HousePrices..Waht Should I Do?

Kate17_2

My House has Doubles over the last 3 years when we brought and is now worth 200K.

I Can't possibly see house prices in our area (south west) going up any more????

We have the opportunity to stay at my parents (2nd home) for up to a year for minimum RENT.
Now its not ideal, we have a couple of small children and this tiny house only has 2 tiny rooms, BUT I am willing to do this if in that year house prices fall, leaving us with some MONEY!!! To buy a nice bigger house with a garden, (we don't currently have one)

Do you think house prices will fall (crystal ball anyone?)
Shall I risk it? Shurly they won't go up anymore will they???

Waht sahll I do, I could do with some help you guys? What what you do it it was you?

Thanks
Kate

lisyloo

I don't think house prices will continue to rise.
However it is difficult to know whether they will stagnate or fall.

I don't think a year is long enough to see big falls if that's what you are hoping for.
Looking at the last crash it was about 4 years before prices hit the bottom (1989-1993).

The advantage you have is that you have a very advantageous rent.
But I think it could be stressful with you all living together even if you have a good relationship with your parents.

Personally I think a year is too short to expect to make big gains but I agree with you that house prices will stop rising.

Kate17_2

Thanks for your reply, Its my Parents 2nd Home, so we will not actually be living with them.
But we will be cramped with the 4 of us living there.

But even if there isn't a crash, if prices were to go down just 20k for example, I would then make 20k, and the next step house would also be cheaper?

we can only live there for a year as they will be selling it themselves at this time as they are moving abroad.
What shall I do?

Kate

lisyloo

Personally I don't think you're going to see a great deal of movement in a year.
Houses are illiquid (not like shares).
It will take sellers a while to realise they can't get the price they want and drop it.
People are stubborn like that.
It's not like shares where they can vary wildly each day.

If I was thinking of doing this then I would want to go longer term.
This would involve living in rental accomodation after your parents house is sold.

Also you have to try and work out whether you are going to be happy in this house while your children grow up (and need more space).

Unfortunately I don't think anyone else can answer that or tell you what will happen with the housing market.

Whichever way you go involves some sort of risk.

DiggingOut

Sounds risky to me. House prices are due to fall or stagnate, but they could continue up for another year first. You could end up even worse off. I don't think so, but who knows?

They could also decline drastically in the next year, but I don't expect that, either.

You have to look at what makes sense for your family, IMO. Sounds like being crowded is not ideal for them.

Mortgageman

and don't forget all the fees involved as well - Stamp duty / legal fees / valuation fees / 2 * moving fees. It's a huge risk (IMHO)

yonk

It's also a case that houses aren't part of a single market, just a series of local markets. So if other factors are present, e.g people buying 2nd homes that will keep the prices inflated in the area.

It's the same as why one place in a city can be hugely more expensive than another. So you can have a national average fall in the value of houses and your own area might only see a small fall or none at all.

Spendless

Totally agree with what yonk says. Where I live the current boom didn`t start until Spring 2002. They haven`t slowed down yet.

dunstonh

prices have stalled a bit but that doesnt mean they wont begin to rise again.   Expectation is that there is probably another 0.5% increase in interest rates still left in the current economic cycle before you see it steady out.  For most mortgage payers, that isnt a great amount.  

Many are now fearful of how much their mortgage may go up to  but when they realise that hasnt hit them that much after all, prices could well rise again.  

There is still a shortage of properties in the UK and some areas are still rising strongly.  So its very much a regional thing.

Other things may impact though, such as rising fuel costs and taxation.   If they keep going up at the rate they have been, that will hit budgets and people will put house moves on hold.   Moves to larger properties will decline and you may see the price difference between smaller houses and larger houses condense a bit.

All the current announcements and warnings are there to slow the market up.

mrtickle

prices have stalled a bit but that doesnt mean they wont begin to rise again.   Expectation is that there is probably another 0.5% increase in interest rates still left in the current economic cycle before you see it steady out.  For most mortgage payers, that isnt a great amount.  

Who are these "most" rich people and where are they hiding? For others, it IS a great amount. My mortgage has gone up from £489 to £558. That 14% rise is huge when taken with the rest of my monthly budget which is tight in my first year of ownership.

Many are now fearful of how much their mortgage may go up to

Damn right I am. If there is another 0.5% rise that'll be £585 I have to find every month, that's £95 added to the original £489, over a 19% rise over the past year.

 but when they realise that hasnt hit them that much after all, prices could well rise again.  

It's hit me very hard.

dunstonh

Who are these "most" rich people and where are they hiding? For others, it IS a great amount. My mortgage has gone up from £489 to £558. That 14% rise is huge when taken with the rest of my monthly budget which is tight in my first year of ownership.

Thats not a great amount at all. You should have budgeted for double your mortgage payment when you took it out. If you havent, you really would suffer if rates were to double. Especially when you purchased when rates were as low as they have been.

Damn right I am. If there is another 0.5% rise that'll be £585 I have to find every month, that's £95 added to the original £489, over a 19% rise over the past year.

Its not a case of if, its a case of when. A 19% rise on your mortgage payments following the lowest rates in recent history is nothing.

Im afraid you appear to be one of a large group of borrowers who have perhaps borrowed more than they should have.