Another anxious post-Brexit first time buyer

TBagpuss

The short answer is that nobody knows. It's clear that Brexit caused a big finacial shock and the ongoing uncertainty until the terms of the exit are negotiated may well mean that things continue to be difiuclt to predict for a long time.

The most pessemstic forecast I've seen sugests that house prices could fall by as much as 18%. If that proves to be correct, as you have a 20% deposit you would not end up in negative equity, you simply wouldn't make a profit. And assuming that you have a repayment mortgage, you would be building up equity over the next 5 years +.

Will your morgage repayments, plus any service/management charges and likley maintenace costs be lower than your current rent?

How soondo you anticipate wanting to move on?

The problem is that nobody really knows. And equally, noby knows how long it will take for things to settle.
If you wait, prices may go down, but equally, interest rates may go up, banks may impose more restrictive borrowing criteria.

If you are in t for the medium to long term, and bearing in mind that you have a reasonable deposit, I would probably go ahead, and then plan to overpay on the mortgage which gives you a bit of a 'cushion' against flainng proices, and against riding interest rates, if either / oth of those prove to be an issue.

BUT think of it as a home, not as an investment. If you are viewing it as an investment, think again, as it just got riskier.

iantojones40

phatbear wrote: »

I keep seeing a lot of threads about people wanting to reduce their offer post brexit and i keep wondering if there would have been posts about sellers increasing the price post bremain if it had gone the other way?

Sellers don't seem to need any reason to ask increased/inflated prices, they just do it anyway.

hazyjo

Blue22 wrote: »

A little anecdote for you. In 1989, a newly married friend bought her dream home with her new husband. It was a cute but small 2 bedroom new build (think box for the second bedroom) in the South East.

Prices dropped soon after but believing that the downturn wouldn't last much longer, they started a family and went on to have two children. By the mid 1990's my friend started to talk about being trapped and the house was totally unsuitable for two young children but with negative equity of 10 000s there was nothing the family could do.

I will spare you the details of the angst the family suffered over the next few years but if is suffice to say that the couple spent years hating their 'dream home'

It wasn't until 2001 that the house increased enough to pay off the remaining mortgage balance. They sold as soon as they could and moved into rented accommodation and they are still in private rented today.

So my advice to any FTB would be not to even think about buying unless you intend to stay put for at least a decade.

I bought for £65k in 1991 at what I thought was the bottom of the market. It kept falling. By 1995 it had dropped to £58,500 (when I sold).


The prices then rose very sharply and my next flat rose from £40k in 1995 to £65k in just under 2.5 years (when I sold). In 2001 it sold for £117,500.


I guess each area's different. In London, prices absolutely rocketed in that time period. Several of my friends felt trapped in that they couldn't afford to buy or move to something bigger as they were totally priced out of the market, and one panic-sold and has never afforded to buy another property since and has always rented.


Nobody can predict the market. I think the speed it went up in the mid-90s to the early 2000s beats anything since.


Jx
PS that flat then rose from £117,500 in Feb 2001 to £161k in July 2003. Crazy times.

Kitten868

Do you actually want to buy it? If yes leave well alone. You've got your ducks in a row. Are you really willing to lose it for the sake of £10k?

sheff6107

Blue22 wrote: »

A little anecdote for you. In 1989, a newly married friend bought her dream home with her new husband. It was a cute but small 2 bedroom new build (think box for the second bedroom) in the South East.

Prices dropped soon after but believing that the downturn wouldn't last much longer, they started a family and went on to have two children. By the mid 1990's my friend started to talk about being trapped and the house was totally unsuitable for two young children but with negative equity of 10 000s there was nothing the family could do.

I will spare you the details of the angst the family suffered over the next few years but if is suffice to say that the couple spent years hating their 'dream home'

It wasn't until 2001 that the house increased enough to pay off the remaining mortgage balance. They sold as soon as they could and moved into rented accommodation and they are still in private rented today.

So my advice to any FTB would be not to even think about buying unless you intend to stay put for at least a decade.

With no context though, it is just an anecdote. 20 other people on the same estate could have been happy as larry.

cashbackproblems

Kitten868 wrote: »

Do you actually want to buy it? If yes leave well alone. You've got your ducks in a row. Are you really willing to lose it for the sake of £10k?

10k? A modest 15% drop amounts to almost 50k off the OP's asking price. London is sky high and even after the stamp duty rise in April has been falling so this will just knock the stuffing out of the market, we saw it in 2008 so it CAN happen. And what has been wiped off the stock market is more than what was lost in the Lehman's scandal.

I would definitely lower my offer, especially if its a one bed flat, as I know the NW London area quite well and one beds will be harder to sell than 2 beds

AlistairM

No one knows what's going to happen really.


As I understand it, house prices will only go down for 2 reasons.


1. More houses for sale than people want to buy. I think this is unlikely, we still have a shortage of housing and builders are taking a hit at the moment in the markets so may cut back on new projects.


2. Credit from banks become harder to get. If that happens less people will be able to afford the house, less completion, equals house prices. This could mean that you fall out of the lending criteria though.


If I were you, I'd look at the house you're buying and its valuation, make sure you're not paying more than that, then just go for it so long as its all affordable. Go for a 5 year fixed term whilst all there's all this uncertainty and see how you feel in 5 years.

cashbackproblems

AlistairM wrote: »

No one knows what's going to happen really.


As I understand it, house prices will only go down for 2 reasons.


1. More houses for sale than people want to buy. I think this is unlikely, we still have a shortage of housing and builders are taking a hit at the moment in the markets so may cut back on new projects.


2. Credit from banks become harder to get. If that happens less people will be able to afford the house, less completion, equals house prices. This could mean that you fall out of the lending criteria though.


If I were you, I'd look at the house you're buying and its valuation, make sure you're not paying more than that, then just go for it so long as its all affordable. Go for a 5 year fixed term whilst all there's all this uncertainty and see how you feel in 5 years.

You are totally deluded then!!

Prices DO go down due to :

1. Stock market losses
2. Uncertainty/loss of confidence in the economy and growth - big factor!
3. Job losses
4. Pay freezes
5. Tighter lending
6. Interest rate increases

TrickyTree83

cashbackproblems wrote: »

10k? A modest 15% drop amounts to almost 50k off the OP's asking price. London is sky high and even after the stamp duty rise in April has been falling so this will just knock the stuffing out of the market, we saw it in 2008 so it CAN happen. And what has been wiped off the stock market is more than what was lost in the Lehman's scandal.

I would definitely lower my offer, especially if its a one bed flat, as I know the NW London area quite well and one beds will be harder to sell than 2 beds

You cannot equate the global financial crisis to the UK leaving the EU. Liquidity is still there, credit is still available.

By advising to lower offers you're advocating a self-fulfilling prophecy because the only reason to lower the offer is to "get a bargain". These people may not realise that once they've purchased their "bargain", that the next house that sells in the same area as them has the same buyer taking the same approach chancing the price and the price for the whole area lowers even further. So if the original buyers wanted to sell their new acquisition they've lost out already because it won't go for what they bought it for.

It's in the interest of the buyers to maintain a stable if not increasing price. It may not look that way - but it is.

jimpix12

Buy buy buy!

Don't come on here whining when you're in negative equity though, please. That's my only ask.