Inflation and it's impact on my ability to buy a house!!

PasturesNew

nearlynew wrote: »

Isn't it awful that someone like the OP should feel the way they are?

Wouldn't it be great if you could just buy a house when you were ready - when you got married or having kids or wanting to move out of your parents...... whatever reason.

Without having to consider what the market is "doing" or weighing up where interests may be going.

And all those young people who rapidly shacked up with the most inappropriate people just to get onto the "ladder" .... right before their relationship burned out, she got up the duff, he ran off with the local barmaid and the market went pop.

I think rising house prices have trapped a lot of people into shacking up instead of dating sensibly and choosing nice people to spend their lives with.

lostinrates

nearlynew wrote: »

Isn't it awful that someone like the OP should feel the way they are?

Wouldn't it be great if you could just buy a house when you were ready - when you got married or having kids or wanting to move out of your parents...... whatever reason.

Without having to consider what the market is "doing" or weighing up where interests may be going.

TBH, I don't think it would be particularly nice: I think it IS a big decision and its people thinking they could buy without mking too much provision that has made a rod for their own backs now, very sadly.

Snooze

Harry_Powell wrote: »

When I first came into this forum I was alarmed by a thread that was urging FTBers to buy 'sooner rather than later' because what FTBers save with falling house prices, they will lose with much increased mortgage premiums (due to double digit inflation).

A lot of people posted retorts on the thread and I was quite relieved TBH and went back to waiting for prices to fall. However, recently I've been seeing more and more talk about inflation and it's now been mentioned in Martin Lewis' newsletter that fixed mortgage rates are climbing and that people should secure a cheap deal while they can.

I also saw this reported on another forum that I've just joined: http://ftalphaville.ft.com/blog/2009/06/01/56441/taleb-goes-long-inflation/

"A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation."

I'm back to being alarmed again. I have the funds in place for my deposit and could buy a decent house for myself and my girlfriend that's large enough for us to start a family in the future. Should we buy now and get a long fix mortgage? If we fix, then our monthly outgoings will be low and inflation will inflate away the debt. If we jump too soon and inflation doesn't get out of control, we will have paid over the odds for the house.

Argh!!! What are other people's views? What would you do??

I have been priced out of home ownership for years due to HPI, I don't want to run the risk of being priced out for years due to unaffordable mortgage payments!!

No-one knows what the state of play will be in the future and we can only make educated guesses based on what's happened in the past. Looking at the house price trend over the past 30 years they should be going down right now, not up (as per Halifax and Nationwide HPIs) and I personally believe we are going through a bounce which won't last (18 months max) and then house prices will tumble back down to the trend of the past 30 years. Whether this actually happens is another story though...

One thing in particular that I think you should factor into any decision are the politics that are currently in play. Brown is desperately trying to get re-elected next year and therefore needs to get people onside. I think that most people would agree that his re-inflation measures so far (Bail-outs, QE and BoE rate, specifically) are not sustainable long term and that huge debt will need to be paid back. Currently we are not paying any of this back and hence why most people still in a job aren't noticing any change but it's got to happen some time and that will likely be pretty soon after the next general election in my opinion.

Personally if I were in your position I'd be ignoring the 'you must buy now before you miss the boat' stories and wait until after the election to see what drastic measures are brought in to start paying all this debt back. Meanwhile, keep saving up as the more deposit you've got the less LTV you'll need, which, if mortgage rates do go up you'll be able to offset that increase with your extra deposit cash.

2p fwiw.

Rob

lostinrates

Snooze wrote: »

.....
2p fwiw.

oh goodness, no! now we start the deflation/inflation/biflation/stagflation row.

Snooze

lostinrates wrote: »

oh goodness, no! now we start the deflation/inflation/biflation/stagflation row.

Should I have just kept quiet then?

R

lostinrates

Snooze wrote: »

Should I have just kept quiet then?

R

No, you were only playing your part...,....Its a sort of neverending cycle we can't break, the only question is which 'flation line comes next in the argument.

Treadmill

We will soon be engulfed by hyper deflation of 1000% a year, imagine that, you could buy a car with a quid, the average wage will be two quid a year though.

LittleMissAspie

Harry_Powell wrote: »

What would you do??

I am waiting because I think the spring bounce will bounce back to the floor again.

The only inflation you need to worry about is house price inflation. If you have 20k for a deposit and the price of everything but houses goes up, it doesn't matter because you aren't using the 20k for other things. You only need to worry if house prices go up, and like I've said, I believe the current spring bounce is not sustainable.

I'm also not bothered about interest rates. They will vary throughout the term of my mortgage anyway. Whether they are high or low when you take out the mortgage doesn't matter because they will change later anyway. The amount I paid for the house will never change.

You need to track what house prices are doing in your area. In my area they are still dropping. The other week saw the very first 100k 2-bed within 10 miles as well as the first 150k 2-bed within the city. Very few of my saved properties are selling and of those, some are coming back to the market. No recovery here.

PasturesNew

LittleMissAspie wrote: »

You need to track what house prices are doing in your area. In my area they are still dropping. The other week saw the very first 100k 2-bed within 10 miles as well as the first 150k 2-bed within the city. Very few of my saved properties are selling and of those, some are coming back to the market. No recovery here.

I just had a look, as I was born/grew up there. A small, 1-bed (galleried bedroom) property in the village I lived in is now £150k.

And the new mobile homes are for sale on the plot where I used to have an old one ... I wonder what would have happened if I hadn't sold that and moved on as they were all cleared.

But here's a crazy price:
http://www.rightmove.co.uk/property-for-sale/property-20918281.html

New mobile home on a newly laid out small park of about 16 of them, right under an electric pylon. Surrounded by fields, road probably not made up to get that far (it wasn't when I was there), right beside the foot crossing over the railways where mental patients from the Victorian mental hospital next door would commit suicide .... £185,000.

sabretoothtigger

I really cant tell anymore what is a good price but at first glance I think thats expensive. My head is set to mid nineties prices with only a small allowance since then

The only inflation you need to worry about is house price inflation. If you have 20k for a deposit and the price of everything but houses goes up, it doesn't matter because you aren't using the 20k for other things. You only need to worry if house prices go up, and like I've said, I believe the current spring bounce is not sustainable.

I think its worth some personal investigation, for anyone holding ten of thousands they are the ones at risk.

My personal understanding of inflation is that hard assets are what see the price rises. The most vulnerable type of wealth is plain old cash, it cannot rise in price or value so it slips away while you hold it

Inflation will boost prices of shares, oil, commoditys, plain old food, gold (obviously) and houses as a long term essential will be strongly affected


I was wondering why the ftse outperformed the american stockmarket last year, Im pretty sure its because at the same time we were losing currency value. So to have the same value (internationally), the price rose - like being on a treadmill

This month should see the opposite, the currency rises so everything priced in pounds is worth more and it might look like the ftse is weaker against the dow for example. I think deflation & inflation are similar to this and we might see a whipsaw action between the two


Really there needs to be a inflation for dummies book. My point is its elusive and it'll have varying effects on different asset types before we realise how