When to enter the housing market ?

ashm1

Hi,

I'm 24 been out of university a few years and many of my friends are starting to buy houses. I have toyed with the idea but found house prices to be very high for a first time buyer in the south east of England. A few of my friends are borrowing vast sums to get on the property ladder. I'm not sure if the high prices are due to high demand /not enough stock of housing or the market is overvalued. The estate agency structure worries me; lots of regional players, and it's not professional. Surely this must create problems ? (inflating prices to increase profit at the risk of creating market instablity)

I'm not an economist but reading the Bank of England website you can see that 'they' will increase interest rates for a while to meet the Government inflation target. I assumed that theses days UK inflation was kept low by downward inflation pressures (high supply of low wage EU migrant labour). The likely capping of wage increases in the public sector (2%), increasing energy costs, and probably increasing interest rates are putting me off entering the housing market. Also unemployment seems to be rising.

But when should one enter this market ?

dips_3

ashm1 wrote:

Hi,


But when should one enter this market ?

When you have a secure job

When you have saved a reasonable deposit that would protect you against any potential fall in the value of the home (thus avoiding negative equity)

When you can afford the repayments on the mortgage comfortably even if interests rates go up 2%

If you are sure you could live in the house for a few years. House prices may stagnate or even drop slightly. Will you be staying in the house for the short-medium time? If your life changed e.g kids - would the house still meet your needs? Is it possible you may have to move for work?

ashm1

dips wrote:

When you have a secure job

When you have saved a reasonable deposit that would protect you against any potential fall in the value of the home (thus avoiding negative equity)

When you can afford the repayments on the mortgage comfortably even if interests rates go up 2%

If you are sure you could live in the house for a few years. House prices may stagnate or even drop slightly. Will you be staying in the house for the short-medium time? If your life changed e.g kids - would the house still meet your needs? Is it possible you may have to move for work?

Took the view to build up deposit rather than pay off 18K student loan.

I have a relatively secure job (public sector) but the office is relocating into a significantly higher priced area (from Kent to Surrey).

I think I would stay in the house for maybe 3-4 years and it would have to provide atleast the option to commute to London. The stock on the market I can afford would not allow life changes (1 bedroom houses, and studio flats)

120K for a studio flat in this area!

thanks,

Ashley.

zar

Hi I'm a similar age to you. I think dips advice is good. We're planning a family in the next few years and also we want to move away from Kent in the next few years as well (to somewhere cheaper though, rather than Surrey!) Although I would like to buy a house, I'm 90% sure that waiting for 3 or 4 years is the best course of action, as the possibility of being trapped in a house that's unsuitable in the wrong county is a worse prospect for us than the small possibility of making some money... I'm fairly bearish about the property market generally anyway, as are many on this board. I certainly don't expect buying to make us better off once fees etc. are taken into account.

Have you compared the costs of owning (mortgage interest, loss of interest on savings, maintenance, buying and selling fees etc., possible falls in house prices*) with the cost of renting a similar property for the period you are considering i.e. 3 years. Working out the figures for your personnal situation and compiling additional pros/cons list (e.g. not having to deal with landlord vs worry about how you can afford to replace the boiler if it packs in) might help you to see things more clearly. I should probably take my own advice here. :rotfl:

p.s. - Whatever you do, don't pay off your student loan early!

*See about a million other threads on this board for discussion of this!

ashm1

Cheers,

Thanks for the link and advice. I did not know that credit agencies do not hold data on student loans. Last time I checked my student loan repayments from my salary I was servicing the interest payments but my salary has increased this month. I have the loan type where the more you earn the faster you pay it off.

Oh I forgot taxes are going up, and the pensions system looks a bit messy for the future!

Yes I may look at renting as much of the property near the town train stations seems to be rental type.


Thanks,

Ashley.