House price crash-don't make me laugh

carolt

Thanks, bargainbarmy, I have thought very long and hard about it, and as explained above, for me personally, it makes absolutely no economic sense to buy. The only condition in which I would consider buying at present is if my 'dream' house, ie one you would like to never move from, big enough for all eventualities, within budget, came up. Then I'd be happy to buy. But realistically, it's not going to, at current prices (see, not all FTB's have unrealistic expectations!).

And looking at above posts, it seems a large number of other FTB's have done the maths and come to the same conclusion.

That's not to say that there might not be individuals for whom that doesn't apply. If gemma.zhang's figures are correct, and the interest only payment on her mortgage really is £200 cheaper than the rent would be, then that's a logical reason to buy (as long as she's sure she will be able to meet future payments easily, even if costs rise or she loses her job etc), as it may not be possible to sell if necessary at the same or higher price in a falling market.

But overall, I think her example is unusual. I certainly wouldn't take advice from bargainbarmy, given that he is the economics 'expert' who claimed house prices had never crashed by 50% anywhere (see other threads for immediate ridiculing of this theory) and who believes that in a downturn, it's the cheap end of the market that doesn't suffer! Do you know NOTHING about basic economics/ Do you have NO memory of the last crash? Or where you not out of nappies then? Of course it's all the studios and one bed flats that become worthless, or worth a fraction of their value then - because let's face it, who ever really wanted to live in them? Other than a few retired people in sheltered accommodation, is there anyone who really says, 'Ooh no, I don't want that flat...it's too BIG for me. I like them cramped, me.'? Yes, of course I could afford a tiny flat, either to live in, or as an 'investment'. But as prices come down, these sorts of properties are going to be the first to suffer, particularly given the glut of recent developments of small BTL flats cluttering up numerous city centres.

By all means, take bargainbarmy's advice. But don't say you haven't been warned.....:eek:

carolt

Oh, and Ms Piggy - I am looking for a home, not an investment. But not one that the bank is going to take off me in a year or two because I've failed to meet my cripplingly high repayments. Whilst I'm not trying to make a profit on it, nor am I trying to throw money down the drain. There's no reason to be stupid about it.......:)

silvercar

Two reasons to buy your home:

1) so you don't have to move every 6 months/ year on a landlord's whim;

2) so you have a cost free place to live in retirement.

Lavendyr

Agree with carolt entirely.

Lavendyr

silvercar wrote: »

Two reasons to buy your home:

1) so you don't have to move every 6 months/ year on a landlord's whim;

2) so you have a cost free place to live in retirement.

1) is not necessarily a bad thing if you also want the flexibility to be able to move on your own whim rather than having to fret about selling up

2) is certainly a good thing, but if you have done the maths and have worked out that by buying *later* you can save up a bigger deposit, thereby borrowing less, thereby actually *saving* money overall, why is it better to buy now than to buy in a few years time? I know, I know, "because house prices will keep going up" - well, maybe, but it's a gamble we all take, isn't it.

abaxas

silvercar wrote: »

Two reasons to buy your home:

1) so you don't have to move every 6 months/ year on a landlord's whim;

2) so you have a cost free place to live in retirement.

Agreed in a traditional sense however people forget to add in employment to this.

If you are made redundant and cannot find another job you basically screwed if you own but ironically in a good position if you rent.

I'm 33 and I don't think I know anyone of my age who wouldn't be screwed after 3-4 months of unemployment.

"a cost free place to live in retirement'

Ermm, have you never heard of maintenance. Obviously houses fix themselves.

Turnbull2000

gemma.zhang wrote: »

I doubt it

Rent: £500pm, fully furnished and excellent maintenance from landlord.

To Buy (going by other listings in area - Tynemouth): 135K, 25 years @ 6.5% IR £922pm

manhattan

bargainbarmy wrote: »

Badgerlady is a very clever girl. Now all those whinging on about house prices carshing and not being able to afford even a 1 bed flat take a good honest look at yourselves. You know you could have done what Badgerlady did but either you're expectations were too high, you weren't prepared to live in a less socially attractive area or you just were waiting for that never about to happen day when the market would crash. FTB house prices would fall the least anyway if that were to happen as they are usually the most in demand type of property. So if you are a FTB you need to get on the market . If interest rates come down prices will start to increase for FTB's. Your top end of the market will probably stagnate a bit but not FTB'S.

Nuff said !!! Think about it carolt.

Some people NEED more than a 1 bedroom place!
There are FAMILIES that are also FTB'RS too! Or are some people expecting a family of four to squeeze into a studio flat???

gemma.zhang

carolt wrote: »

That's not to say that there might not be individuals for whom that doesn't apply. If gemma.zhang's figures are correct, and the interest only payment on her mortgage really is £200 cheaper than the rent would be, then that's a logical reason to buy (as long as she's sure she will be able to meet future payments easily, even if costs rise or she loses her job etc), as it may not be possible to sell if necessary at the same or higher price in a falling market.

Agree, figures work out so well, it's coz we have a large desposit - bit more than 30%.

318k house, we're taking mortgage of 218k for 23 years @ 5.48% tracker rate -- work out to be 1391 pounds/month. repayment, in which, around 1000 pounds is interest only, 400 pounds capital.

Yup.. I understand your point.. and it is a risk of buying it now...it's a risk of buying at ANY TIME. We thought of buying last year, was waiting for the market to be stablised. Now I am kicking myself for not doing it, otherwise, we could have saved up at the lease 30k. and as long as you've got enough deposit, and not killing yourself to buy the house, do up the sum, if the interest only is roughly more or less the same as the rent. I will vote for buying.. as you're not losing the rent, or any money at all...

silvercar

why is it better to buy now than to buy in a few years time? I know, I know, "because house prices will keep going up" - well, maybe, but it's a gamble we all take, isn't it.

If you keep waiting those "few years" you will never be in a position of having a 25 year repayment mortgage and owning your own home outright before retirement.

I accept that sometimes it is a good thing to be able to move quickly, and renting has the advantage of doing this. But I wouldn't like to keep moving with children in tow and wouldn't like to worry about having to move when I'm 75.