Right time to buy?

Blacklight

The truth is that nobody knows and nobody can predict what's going to happen.

You just have to weigh it up between paying dead money in rent or paying down your debt as early as you can.

Maybe they will come down a few % in six months but you'd have probably spent £5k on rent by then.

amcluesent

The biggest risk is that you won't be able to cover repayments in the event of mortgage rises and/or a loss of income. You'll need to plan on the basis of a 2%-3% rise in base rates in the next 5 years, worst case.

brit1234

steve237 wrote: »

If house prices do drop, I don't personally think we'll see massive drops, and only for the short term.

I disagree, there is scope for big falls. Remember prices over the last decade have been extremely over inflated, way higher historical averages based on wages. We are now only starting to suffer the fall out of this over borrowing with wage frezes and big tax rises.

Save up 25% deposit and enjoy the falls that have just started..

twadge_face

Blacklight wrote: »

You just have to weigh it up between paying dead money in rent or paying down your debt as early as you can.

Maybe they will come down a few % in six months but you'd have probably spent £5k on rent by then.

Compared to dead money on mortgage interest? Hmm? Mortgage interest which is usually considerably more than a standard rental payment for the first few years of a mortgage term. Renting and saving has suited me well the last few years.

At least a rent is relatively stable and you're not at the whim of the Bank of England who are pretty certainly going to increase rates by the end of the year. That would be a very nasty surprise if rates go up to even a mere 5% (still low) after just buying on the basis of an apparently-decent tracker deal.

So, I would like to suggest to the OP that if they do go ahead and buy, that they consider a decent fixed-term deal for, say, 5 years or maybe 10. 20% deposit should ensure they get a pretty good deal for that.

Also 20% deposit means they'll only be taking out an 80% LTV mortage so even if prices drop 20% and stagnate for a while they're not in negative equity... that to me is the ONE thing you want to try to avoid.

Money ain't the biggest deal in the universe but the being stuck in a property for say 5-10 years until positive equity is restored would be a real bummer if you needed to change jobs or fall into a catchment area for a preferred school.

EDIT: for the record I am of the view prices will drop due to wider macroeconomic situation, but I do reckon that if you've got a 20% deposit, negotiate the price down really hard, and are staying put for, say, a decade... I would hope you'd be OK. :-) ....PERHAPS wait till after the emergency budget (next Tuesday, 22nd June!) and see what the response to that is.

We already have three months of falls on record (ACADAMETRICS) so it does seem to represent the long-anticipated "turn" back down from the bull trap: http://www.investopedia.com/terms/b/bulltrap.asp

doire_2

Keep adding to your deposit. One thing is for sure the "rises" are starting to flatten out. Remember these rises are based on the results of very low transaction levels. I wouldn't pay any heed to graphs showing rises for that reason.

The boom years have gone and wont be back for a long time yet.

Just look around your area and see what is happening.

You mention the budgest cuts and job loses. If this worries you then you should not buy. There is serious pain just around the corner.

Good luck with whatever you decide to do.

JonnyBravo

Annisele wrote: »

Renting is no more 'dead money' than interest on a mortgage is.

Hmmm..... on first glance maybe..... but once you've got a mortgage and are paying that interest you've fixed your expenditure. You now have a friend called inflation.
That doesn't help you out if you're renting.

Of course prices may fall in which case this doesn't apply.



To the OP, rather than measure it just in financial terms, which is impossible without the useful ability of foresight, try also considering other pro's and con's the purchase of a house would bring to your life.

Vincenzo

I would suggest you start looking and see how it goes. It can take many months (or more) from beginning your search to completing a purchase. My wife and I looked for over a year before we bought our current house (with a couple of fall throughs inbetween).

Much depends on where you are buying and what the housing stock is like. In the area we wish to move to next, finding the right house is hard enough without having to worry about whether it might be cheaper in 12 months. People talk about houses as if they are a uniform product or commodity traded in an efficient market. There are so many variables both at the macro and micro economic levels and at a property specific level.

My advice, if you find a house you love and can easily afford it, buy it and don't look back.

the_flying_pig

I think you'll see from the responses on this thread that there isn't really such a thing as a consensus opinion on this.

Nor are there many neutral observers.

Some of these characterisations are a little cartoonish & unfair but broadly they're correct -

(1) Most of the online posters who you'll find confidently predicting big price falls are youngish [20s or perhaps early 30s], educated, good but probably not mega-high earning, middle class types who really hope that house prices fall because they are upset at the idea that, even taking a monstrous amount of debt on, at current prices they can't afford a house that's anywhere near as good as what their parents had at a similar age.

(2) Most of the online posters who you'll find confidently predicting big price rises [or else very confidently asserting that prices won't fall] are somewhat older than the previous group, and somewhat less educated, typically medium earners, who really hope that house prices rise substantially in real terms because [most often through BTL or second home ownership] this [rather than earnings from paid work] this would represent their best chance of making really good money.

Relatively few people outside of either of these two categories are sufficiently interested in house prices to spend a lot of time banging on about them online.

My suggestions are:

(1) Read everything you can about house prices on the websites of the four main broadsheet newspapers [main sections only - ignore the property supplements, which are quasi-advertising features for EAs, similarly avoid the tabloids]; and

(2) Shop around very, very hard. The Halifax index says that prices are now about 15% below the peak or something, but this is absolutely an average only, what you will find is that, at the peak, many people were able to get relatively cheap houses well below the notional peak value, similarly many people will have paid lots more than the notional peak price. If you only put an offer in on one or two places there is a very good chance indeed that you will overpay. Every seller's circumstances are different. Lots of low offers may well reap rewards. If you think you're too busy to do this dedicate a week, or even two weeks, of your annual leave quota to it... there is lots and lots of money to be saved.


My own personal best guess is that prices, in the next few years, will fall in many more places than they rise, but this is not a great deal better than pure guesswork. It's a punt that just the freakish highness of current prices [relative to incomes and rents] is more abnormal than the unusually low interest rates & level of housebuilding, but anyone who tells you that they know which is more important for sure is, well, either deluded or a liar or both.

My own VI, by the way - I own with a v small mortgage & want to upsize, preferably without borrowing something obscene like 3 times joint income.

Out,_Vile_Jelly

If you haven't lived with your partner yet, I would suggest renting first for purely domestic (rather than financial) reasons. You never truly know someone until you've actually lived with them day in, day out and seen what their tidiness/hygiene and management of budgeting/bills is like.

steve237

Out,_Vile_Jelly wrote: »

If you haven't lived with your partner yet, I would suggest renting first for purely domestic (rather than financial) reasons. You never truly know someone until you've actually lived with them day in, day out and seen what their tidiness/hygiene and management of budgeting/bills is like.

Whoever said romance was dead?