Buy now or wait?

Tiger_greeneyes

hughgallagher wrote: »

ok, well that's good for you, but the original post was not about you it was about whether or not to buy now as a FTB. Your advice was along the lines of "buy now anyway because it doesn't make a difference if prices dip". I am saying that that advice is wrong as long as inflation and interest rates are rising because the further up they go the greater the risk of negative equity in a few years time. Then you are stuck unless you fund the difference to move up the ladder in say 3,4,5 years time. IMO we are finally approaching a critical point in the current housing market cycle and we won't know untill then end of the year or even well into 2008 what the effects of raised IR,inflation, HIPS etc will be.

The alternative is rent low and as long as you save half your annual rent again in ISA's, investments and high interest accounts you are covering your rent by reducing the starting point of your eventual mortgage and capital/ + interest over the term of the mortgage.

My advice wasn't wrong, it's my point of view and as far as I'm concerned, I'll stick by it. I managed to pay my mortgage off in 13 years on the back of making the right decisions for me, so it suits me. If you don't like it then that's fine, I won't force you to agree!

I'm fully aware the OP wasn't about me, and I don't remember ever posting that it was :rolleyes:

Most people can't afford to rent and save 50% as much again. In the two areas I've rented (London and Suffolk), my rent has been around double what a 90% mortgage would have cost on a similar sized property.

When I first bought in 1993, I went into negative equity within a year. A year or two later, the prices had risen and my first flat has now quadrupled in value. Proof that you can go into negative equity and then back into positive equity without moving and without renting.

I completed on my house in January this year. The house has already increased in value by £20k - but even if it had gone the other way - I don't care because it's my home - and the small mortgage that my partner has on his share will be paid off in time. The house prices have absolutely no bearing on the fact that I've got the stability of having my own front door.

Hughgallagher - your argument doesn't make sense to me. What does it matter if prices go up and down on the house you live in? It's the interest rates that make the difference. My mortgages have always been cheaper than rent and at the end of the day, I own the property and I can live there as long as I want, I'm not at the mercy of a landlord.

as long as inflation and interest rates are rising because the further up they go the greater the risk of negative equity in a few years time. Then you are stuck unless you fund the difference to move up the ladder in say 3,4,5 years time.

And your point is? If your property has dropped in value, and you want to move up to the next rung of the property ladder, then you need to bear in mind that the property you want to buy will also have dropped in price. You'll actually have the benefit of having a lower mortgage, if anything. And if the prices drop? You'll still have paid (for instance) five years off your existing mortgage and that's far better than making a landlord rich!

Are you a homeowner hughgallagher? You have the air about you of someone who's been waiting for years for the prices to drop so that you can get a bargain.

pricedout_1

Tiger_greeneyes wrote: »

My advice wasn't wrong, it's my point of view and as far as I'm concerned, I'll stick by it. I managed to pay my mortgage off in 13 years on the back of making the right decisions for me, so it suits me

I'm fully aware the OP wasn't about me, and I don't remember ever posting that it was :rolleyes:

.

But you just did it again ... in the sentence above the one where you say you know the post isn't about you :rotfl:

Sorry, I am joking about here ,but your example is an interesting one ....
You bought in 1993 at the back end of the last property crash. Good timing :j
That is in no way the situation of todays first time buyer who is faced with the daunting decision to buy at the height of the biggest ever property boom in British history with house price to earnings ratio's at average of about 6-7 and higher in certain parts of London. What was the house price to earnings ratio when your bought in 1993 I wonder? In effect your advice is to do the opposite of what you did in terms of the housing cycle.

Tiger_greeneyes wrote: »

Most people can't afford to rent and save 50% as much again. In the two areas I've rented (London and Suffolk), my rent has been around double what a 90% mortgage would have cost on a similar sized property.
.

I've done it but it's a good point.

Tiger_greeneyes wrote: »

If your property has dropped in value, and you want to move up to the next rung of the property ladder, then you need to bear in mind that the property you want to buy will also have dropped in price.

You'll actually have the benefit of having a lower mortgage, if anything. And if the prices drop? You'll still have paid (for instance) five years off your existing mortgage and that's far better than making a landlord rich!

.

But you will need to cough up the shortfall caused by the negative equity to move. How much would that be 10K 20K who knows. Would you a normal wage earner have that sort of money spare? and would they really want to spend that much just to move?

Also, in the example you describe, if you wait in the first place and jump in to a lower mortgage thats better than not waiting and having to deal with negative equity. which is my advice the the original post.

Tiger_greeneyes

But you just did it again ... in the sentence above the one where you say you know the post isn't about you

Have you seriously failed to notice that you keep bringing the subject back to me by directing questions to me? I'm merely replying to you from my own point of view. It was actually your first post to me at 1.07pm (above) started that trend: You quoted my text and asked me:

If that's true then what's the point in buying into a depreciating asset? May aswell rent in that case and let a landlord take the hit.

If you didn't want any of this to be about me, then why ask me in the first place?!!!

You seem to have a problem with me - hence your constant criticism of this being about me, which it clearly isn't if you read the thread in context. However, this is your problem and not mine, so don't expect me to bite.

if you wait in the first place and jump in to a lower mortgage thats better than not waiting and having to deal with negative equity. which is my advice the the original post.

So what do you do if the prices don't fall? There's no guarantee anywhere that will happen. It looks like you've already found this out the hard way.

That aside, if all you're going to do is criticise me because I answer your questions from a personal point of view, the answer is simple - don't bother asking me in the first place

meanmachine_2

I'm sorry, I mentally switched off when the poster began "I bought in 1993..."

in other words this person has NO idea what it's like to borrow at the top of a peak or on 5, 6 or 7 times their income.

They DO know what it's like to buy after a massive crash, and yet still think they're qualified to give advice in the current climate.

Dear dear dear

Tiger_greeneyes

meanmachine wrote: »

I'm sorry, I mentally switched off when the poster began "I bought in 1993..."

in other words this person has NO idea what it's like to borrow at the top of a peak or on 5, 6 or 7 times their income.

They DO know what it's like to buy after a massive crash, and yet still think they're qualified to give advice in the current climate.

Dear dear dear

I do apologise meanmachine, I didn't actually realise that I'm not allowed an opinion :rotfl: Maybe you should start your own forum and specify that as one of the rules - 'nobody is entitled to an opinion that differs from mine'. That should keep you happy

in other words this person has NO idea what it's like to borrow at the top of a peak or on 5, 6 or 7 times their income.

I must have missed the post where I specifically posted on that particular subject :rolleyes:

They DO know what it's like to buy after a massive crash, and yet still think they're qualified to give advice in the current climate.

Yes, I know what it's like to buy after a crash, I know what it's like to be in negative equity and I've just bought a house in January - today's climate. Try assuming something else :rolleyes:

I've bought six properties in all, and sold six, so actually, I DO think that qualifies me to post on this subject.

What exactly qualifies you to be so rude? Could you not have simply replied that you don't agree with me I'm not interested in having an answer btw, you can take that as rhetorical.

meanmachine_2

I'm sorry, but you are not wholly qualified to give advice as a first time buyer at the peak of a property cycle (or perceived peak).

Unless you're now claiming 1993 was a peak.

For someone who doesn't like threads becoming about them, you must be hating this.

Or maybe not.

You ARE qualified to give advice as someone who "proudly" doesn't have a mortgage at the age of 37.

Try repeating that trick at today's prices and I really will be impressed.

And please don't post a response then tell me I cannot reply. Or is this now YOUR forum?

Tiger_greeneyes

Where did I tell you that you can't reply? I just said I wasn't interested in your explanation of why you're being so rude towards me!

Anyone who has bought a property is qualified on buying property.

And 1993 wasn't a peak, but neither was it a trough.

I could understand your criticism of me if you were paying me for advice that you didn't like, but I'm not, I'm posting my own personal opinion on an internet forum.

I'm sorry, but you are not wholly qualified to give advice as a first time buyer at the peak of a property cycle (or perceived peak).

You ARE qualified to give advice as someone who "proudly" doesn't have a mortgage at the age of 37.

Aha, we seem to be finally getting somewhere... where exactly was I 'professing' to being a first time buyer at the peak of a property cycle?

Tell you what, if it makes you feel better, then look at it as I'm giving advice as someone who paid off their mortgage at the age of 37

Try repeating that trick at today's prices and I really will be impressed.

Maybe you need to read the thread - more specifically - the post where I pointed out that I completed on my most recent purchase in January 2007, and that the value has already increased by £20k?

For someone who doesn't like threads becoming about them, you must be hating this.

Or maybe not.

Not, would actually be my answer on that one. I actually abhor being the centre of attention. Which is probably why it was you bringing attention to my posts in the first place, and not vice-versa.

CB1979_2

don't worry tiger greeneyes, meanmachine has been "predicting" a crash for about 4 years now

olive84

I don't want to wade into a row, but I am a FTB buying at the peak of the property boom (waiting to exchange at the mo), borrowing at 5x me and partners joint income. And I agree with Tiger_Green_Eyes. Nothing is more depressing than paying my landlord's mortgage in the form of rent at the beginning of every month, when I could be paying my own. If the market goes down, I'll sit tight and carry on paying my mortgage as usual.


If the market does crash, then the argument follows that repossessions will go up, and more people will need rental properties. Rental prices go up, so how is that a better option?

My point is, no one can predict what's going to happen, and if you work out your financial situation accordingly, it feels right to buy, then that's what you should do. I can't wait to own my own home personally, and think the benefits far outweigh the risks.

meanmachine_2

CB1979 wrote: »

don't worry tiger greeneyes, meanmachine has been "predicting" a crash for about 4 years now

That's right. I joined in April 2005 and now it's 2009.

How time flies!

No, not that my own thoughts are really relevant, but for the past year I've been predicting buyers will push prices to the absolute limits of affordability, just as they did in the 80s.

Sadly, I've been proved hideously right.

And my own experiences of the London market - as a potential FTBer tell me we really are in a late 80s frenzy.

And 1993-5, with hindsight, is now regarded as the trough of the previous cycle.

I'm not predicting the current cycle will peak for a year or two, but we seem to be heading there much quicker than even the most bullish feared/hoped.