First Time Buyers - Enough is Enough!

Robin_Hood_7

right guys & girlys...

i now have the green light to buy with my g/f from speaking to the finacial adivisor, but im looking at the house prices thinking do i really want to pay over the odd`s... from what i have heard from the bank of englands speach the prices will stay where they are for a bit with perhaps the interest rates dropping 1/2 % buy the end of the year.. i personally think renting is like frowing your money away esp in my shoe`s.. even though i could now pretty much move into a house within 2-3 months i and my g/f will prob wait for at leist 6 months to just see if the market is going to move in any way..
but the lur of buying soon is strong at the moment... i can see how people just rush out to buy and land in a lot of over priced debt, just buy the way i am feeling about wanting to just look at property, but i will wait i think and see what happens... at this rate i can save another £2000 a month with my g/f`s pay aswell and then i will have enough for the furniture as well

dougk_2

Again (which seems to be happening more often ) I would agree with MeanMAchine on the point of gazundering. I do not believe it is fair of morally right to do this. Buying/selling a house is stressful enough. I personally think once an offer price is made it should stand firm unless there is significant problems with the property brought up in the survey.

If anyone tried to gazunder on me I'd simply tell them to stick it even if it meant me losing out in the long run.

Imagine going for a job and as you are about to sign the contract someone saying - actually you are not worth that much lets pay you £3k a year less....

pioneer31

ignore post

Thorpeedo

Pal wrote:

My point is that no-one really benefits from high house prices. The gains are almost always pushed into a new house. Often when people trade up they buy a larger place and INCREASE the size of their mortgage debt, despite the equity they have used as a deposit. In almost all cases, if they had been able to save the deposit and get the mortgage based on their salary, they would have been better off going for the larger house to begin with.

Surely the longer you have a smaller mortgage the less you pay in interest, and the quicker you can save a deposit for a smaller property. We've got a "smaller" house than we ideally want, and are overpaying, making mortgage payments based upon a larger mortgage, when we've actually got a smaller mortgage. The percentage of our monthly payment that is "invested" rather than "paying interest" is far greater now than it would be if we'd bought a larger house to start with. When we eventually go for the larger house I'll be borrowing far less and therefore paying far less in interest. so I feel going for a smaller house in our case has it's benefits, and if prices tumble, then we lose on our house but the sellers of the larger house lose more on theirs ( assuming same percentage move) ! It's a case of how long we're prepared to put up with the niggles of our current house before we jump. It's purely a financial/emotional balancing act, the longer we stay the more we save, but then the longer we wait for the dream ! Given the possibility of prices dropping and the benefits of small mortgage, waiting is winning the battle.

I think i've got it setup so I can't lose, but would appreciate anyone pointing out glaring errors in the theory.

meanmachine_2

I've never really understood this desperate need to get on the property ladder.

A friend of mine bought a place for 100K five years ago. Sold it a few years later, and apparently the equity in the place "allowed" her to buy her second home.

I didn't have the heart to tell her that had she bought this second property rather than her first she'd be no worse off, since she could have acquired it for £100K less all those years ago.

her circumstances in terms of salary haven't improved. In fact she's earning slightly less now than she was when she took her first step on the ladder.

And in a flat housing market there's even less need to buy a smaller property, thinking it'll "help fund" the next one.

Or am I missing something?

Yes, as you earn more and your circumstances change, then trade up. But thinking that a first time buy helps you in any way with the second purchase is not entirely accurate. It's yet another misconception.

deemy2004

The reason people what to get on the property ladder, is because they see fantastic bull markets where prices rise X3... as compared against their salaries etc... which don't tend to triple over say 5 or so years....

everyone here who has not bought wishes they had bought 5 or so years ago, Those that say had they known what was to transpire they would not have, ARE LIEING !

No matter if there is a 3 year bearmarket resulting in say a 20% drop, people will still want to get on the property ladder for they anticipate rises eventually well inexcess of their earnings.

I recall viewing a house for 40k some 4-5 years ago - 3 bed detached. that same house would probably go for well over 120k today ! Oh for all the fishes we let get away.... :rolleyes:

meanmachine_2

But I'm talking about moving up the ladder.

Surely a booming housing market helps no one except someone about to die and give the property to their kids.

My friend bought a £100K property in 2000

Didn't buy a £150K property in 2000

Sold the first property for £150K in 2004, and made £50K

Meanwhile the £150K property soared by £70K to £220K

They then had to take out a £170K mortgage, whereas in 2000 they would only have needed a £150K mortgage (less deposit).

So who's gained from this, except the banks of course...

deemy2004

A booming housing market helps the economy enourmously.

From the B&Q's to the estate agents, to the banking industry to the service industries to support housing developments to the builders to the .....


the list is endless....

Its the reason why we have had continious growth (mostly above trend) for the last 10 years...

Yeh there is a day of reckoning when they stop rising and start falling and thus demand is depressed and everything that was helped on the way up is hampered on the way down leading to below trend growth or recession, which is the direction we are now heading in. Still 10 years solid growth is a pretty good run !

Its amazing where the UK was say 15 years ago and where it is today I mean we were something like 25% behind France & Germany in GDP terms and today were in FRONT !

So basically in conclusion a booming housing market is good for britain even if it does lead to periodic bear markets, as long as those bear markets are measured and don't turn into somethign similar to the early 80's in economic terms.

meanmachine_2

SO the health of the entire economy is dependent on above inflation (ergo unsustainable) rises in property value.

Sounds like a recipe for disaster.

No wonder Gordon Brown is so desperate to bribe FTBers into taking on massive debts.

Chump.

deemy2004

Yep, I'll agree with that.

Its inevitable that one day they will stop rising and fall... if the governments can time it right, they get the fall early in the electoral cycle so that the economies recovered by the time of the next election

The Tories in 1992, were resigned to Labour winning so gave them an run down economy.... unfortunately they won ! So it was tough going to build up the economy for the 1997 election enough to win.

Since which britain has reaped the hard work done in 1992 to 1997 and also some good managment / decisions by labour.

Its a tough call, what the plan is now

Whether to get a drop / recession out of the way now, or to soldier on until the next election and get it done then...
The problem is if it is now then unlikely Gorden will be the next PM. If it is after the next election than likely Gorden will be the PM. This suggests they (Labour), will try their hardest to keep the economy chugging along and attempt to support the housing market as they are doing so.

Whether this will work... I don't know...

But sometimes it is wise to lose an election and give the opposition a mess that they are not able to turnaround during a parliament and then be in for umpteen subsquent terms.