**Don't Buy A House** House Prices Set To Crash!!!

Spendless

Hi nik

You probably haven't read my post on the first few pages of this thread (posted some time ago - lol) but in a nutshell i bought a property when i was single and within a year it was in negative property.

The only time it created me a problem was after i'd met my husband and we had a baby. The house was too small but we couldn't afford to move. Things worked out ok for us in the end.

The things i'd ask you is are you buying a property big enough for if you have children and would it be in the area where you wish to stay for a period of time?

If i'd bought a bigger house in a different area when i was single being in negative equity wouldn't have bothered me at all.
It didn't bother me in my little house when i was single as i had no wish to move.
It was only after acquiring husband and child and really needing to move and not being able to when the negative equity created a problem for me

Charlton_Taz

Looking through this forum has been fasinating!

My partner and I were first time buyers four years ago. It was a big decision at the time and we weighed up the pros and cons then...because even then the press etc. were talking about house price crashes. We decided to take the plunge and drew up a budget to see what we could realistically afford. We originally wanted to live in Reading, but we found for the kind of property we wanted was going to cost as more than we were willing to pay...so we compromised and lived in a smaller town 15 miles away instead where we could afford it. We managed to get a 2 bed terrace. We borrowed furniture from our parents to get us started....very lovely 70's stuff

Important thing was we made the sacrifice and took the risk of home ownership because we felt in the longterm it would be of benefit to us. It is always painful when you start out but you've got to remember that as your wages rise your mortgage payment doesn't so the burden does become less. We compromised by not going on holiday for several years....instead our exciting holidays off work were mostly used for DIY projects to the house

We now moved to our second house last Friday......in Reading (hello DougK!!) and I don't regret it. Homes are for living in and prices go up and down. The main thing is I like the fact I can do what I want to my house and I am not paying off someone else's mortgage....I am paying off my own. In 25 years time....even if house prices fall I will own a house I can leave in for free......to me thats a no-brainer!!!

I have found that several potential FTBs I know seem to be too fussy. They want a wonderous location and don't want to cut back on luxuries like designer clothes / fast cars / expensive eating out etc....People have got to realise that compromises need to be made.

vishpatel

Charlton_Taz wrote:

I have found that several potential FTBs I know seem to be too fussy. They want a wonderous location and don't want to cut back on luxuries like designer clothes / fast cars / expensive eating out etc....People have got to realise that compromises need to be made.

classic attitude towards FTB'ers.

I don't have designer clothes, any kind of car, nor do I eat at expensive restaurants if I can help it. But with the exception of fast cars (most just settle for any car) I agree, many of the young people I know do enjoy these things...

Can I ask you one question - what is the maximum salary multiple you would advise a FTB'er to take out as a mortgage?

Yes many young folk these days live way beyond their means. BUT those that are GENUINELY looking to buy do understand sacrifices need to be made.

I think the housing boom has left a lot of young folk bewildered. Many of them think they will never be able to afford a home, and therefore decide to spend & live for the moment.

Also, this is the first generation that has had to deal with Student fees/loans. When the average student leaves university they are already in a large amount of debt. This doesn't help when trying to buy a home!

nelly_2

Student loans is a damn good point Vish.

The facts are ftb's are at a 20 year low apparently, and the thing with stamp duty today wont make the slightest difference.

And I love this article;

http://money.independent.co.uk/property/homes/story.jsp?story=620469

vishpatel

nelly wrote:

And I love this article;

http://money.independent.co.uk/property/homes/story.jsp?story=620469

The funny thing is thats actually true. A couple of my friends have mentioned buying in Dubai...

The UK masses have been programmed into thinking property is a one-way bet...

The problem is not with the FTB'ers or existing homeowners (who are smug about their paper wealth). It's because of all these amateur speculators!! And I don't think very highly of estate agents either...

Woby_Tide

vishpatel wrote:

Can I ask you one question - what is the maximum salary multiple you would advise a FTB'er to take out as a mortgage?

Don't work on multiples, work on affordability, if someone wishes to take out 5x their salary because someone will lend it them but finds their payments don't allow them them any leeway if rates go up etc. thats bad. But if someone works out they could afford to pay £1000 a month say(and cope with potential increases in rates etc.) and the mortgage amount happens to be 5x their salary then that is not such a bad decision personally as they have worked out their limits but the mortgage happens to be a high multiple

vishpatel

Woby_Tide wrote:

Don't work on multiples, work on affordability, if someone wishes to take out 5x their salary because someone will lend it them but finds their payments don't allow them them any leeway if rates go up etc. thats bad. But if someone works out they could afford to pay £1000 a month say(and cope with potential increases in rates etc.) and the mortgage amount happens to be 5x their salary then that is not such a bad decision personally as they have worked out their limits but the mortgage happens to be a high multiple

and you sir take the prize!

Personally, 3.5x is about what I can afford... it works out right for me. For the overwhelming majority a 4x salary mortgage is probably as far as you can stretch.

Higher multiples can only be advocated for very high earners since they'll have a lot more spare cash than your average Joe.

The mortage industry has agreed for god knows how long affordability is directly linked to multiples of salary. It's to protect people like me from people like you who encourage HUGE amounts of debt.

Who are you to say FTB'ers should accept the days of 3x or 4x salary mortgages are gone???

kazd

dougk wrote:

vishpatel -


You DO NOT have to buy in London to work in London.... ).

I have to agree, my husband works in London and we live in Northamptonshire !

vishpatel

kazd wrote:

I have to agree, my husband works in London and we live in Northamptonshire !

good for you!! I'm actually from Wellingborough!

But with the impending slowdown/crash, I'd rather not buy in an area where I do not want to live.

I'm certain prices will fall in London - it just won't happen overnight. In the meantime, I'm prepared to wait and save. And my salary should be a lot higher by the time I come around to buying too!

By the way, I think Northamptonshire prices are equally inflated, as is most of the country.

Edit: I read this morning that around 2% of homes in London cost 120K or less - ie the new stamp duty threshold. I wonder if they are actually fit for humans?? That figure rises to 7% for the entire South-East.

dougk_2

As i have stated London is a capital city - It is meant for the rich... and prices will always be higher than elsewhere. The poorer folk have always lived in the suburbs or further afield..... and they often lived in the houses of their employers... Most people did not own their own houses until the last 20 or 30 years.
Why do you think you have some "given right" to own a house in one of the most expensive places in the UK? Sorry Like Charlton TAz says , FTB's are becoming too fussy about what they want, the idea is to get onto the property ladder and ten work up to a better home. Its rather like a career... very few people go straight into work as a director or CE.