Nobody wanted 1 bed conversions back then. This would have been from '91 onwards.

I only post from memory so don't know if this was common.

fc123

http://www.moneyweek.com/spending-it/properties.aspx

I hope the link works.

Some pricey stuff here with the reductions in asking price (and still not sold).

penguine

EdInvestor wrote: »

This is an excellent example of how expectations have inflated.Precisely the same thing was said in relation to studio flats after the last property market crash. But now it's 1-bed flats that are supposedly unsaleable.

In the Middle Ages average lifespan was mid-30s I think. Funny how our expectations have inflated, nowadays we generally expect to live into our 60s at least.

penguine

AnnaMonkey wrote: »

And ARRRGH at penguine. If this flat falls through we'll defo just carry on saving, but with our situation it makes much much more sense to buy this if we can rather than 'waste' money on rent. (Without too much detail we live rent free atm but in under a year will have to move out so I'd take a mortgage over rent anyday - for a start it's less)

Best of luck whatever you decide to do.

JayScottGreenspan

AnnaMonkey wrote: »

Thank you IveSeenTheLight! You made me smile!

And ARRRGH at penguine. If this flat falls through we'll defo just carry on saving, but with our situation it makes much much more sense to buy this if we can rather than 'waste' money on rent. (Without too much detail we live rent free atm but in under a year will have to move out so I'd take a mortgage over rent anyday - for a start it's less )

:T

Things I would consider:
* Make spreadsheet with all of the costs of renting on. Make another one with all the costs of owning on. A lot will depend on your area, and there are quite a lot of bits to this jigsaw so it helps to have it all written down. It's impossible to make a proper decision if you just let all this bounce randomly around your subconscious.
* Make a list of pros and cons.
* Think how negative equity could affect you - will you need to move?, will you need to remortgage?

Personally, I'd stay rent free for as long as possible and save hard, but that's just me.