should we buy or rent?

whitesatin

We are just about to move out of our house, having reduced it to such an extent that it had to sell! Anyway, we are moving in with relatives with a view to taking the stress out of trying to combine selling with buying. We are moving to Hertfordshrie which is generally expensive so we may consider going into Bedfordshire if we need to.

It would appear from the emails I receive from estate agents, that property is not selling as well as it was, the prices are still too high, even though they are being reduced slowly but surely.

We don't want to pay more than around 300k although are looking at properties ten per cent higher than this with a view to making an offer when we find something.

We can stay with relatives for as long as we wish (or until we begin to get on each others' nerves) so can take our time. Now we are wondering if we would be better renting for a year to see what happens, knowing that the money is easily accessible should something suitable come onto the market.

Buying or renting, I expect it is a common dilema right now.

tawse57

You can do a number of things:

1. Post here, as you have done, and get opinions from people.

2. You can also visit the housepricecrash.co.uk forum which, although sellers on here appear to loathe it, does have geographical specific sub-forums so you can ask in there also about the area you are hoping to buy in.

3. You can go visit the Moneyweek website and read their articles on why they think UK house prices are about to crash - and make up your own mind.

4. You can use the Firefox web browser and download the Property Bee plugin in for it - it only works in Firefox and then when you visit the Rightmove website it will show you a detailed list of the price reductions on asking prices of each house listed. Very, very useful.

I like the views of this site, which appears to be mostly sellers, and the views of housepricecrash, which appears 50 50 sellers / buyers, and then, frankly, I make up my own mind - but it is usuful getting so many views from all the above.

Best of luck.

whitesatin

Thank you, Tawse57, for a very helpful post.

There is a lot to think about but it helps having input from people on here.

theartfullodger

a) Take coin...
b) Decide on "heads" or "tails".
c) Toss coin..
d) Decide if you are happy with the decision of the oracle of the coins. If you are do that, if you are not do the other...


There ain't a good answer, it depends, not least on what happens to interest rates (they'll go up, question is when & by how much..)


When they go up mortgages will be more expensive. Will rents go up also?? Maybe, but I suspect probably mainly not.. Do you remember shed-loads of landlords reducing rents as interest rates came down?? Well, I must have missed the press coverage if they did...


Cheers!

Artful

sonastin

If you find the right house, offer a price you can afford and if they agree, buy it. If they don't agree, wait for the market to fall, offer again and then buy it!

If you can't find the right house and you get sick of living with your relatives (or them with you!), rent rather than rushing into buying a house that is "nearly right". Now is not the time to compromise.

If you find that prices suddenly start rising against all economic predictions, think about compromising (not likely).

The ideal house might not be around when we get to the magic "bottom of the market" point, which no one will be able to pinpoint till after the event anyway. So if you find it now, go for it because you might not get the chance later. But in the meantime, it would be foolish to rush into buying something less than ideal when the market is somewhere between stagnant and falling.

tawse57

The other thing to bear in mind that the Public Sector job cuts have not yet begun - we have the Govt spending review on Oct 20th and by then we will know just how bad the job cuts will be.

Some parts of the country have a third, even two thirds, of workers employed in the PS so if large numbers lose their jobs then house prices surely will fall in those areas?

whitesatin

Thanks, all, for your thoughts, I know there is no such thing as a crystal ball. LOL.

theartfullodger

tawse57 wrote: »

The other thing to bear in mind that the Public Sector job cuts have not yet begun - we have the Govt spending review on Oct 20th and by then we will know just how bad the job cuts will be.

Some parts of the country have a third, even two thirds, of workers employed in the PS so if large numbers lose their jobs then house prices surely will fall in those areas?

Plus the expected significant cuts in LHA/HB (Local-housing-allowance/housing-benefit) which will certainly reduce rents one way or another, and may have tenants leaving (to live with mum, friends, whoever) when they find the can't afford where they were any more..

HAMISH_MCTAVISH

sonastin wrote: »

The ideal house might not be around when we get to the magic "bottom of the market" point, which no one will be able to pinpoint till after the event anyway. So if you find it now, go for it because you might not get the chance later. .

Very true.

But of course, in order to leave the money accessible without penalty in the event the right house becomes available, the OP would be looking at an instant access savings account, paying negative real returns at the moment. SO the STR fund loses value over the course of even a year.

The other factor is the cost of renting.

At a typical 5% yield, rent on a comparable 300K house would be around 15K a year, so very roughly if house prices fall by 15K, you break even.

If house prices stagnate, you lose 15K, plus the negative real return on the savings.

If house prices rise, even by just a few percent, then the losses really start to add up. Staying out of the market for just a year could become a 30K or 40K mistake. Sounds impossible? Just think back to February 2009, the depths of the recession and the worst crash in history..... And the fact that absolutely nobody was predicting house prices would rise by 20K in the next 18 months.

STR is a VERY dangerous game......

westlondonbuyer

I'm in exactly your shoes so understand your mixed feelings.

My husband and I sold our respective flats last year when we got married. There were very few family houses on the market and everyone told us we'd be in a better position to buy without a chain. Since then, the abolition of HIPs has meant LOADS of new houses on the market, but none are at a price we're happy to pay (or that reflect the reductions in asking price that we ourselves accepted). The EA who sold our places has told us that, now that it doesn't cost anyone *anything* to put their house on the market, there are lots of people chancing their luck - but only prepared to sell for a plum price. So it's the vendor and not the agent setting the price. The result is that almost nothing is actually selling in my area, although there is now much more choice.

We have managed to find a lovely house to rent. It would cost twice as much to buy (in monthly mortgage payments with a 20% deposit) as it does to rent. When something goes wrong, it's fixed quickly and at no expense to me.

But the house belongs to someone else, and that stops me thinking of it as my home. It's a perch and not a nest IYSWIM. Plus there's the worry about our equity from our sales. It is in several bank accounts, but I still worry about its security, and it's earning negligible interest.

Nonetheless, we have decided this week to renew our tenancy for another year. There are so many uncertainties with the economy, and with jobs - and this is far more worrying than house prices. At least the financial downside of renting is a fraction of the financial downside of owning. For the last decade, people have only seen the upside, so it's hardly surprising that they see renting as "dead money". It isn't - it's payment for a service.

HAMISH_MCTAVISH

westlondonbuyer wrote: »

LOADS of new houses on the market, but none are at a price we're happy to pay (or that reflect the reductions in asking price that we ourselves accepted). .

So you sold to rent at the bottom of the market, and have since found it far harder to buy back in as prices have risen significantly over the last year or so.

It's unfortunate, but it's the risk you take by stepping off the ladder.

Out of curiousity, do you have a plan for what happens if prices now don't fall back again? How long are you prepared to pay someone elses mortgage for them?