FTB - Would you?

Linton

To go back to the original question....

IMHO basing a house purchase on a guess of future movements on house prices in particular and the economy in general is futile. The uncertainty and complexity will mean you never buy anything.

There are only 3 question you need to ask yourself...

1) Do you really want to buy your own home?
2) Can you afford to pay the deposit and mortgage for an acceptable home and have enough left over for an acceptable lifestyle and emergencies?
3) Do you expect to be able to manage for the next few number of years even if interest rates go up to "normal" values.

If the answer to all 3 is YES, then go for it now. Homes are for living in, not for investment.

As to whether houses will be more affordable in general in a few years -no: limited supply and demand limited solely by affordability.

They will be more affordable to some people and less to others. Which class will you be in? Who knows?

Batchy

Procrastinator333 wrote: »

It takes years off your mortgage if you start with a larger deposit and then go for a shorter term. Same result.

True but where do you live in the mean time?
How long do you wait and put your life on hold
Will you be happy saving, rather than living
How old are you, as if you save an additional 20% but it takes 5 years to get down that far, thats 5 years less you can get a mortgage duration for, not good if your 55 for example?
Are you expecting wage rises? or Wage falls? Would you stand for a cut, or a freeze or would you move?
How about locality to work, will you still need a car? Petrol costs, oil costs rising?
Can you save at a greater rate than POTENTIAL HPI on the house you desire?
If house prices fall at a great rate, can you save a 50% deposit? As Mortgage companies will have been badly burnt, their LTV ratio's will decrease.
Will People be forced sellers in future or will they be protected?

Its not as simple as HPI
its not as simple as Interest Rates

You need to look at your personal 'big picture'!

FTBFun

Linton wrote: »

To go back to the original question....

IMHO basing a house purchase on a guess of future movements on house prices in particular and the economy in general is futile. The uncertainty and complexity will mean you never buy anything.

There are only 3 question you need to ask yourself...

1) Do you really want to buy your own home?
2) Can you afford to pay the deposit and mortgage for an acceptable home and have enough left over for an acceptable lifestyle and emergencies?
3) Do you expect to be able to manage for the next few number of years even if interest rates go up to "normal" values.

If the answer to all 3 is YES, then go for it now. Homes are for living in, not for investment.

As to whether houses will be more affordable in general in a few years -no: limited supply and demand limited solely by affordability.

They will be more affordable to some people and less to others. Which class will you be in? Who knows?

I agree with all this. I've just bought a flat as I was sick of living in flatshares, and could afford it.

Basing buying decisions purely on whatever survey or statistics pop up in the media about prices is ridiculous.

Herbie_Hancock_I_wish

It all runs in different ways. I don`t have a mortgage, long gone. However, being good little people we put money away every month since our mid 20`s into pensions. That jubberly amount of £15k a year on top of full state and some serps is now a joke.

Our savings, which are in the low 6 figure mark, even at 5% ( 5%, what happened to double digits ) would kick out a nice amount every year on top of all else. I laugh at the " average wage " these days. 4 years ago my little business ran almost double that income, now crashed to about a quarter of that. My wife has her hours cut in an industry that is low paying yet life saving.

I read a lot of the posters here. However I see a lot of this carp created by high house prices, lies and smoke and mirrors. Looking forward to becoming the new poor, not.

Procrastinator333

Linton wrote: »

To go back to the original question....

IMHO basing a house purchase on a guess of future movements on house prices in particular and the economy in general is futile. The uncertainty and complexity will mean you never buy anything.

So you are not really going back to the original question other than to say you don't think you are capable of forming an opinion on it. Fair enough, why post anymore?

Linton wrote: »

There are only 3 question you need to ask yourself...

1) Do you really want to buy your own home?
2) Can you afford to pay the deposit and mortgage for an acceptable home and have enough left over for an acceptable lifestyle and emergencies?
3) Do you expect to be able to manage for the next few number of years even if interest rates go up to "normal" values.

Please see the quote from the first line of my first post:

Procrastinator333 wrote: »

I'm a procrastinating FTB and pretty comfortable in my view that waiting is the best option for those in my position. I'm talking about the financial choice, not that someone may want to buy for their family etc - different reasons and fair enough, but not the thrust of this post.

If you don't have anything to contribute to the discussion on whether buying now is a good or bad financial decision, fair enough, but why post?

Why not go start your own thread titled "Ignoring the financial implications, to buy or not to buy". That is a seperate discussion and one in whihc your point would be very relevant.

Linton wrote: »

If the answer to all 3 is YES, then go for it now. Homes are for living in, not for investment.

I'm sorry, but to not even consider if the most expensive thing you will purchase in your life is going to go up or down in value is just stupid.

If I just said to you, this is the price of a TV, it was this price sometime in the last 12 months from a shop that sells TV's. On your logic you would just say, do I have the cash, yes, do I want it, yes, ok then buy.

Or perhaps you should be asking is it cheaper elsewhere, what time of year is it? Am I buying the week before Xmas or the January sales.

There is more certainty in that line of thought, but the principle applies.

Linton wrote: »

As to whether houses will be more affordable in general in a few years -no: limited supply and demand limited solely by affordability.

Perhaps you are right and prices are more expensive in the future, but to try and break down the movement of house prices in to one line and then give a categoric no is just stupid. Is that not what you were having a pop at me for? If you want to make a contribution to the finacial choice facing the FTB, please do.

Batchy wrote: »

True but where do you live in the mean time?
How long do you wait and put your life on hold
Will you be happy saving, rather than living
How old are you, as if you save an additional 20% but it takes 5 years to get down that far, thats 5 years less you can get a mortgage duration for, not good if your 55 for example?
Are you expecting wage rises? or Wage falls? Would you stand for a cut, or a freeze or would you move?
How about locality to work, will you still need a car? Petrol costs, oil costs rising?
Can you save at a greater rate than POTENTIAL HPI on the house you desire?
If house prices fall at a great rate, can you save a 50% deposit? As Mortgage companies will have been badly burnt, their LTV ratio's will decrease.
Will People be forced sellers in future or will they be protected?

Its not as simple as HPI
its not as simple as Interest Rates

You need to look at your personal 'big picture'!

We live in a rented house and it is very nice thank you. Low stress, low worry, low maintenance.

I don't consider spending £000's on interest living. I prefer to get what I want at the cheapest price therefore allowing me more £ for doing the things I want to do.

I'm 28, so that line is not applicable to me, but fair point for any 55 year old FTB.

I'm expecting wage rises. How would I react to a cut? Not going to happen.

Since when have I been talking about giving up my car? I don't have a high mileage commute and we wouldn't really notice greatly if fuel went up 50%

Can we save at a greater rate than POTENTIAL HPI - Well that is part of the thrust of this question, for the reasons I outlined, I don't think HPI is on the way. If you disagree, please explain why. I don't wish to go in to too much detail about the numbers as it genreally leads to people getting out their handbags. But we are fine thank you.

Hang on, you were just talking about potential HPI, now you are asking about falls? Yes if they fall we could save a 50% deposit.

I don't think there will be many forced sellers and hence my prediction of stagnation.

Some fair questions in their regarding affordability etc , but really I was looking for peoples thoughts on whether the FTB will be better or worse off by waiting.

In terms of what is the best option financially, hpi and interest rates are almost all there is. Moving costs, insurance, renovation etc etc all pale in comparison to the 2.

FTBFun wrote: »

I agree with all this. I've just bought a flat as I was sick of living in flatshares, and could afford it.

Basing buying decisions purely on whatever survey or statistics pop up in the media about prices is ridiculous.

Good for you. Did I even quote a survey or statistic that had popped up? Just because you didn't want to think about it doesn't mean others don't.

This is MSE - MONEY SAVING. I'm asking about money saving. If you have nothing to contribute to the thread, please go and start your own, perhaps with Linton where you can discuss all of the non finance related reasons to by or not. I'm sure your enlightened comments will be of use there.

Your last line just smacks of blissful ignorance.

If I had follwed the advice of FTBFun and Linton, my parter and I would have bought a 2 bed flat in 2007. We would now be sitting in negative equity, ploughing money in to the mortgage desperate to escape negative equity with the hope of one day getting a low enough LTV to get a better rate. To dream a dream..

Instead we are sitting comfortably in a nice rented house, ploughing money in to our deposit that is growing at a rapid rate. Jeez. I have got the decision right to date (possibly).

I say possibly as it is not impossible that Feb 09 was the bottom, but even then I'm not upset at having missed the absolute bottom, got the overall decision right. I think I will be better off waiting another year or 2 and I was after some thoughtful comments on that, which some people have given.

Apologies, bit of a rant, but I just don't get how people can not give a carp about the financial implications of the biggest purchase of their life!

Linton

Your chosen user name seems quite appropriate!

Procrastinator333 wrote: »

So you are not really going back to the original question other than to say you don't think you are capable of forming an opinion on it. Fair enough, why post anymore?

because I dont believe anyone's opinion on the future of the £ value of house prices is of any more significance than their prediction of the weather in 6 months time. But people still have to make a decision now whether to buy or not. I am trying to provide them with a sensible financial basis for doing so.

Please see the quote from the first line of my first post:



If you don't have anything to contribute to the discussion on whether buying now is a good or bad financial decision, fair enough, but why post?

Why not go start your own thread titled "Ignoring the financial implications, to buy or not to buy". That is a seperate discussion and one in whihc your point would be very relevant.



I'm sorry, but to not even consider if the most expensive thing you will purchase in your life is going to go up or down in value is just stupid.

A house is something to live in - why should anyone care whether
If I just said to you, this is the price of a TV, it was this price sometime in the last 12 months from a shop that sells TV's. On your logic you would just say, do I have the cash, yes, do I want it, yes, ok then buy.

Or perhaps you should be asking is it cheaper elsewhere, what time of year is it? Am I buying the week before Xmas or the January sales.

Perhaps you should be asking yourself "do I want to watch TV over Xmas?"


There is more certainty in that line of thought, but the principle applies.



Perhaps you are right and prices are more expensive in the future, but to try and break down the movement of house prices in to one line and then give a categoric no is just stupid. Is that not what you were having a pop at me for? If you want to make a contribution to the finacial choice facing the FTB, please do.

I am not having a pop at anyone. I dont know whether houses will be more expensive in the future or not, nor whether your personal circumstances will have changed in the future to make house buying easier or more difficult. Neither does anyone else.

What I do know is that house prices wont suddenly drop to the point where every aspirant FTBer can rush out and buy one - it is always going to be a struggle for most people. Sorry bears.

We live in a rented house and it is very nice thank you. Low stress, low worry, low maintenance.

Fine, if you are happy where you are, then why on earth buy a new home when you are going to spend the rest of your life beating yourself up for not having optimally timed the market?

I don't consider spending £000's on interest living. I prefer to get what I want at the cheapest price therefore allowing me more £ for doing the things I want to do.

I'm 28, so that line is not applicable to me, but fair point for any 55 year old FTB.

I'm expecting wage rises. How would I react to a cut? Not going to happen.

Since when have I been talking about giving up my car? I don't have a high mileage commute and we wouldn't really notice greatly if fuel went up 50%

Can we save at a greater rate than POTENTIAL HPI - Well that is part of the thrust of this question, for the reasons I outlined, I don't think HPI is on the way. If you disagree, please explain why. I don't wish to go in to too much detail about the numbers as it genreally leads to people getting out their handbags. But we are fine thank you.

Hang on, you were just talking about potential HPI, now you are asking about falls? Yes if they fall we could save a 50% deposit.

I don't think there will be many forced sellers and hence my prediction of stagnation.

Some fair questions in their regarding affordability etc , but really I was looking for peoples thoughts on whether the FTB will be better or worse off by waiting.

In terms of what is the best option financially, hpi and interest rates are almost all there is. Moving costs, insurance, renovation etc etc all pale in comparison to the 2.



Good for you. Did I even quote a survey or statistic that had popped up? Just because you didn't want to think about it doesn't mean others don't.

This is MSE - MONEY SAVING. I'm asking about money saving. If you have nothing to contribute to the thread, please go and start your own, perhaps with Linton where you can discuss all of the non finance related reasons to by or not. I'm sure your enlightened comments will be of use there.

Your last line just smacks of blissful ignorance.

If I had follwed the advice of FTBFun and Linton, my parter and I would have bought a 2 bed flat in 2007. We would now be sitting in negative equity, ploughing money in to the mortgage desperate to escape negative equity with the hope of one day getting a low enough LTV to get a better rate. To dream a dream..

Instead you could still be in your rented house in 20 years time waiting for the bears to tell you that prices have bottomed out.

But it sounds like you dont fancy the idea of buying a 2 bedroomed flat as a home anyway - then dont buy one!

Why is negative equity a problem if you dont need to sell in the short term? In the medium to long term inflation will sort it out.

Instead we are sitting comfortably in a nice rented house, ploughing money in to our deposit that is growing at a rapid rate. Jeez. I have got the decision right to date (possibly).

I say possibly as it is not impossible that Feb 09 was the bottom, but even then I'm not upset at having missed the absolute bottom, got the overall decision right. I think I will be better off waiting another year or 2 and I was after some thoughtful comments on that, which some people have given.

Apologies, bit of a rant, but I just don't get how people can not give a carp about the financial implications of the biggest purchase of their life!

Of course we care about the financial implications - but trying to predict the future isnt going to be the most fruitful way of doing it.

Do you base your holiday plans on the Meteorology forum concensus long term weather forecast? After all you wont want to waste your £'s and limited time if it's going to be raining for the whole 2 weeks.

As I said in my note a better way of handling the financial implications is to decide that a house is what you REALLY want and then ensure you can afford it with a reasonable leeway.

Batchy

I think you could get potentially cheaper house by waiting... yes
do I think that your money will buy less of everything else in the future... yes, I dont think savings and interest are keeping pace at all

For example

I think Car prices have gone up 10-15% in the last 12 months - Margins have increased as volumes are only half their norms.

aside from the house, getting cheaping, the second biggest purchases cars, are going up significantly.

SO where you might be saving 100 per month on mortgage at the moment, the car now costs a lot more on a lease for example. Its costs more to buy outright also, plus the tax is going up, fuel is going up. You can only hedge by using economical cars, minimise the impact. The second hand market at the moment is weird... just overpriced, in 2 years, prices havent budged... strange. Maybe less supply since the scrappage scheme.

The same money is out their (OK) less some lost GDP during the recession. But its just being spent on different things.

Pubs they are still ticking over, but their costs have gone up considerably and turnover is down... noticed how expensive a pint is lately?

Most people have stopped spending on average 18% of income on social activities and now are down to about 8% as these are deemed luxuries. It will get worse still before the mortgage bite really hits.

People know that if they lose their house they are now homeless, so they will try to do everything to keep hold of it.

There just isnt any social housing anymore.

IMO its not an option... social or housing association. If youve got it, your sorted, if you havent... get working ... Hard, to get by in life, you dont want to be stuck in the private renting rut, its expensive, get clearing the debt on your house! Or save to buy cash... but if rent is taking up all spare income, IMO when your not saving in renting, your better off buying even at 100% as long as you go for repayment.

Procrastinator333

Linton wrote: »

Your chosen user name seems quite appropriate!

The username was used in a previous forum and unrelated, used it here for continuity, but it has turned out to be rather apt.

Linton wrote: »

because I dont believe anyone's opinion on the future of the £ value of house prices is of any more significance than their prediction of the weather in 6 months time. But people still have to make a decision now whether to buy or not. I am trying to provide them with a sensible financial basis for doing so.

I'm not disagreeing that your questions are important, very much so, but not in relation to whether buying now or later will maximise purchasing power.

Linton wrote: »

Perhaps you should be asking yourself "do I want to watch TV over Xmas?"

But that would be like saying I'm homeless, should I get a house? I should have rephrased it to upgrading your tv.

Linton wrote: »

I am not having a pop at anyone. I dont know whether houses will be more expensive in the future or not, nor whether your personal circumstances will have changed in the future to make house buying easier or more difficult. Neither does anyone else.

What I do know is that house prices wont suddenly drop to the point where every aspirant FTBer can rush out and buy one - it is always going to be a struggle for most people. Sorry bears.

Just because you can't make an informed prediction, doesn't mean others can't. In truth, whatever happens, something like 50% of people are going to be right in their predictions. Perhaps just luck, perhaps not. If you don't want to try, fine.

In one breath you are saying nobody can predict house prices, then in the next you are saying they won't suddenly drop. If you have an opinion on the direction of house prices, fire away, but please support it with your reasoning.

Linton wrote: »

Fine, if you are happy where you are, then why on earth buy a new home when you are going to spend the rest of your life beating yourself up for not having optimally timed the market?

Because buying is cheaper in the long term, I don't doubt that. But what is also true is that there are times when postponing the first purchase, or step up would be very advantageous.

Linton wrote: »

Instead you could still be in your rented house in 20 years time waiting for the bears to tell you that prices have bottomed out.

In the end the "other" considerations will over ride the financial - E.g. Family, but that is a few years off.

Linton wrote: »

Why is negative equity a problem if you dont need to sell in the short term? In the medium to long term inflation will sort it out.

Because A) It shows you have wasted money and it can cause you serious problems in terms of future moves

Linton wrote: »

Do you base your holiday plans on the Meteorology forum concensus long term weather forecast? After all you wont want to waste your £'s and limited time if it's going to be raining for the whole 2 weeks.

I use average rain / hours of sunshine for that. Doesn't everyone?

Linton wrote: »

As I said in my note a better way of handling the financial implications is to decide that a house is what you REALLY want and then ensure you can afford it with a reasonable leeway.

For you maybe. Not for me, and this being a forum for debating house prices, I had assumed others on here might also contemplate it.

Procrastinator333

Linton, what are you smoking. In this thread, your advice is - It is impossible to predict house price movements so just buy when you can.

Than I look in another thread and find this:

Linton wrote: »

'fraid not. Far more likely stagnation or a relatively small temporary drop. Less credit will decrease the building of new houses. A drop in prices will reduce the number of houses coming onto the market.

Less credit wont do the average FTBer much good because he/she wont be able to get the credit, so any drop in prices would be irrelevent.

I thought it was "futile" to predict prices?

Exocet

Procrastinator333 wrote: »

I thought it was "futile" to predict prices?

It's fairly futile trying to argue the point. There are very few who change their minds, or accept the power of argument on here. It is more a case of typing your own thoughts, and that act alone may help in clarifying your own feelings, thoughts and 'predictions' on the market. Sometimes others who are on your side of the argument may post something which adds to the picture you have, or link to an article which contains elements which dovetail with your POV.

The whole house price argument is an exercise in futility I think.