Should I buy now?

bert

Hi, Welcome to my first post! I realise this question has probably been asked alot and the answer is really dependent on where you live, who you are, future plans, etc.. but if anyone can give me any feedback I would greatly appreciate it.

I've lived in rented accomodation since the summer 2004 and my tenancy agreement runs out January 2006. I thought about buying at that time but decided to rent as I was convinced the prices had peaked. I was thinking the end of 2005 would be a good time to buy and prices would at least be 10% less and at a more sensible level. The prices could possibly drop even more a year or two after that but I don't want to throw rent money away any longer that Jan 06. Now, however, I am less sure of prices being lower january 06 than now, and alot of people are saying now is a good time. Prices could rise a bit again as buyers are taking advantage of this small window of opportunity, and market stability.

Should I go for it and buy? I have £50,000 for a deposit but don't want to waste it on an overpriced apartment. In my area there also appears to be alot of new build appartments due for completion towards the end of the year. When these are all done there could be an oversupply and prices could be lower than they are now. It is also a risk buying property that hasn't been built yet. Then again there is a risk if I wait. All these new builds could be being snapped up now / soon? Is this still likely nowadays?

I realise I have a sizeable deposit, but my salary is quite low. £13,000pa. I don't want to buy a place unless it is a property I really like and will be happy living there. I live in Worcester and will be living here for at least another 4 years. I also need to take into account the cost of breaking my rental contract if I move into a bought property in the next few months.

I am currently paying £360pm in rent in an old 1 bedroom flat worth about £75,000. I would like to buy a new/modern appartment with a budget of about £140,000. I am a first-time buyer.

If anyone can be bothered to read all this and comment, thanks!

garysletters

house price falls only affect you if you are selling your house.
What will happen to the market- nobody knows. its all a gamble on your predictions.
I personally would not let a small drop put me off buying (indeed i'm in the process of buying a flat right now).
Newbuilds are generally having to offer bigger discounts as there is less interest in them, but they still sell up in most cases before completion. (I tend to avoid new builds anyway as I feel most are way overpriced).
I don't see how with £50.000 deposit and a salary of £13K how you can afford a £140K house. I would say finding a £90K mortgage on your salary is just about impossible. Have you tried???? Find out first what a realistic budget is!!
The fact you may need to sell again in 4 years makes your decision harder as any drop would have more of an affect on you when you sell. However,I think in 4 years, any drops would have been countered by quick rises again as lots of people look to grab a bargain.

This is only my opinion and not advice.

dougk_2

I agree with what garysletters says.

I would say that Borrowing £40k on 13k a year is about the max.

If in your shoes I would be looking for a house/flat around £80K as there are other expenses to consider as well as the house itself. (solicitors fees, stamp duty, mortgage fees, items for the house itself, bills etc).

Borrowing £40k you would be roughly looking at £300 a month for the mortgage, then you have council tax, insurance, utility bills etc. I would say you are talking about £450 - 500 a month to "keep" the house. Guess you take home pay at around £800 - it doesn't leave much for other things!

bert

Thanks for all replies so far.

I will be buying with a family member. He will be putting £70k in and it would be a 50/50 joint owenership thing. So anything over £120k I will need to get a mortgage for. I would be the only one living there so I would be responsible for all the bills. I don't really want to borrow more than £20k on a mortgage. New builds do seem overpriced, and you don't even know if they will stay standing when they are complete! but I guess it is my obsession with all things new and clean. These terraced houses still seem overpriced too anyway. When/If I move in 4 years time I would want to rent it out and in effect start over. i would most likely be moving overseas.

I suppose the general consensus is that I shouldn't worry too much about finding the ideal property for the ideal price, and that prices are very unlikely to crash? It took a long time to save and work for the £50k, it just feels like i'm throwing it away if it's not on a property I'm really happy with and its subsequent investment in property even has the slightest chance of loosing value.

rizla01

Hi,

Congratulations on taking the first step and that is deciding to purchase rather than rent.

The only way I would buy new build is to buy off plan. You will get the best position and the most value for your investment and realise a better return on resale. There are a lot of investors that do nothing else than that. Wait till completion and then sell for a good £10,000+ profit WITHOUT even completing on the sale.

The market is in a peculiar stage at present. Few people are prepared to dip their toes at this time because they are unsure about the market. That means that for those like yourself (and me, I might add) there are a lot of opportunities to get the better properties, so go for it, is my advice. I might also mention that auctions are a good place for a bargain. Very straightforward and speedy but be clear - properties go into auction for a reason. Try to find out what this is before you buy.

If you wait till the market starts to move EVERYONE and his aunt will be buying.

Ask yourself. "What is it about a property that excites you?' Is it knowing that you managed to buy it and will make 'X' profit on it when you sell it or is it that you are living in a place to be proud of - spacious - good location - development potential - easy resale and still able to make a good profit when it comes to selling but perhaps a little less than getting that 'Bargain'?

House searching is stressful enough without adding to the burden by being pushed along by 'the rush'. Just make sure that you enjoy it. It can be a load of fun.

I buy and sell property for a living and would not hesitate to buy now. Just go for the most expensive that you can afford and remember that historically, property NEVER devalues!

Best of luck and happy house hunting.

bert

Thanks for the reassurance rizla, but I'm still unsure. I'm still suffering from the property crash in Hong Kong in 1997 - I have those memories crystal clear in my head. Prices will not go back to 1996/97 levels over there for a long long time.

I think buying new builds off plan are great buy to let opportunities, and I would myself prefer to live in new builds, but I still worry alot about those bloody cardboard walls! Its not something you can change too! If you've got to live there first you experience all the problems with the property coming through. Maybe properties are being built better now, but the quality of properties built during the last 10 years has been pretty poor.