PLEASE READ BEFORE POSTING
Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Should I just buy or wait for all this to blow over?

Toptom1
Posts: 76 Forumite
Buying a house in manchester for 115k down from 140k I belive it is worth 125k in current market but due to a desperate seller I did get it for under offer. Anyway I exapect house prices to fall and a lot of people are talking about a massive crash like there was in the 90s. So should I just buy the house as I'm about to exchange and live in the house and not see it as a investment or drop out and hope there is a crash and buy then? I'm worried in getting into negative equity and being stuck in the house paying over the odds.
0
Comments
-
Difficult one Tom, and nobody has a crystal ball.
My best guess would be that many properties are unlikely to fall much further than they have already have.
Nonetheless, there could be a crash at any point, and you (and millions of others) could lose 1000s in negative equity. It's the risk you have to take.
Also, the more you pay for your property, the more you are likely to lose.
I can't see you losing a lot on a house that is just over £100K. Go for it.No debt left now. Saved £111 in our sealed pot last year. And £272.13 this year! Also we have £2300 in savings. :j
SPC #468Target £250 for 2015.
0 -
How long do you see yourself living there? If it's 5 years, 7 years, 10 years, fluctuations year on year in house prices will affect you less than if you're looking at a 2-3 year timescale.
Negative equity seems to particularly impact "generic" properties- e.g a huge housing estate full of identical 3 bed houses - there's nothing to differentiate one from another, so there's always someone selling your kind of house for less than you, because they're more desperate to move. Likewise areas with large numbers of small new build flats - if they're all in the same area, with no particular features or views, there's no compelling reason to pick one above another.
Also, what do you expect to be your next move after this property? If say you're planing to move abroad in a few years, then yes, buying a property for £115k and selling it for e.g. £105k may mean you make a loss on paper (ignoring cost of renting versus mortgage interest etc). However, if you plan to buy again and upsize, in a falling market, the bigger property will reduce in price by more than your property, so the "switching cost" is actually less; you would save money by prices falling.
Another way to look at is, if you choose not to buy a house, you're gambling on what rental prices will do over the same time periodNo=one knows what the future will bring, so you just need to sign up for something you're happy with, given your current assumptions about the future!
0 -
I predict house prices will fall, rise, or stay exactly the same.
If you want to live there long term, I also predict the sooner you start paying your mortgage the sooner you will finish and be mortgage free. Few of us buy at exactly the perfect time price-wise. In fact I bought near the peak of two booms, but still have loads of equity and pay one third of what rent would be.
You can only do what is right for you. Not what a bunch of strangers on the internet think you should do.Been away for a while.0 -
By UK standards, it's a cheap house. If house prices fall 10%, you will 'lose' about 11k only. That's not a large amount relative to your future wages or even the undervalue you believe you may have achieved. The latter point also means negative equity is not a terrible risk as you have your deposit buffer too.
It would be different if you were buying a million pound house.
There is one other huge aspect to think about too. The 'value' of buying a house is not just on the gains or losses on the asset side. You also finance it with a huge liability called a mortgage. Your equity (the wealth in the house you own) is the difference between the asset and the liability, not the asset alone.
So the gains or losses caused by paying a mortgage vs renting costs need to be considered too.
The main cyclical reason house prices are so high right now is low interest rates (the structural reason being planning restrictions on supply).
Because mortgages are so cheap, then the potential 'pain' of future falling house prices can be compensated by the benefit of low mortgage payments.
You benefit from this effect before any fall, and, if you have a fixed period, for a period after it too.
(The topic of whether to fix is whole other area, but suffice to say for now that fixed rate mortgages are, very crudely, the market's expectations for the average cost of a variable mortgage over the same time period. So there is rarely a clear choice and it comes down to risk outlook and personal opinions.)
You are right to think about the risk of house prices. Most people have no clue or thought, especially about the risk of leverage caused by high loan to value mortgages (where a negative 10% move in house prices can destroy 100% of your deposit).
But keep it in perspective. Your investment is made less risky simply by being a smaller exposure. The intangible benefits such as security of tenure are also larger relative to the financial exposure than with more expensive houses.0 -
If you can afford it, go for it.
If interest rates go up, can you still afford it?
Will you need to move in the next 5 years?
If you don't need to move then house prices don't matter so much as you can just continue to pay off your mortgage as originally planne.
If you want to move in a few years and you are in negative equity then you might be stuck, that's the only situation to worry about really.Changing the world, one sarcastic comment at a time.0 -
House prices will crash by at least 65% by christmas.
Are you watching what is happening in Russia right now?Well life is harsh, hug me don't reject me.0 -
-
If you like it and want to live there, buy it. The only reason not to would be if it's a starter home and you know for sure that you will definitely want to sell in 2-3 years' time. Otherwise, it's your home! How much of your life are you going to spend waiting for the right time to buy (given that you might always get it wrong no matter how long you wait)? Suppose the market gradually falls for ten years... will you be glad you spent those ten years in rented accommodation because you've saved £15k on house price movements, even though you will be about to start from scratch with a 25-year mortgage when it could have been a fair way to being paid off had you bought on Day One?
You're just being a wimp because you are a first time buyer and it's a scary large number and a scary large debt. And I know exactly how you feel.0 -
ps Also, you need to be aware of how much of this is really that you think you wouldn't be able to manage if prices fell a little, and how much of it is that you would hate for your friends, family, acquaintances etc to know that you didn't call the market perfectly? A £10k drop in value would mean, on a 3% mortgage, that you could have saved £25 a month had you waited. But if you are really less than £25 a month away from having to declare bankruptcy then you shouldn't be even thinking about buying because what if interest rates go up! (Oh, and also, you are about to buy for £10k below current value, so you'd still have to pay £115k for a similar property if you waited and prices did fall.)
Every time I buy something, or sell something, or make any decision, I am surrounded by people keen to tell me that I made the wrong choice and that they would have done something completely different and/or that when they did it they made/saved a fortune blah blah. Strangely, not one of them is the kind of stinking rich and successful that you would expect of such a group of perfect people who always make the exact most beneficial choice in every situation throughout their whole lives. It's almost as if people like to brag about their few successes while keeping shtum about their many failures. To let them, or the thought of them, get to you would be like slashing your wrists because everyone on Facebook always seems so happy in their photos. Like everyone else, you have to make the best decision you can at the time, based on what you want out of life, and based on the information available to you at the time. Weigh it all up and go for it!0 -
It's like the latest phone, you want to buy an iphone 6 but hey the 7 is just round the corner so I will wait for that, bottom line you never get anything because something else is just round the corner.
Buy it now whilst you think your getting a good deal, the lenders have no interest in seeing another house crash. Status quo is more likely rather than a huge crash.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 348.3K Banking & Borrowing
- 252.1K Reduce Debt & Boost Income
- 452.4K Spending & Discounts
- 240.8K Work, Benefits & Business
- 617.1K Mortgages, Homes & Bills
- 175.6K Life & Family
- 254K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 15.1K Coronavirus Support Boards