First time buyer - wait out Brexit?

Crashy_Time

AdrianC wrote: »

Great, so you know that your question was pointless, because the answer is that they don't, and haven't for a very long while if ever.

The poster assumed that the money to buy is constant, while the global backdrop always fluctuates. I pointed out that in severe global turbulence the banks won`t lend, leading to an even bigger crash.

katebl

I'm a potential FTB but not until the right house comes up. Most of the people on here seem to own so of course will encourage you to do so because it worked out well for them but I am not so sure current FTB's will benefit from what the existing owners have done in terms of value increases. In my area a third of the houses are reducing, about a third of all stock are no ongoing chain (ex BTL must make up a large amount of that) and time taking to sell is definitely longer than last year.

Since I got my first AIP last year what I can borrow has been reduced (I assume removal of HTB mortgage guarantee had something to do with that) but I've managed to save the same amount so my overall budget is the same - just I will own more than I would have done which to me is definitely a good thing.

Do your own research and set your own time scale - assess your own risks and benefits as what works for someone else won't necessarily work for you.

Victor_the_Gink

Crashy_Time wrote: »

The market has already stalled and is dropping, any assertions to the contrary mainly come from people trying to sell or who have just bought IME. Seeing LOTS of empty retail space in prime areas of Edinburgh, something is definitely up. All it needs is for the US to tweak rates higher or a country to come out and say it is leaving the Euro for the low interest rate scenario to run out of road. Banks NEED higher rates now, they don`t really care if your mortgage goes up or not.

HAHAHA. It has been apparent for some time you know nothing about economics. I can now add the banking industry to the list of things you know jack !!!! about. Banks do not need higher interest rates whatsoever.

buglawton

Victor_the_Gink wrote: »

HAHAHA. It has been apparent for some time you know nothing about economics. I can now add the banking industry to the list of things you know jack !!!! about. Banks do not need higher interest rates whatsoever.

I often hear in the media (even from serious commentators) that 'banks need higher rates'. Which overlooks the fact that it's the BOE that sets the base rate.

What banks would love is a higher lending profit margin over the BOE rate. Which they are resoundingly not getting.

Only yesterday yet another even lower mortgage deal was offered by Atom Bank, I think it was the 5 year 1.25% fix with £900 fee.

lopsyfa

Let's look at it from a mathematical modelling perspective.

For a £250k house, the rental value will be about £800pm if not more. Assuming the OP waits 2 years to see the effect of Brexit on house prices (they may need to wait longer but let's use 2 year for worst case scenario). They will have paid £19200 on rent and assuming house price keep rising by 2% each year in that two year, the £250k house will then be worth £260.1k.

Let's now assume house price fall by 10% then, the same house will then be valued at £234.09k (0.9*£260.1k). If you add the £19.2k the OP will have spent renting, that makes the total £253.29 and the OP is £3.29k worse off in that scenario.

But if there is no crash, the OP is paying £279.3k (19.2k+260.1k) for the same house. This assumes they rent and buy the same house they could have bought now.

If there is a 50-50 probability of either of the two cases happening (higher probability there won't be a crash but let's go for 50-50), the expected cost of the house to the OP is £266.295k (0.5*253.29k +0.5*279.3).

If the OP has to wait longer than 2 years or if house prices rise by more than 2% in that 2 years (very likely depending on the location), the difference is even much larger. If you factor in the possibility of landlords wanting to move back to their house (just happened to us but luckily we had bought our own house), deposit lost, tenancy referencing fees, moving cost if you have to change rented apartment, possible higher interest rates if there is a crash and even the possibility of tighter lending criteria and the differential gets higher.

I think there is no sense in waiting once you found a house you love and even if there is a price crash some time in the future, the gain by waiting will be very little compared to if you buy now but you stand much more to lose if there is no crash.

Crashy_Time

katebl wrote: »

I'm a potential FTB but not until the right house comes up. Most of the people on here seem to own so of course will encourage you to do so because it worked out well for them but I am not so sure current FTB's will benefit from what the existing owners have done in terms of value increases. In my area a third of the houses are reducing, about a third of all stock are no ongoing chain (ex BTL must make up a large amount of that) and time taking to sell is definitely longer than last year.

Since I got my first AIP last year what I can borrow has been reduced (I assume removal of HTB mortgage guarantee had something to do with that) but I've managed to save the same amount so my overall budget is the same - just I will own more than I would have done which to me is definitely a good thing.

Do your own research and set your own time scale - assess your own risks and benefits as what works for someone else won't necessarily work for you.

Well if they are still waiting for a buyer it hasn`t worked out so well, but yes. human psychology dictates that they will advise you to do what they did.

Victor_the_Gink

Crashy_Time wrote: »

Well if they are still waiting for a buyer it hasn`t worked out so well, but yes. human psychology dictates that they will advise you to do what they did.

It's basic common sense that if you can avoid renting, where you shovel money hand over fist to someone else, when you can buy something that you will yourself own, that you should do the latter. Some of those lunatics over on HPC have deluded themselves that for TWENTY years they are "ahead of the game" by giving money to a stranger, when even if prices do crash, they are not going to return to the levels that they were twenty years ago!!!

Crashy_Time

Victor_the_Gink wrote: »

It's basic common sense that if you can avoid renting, where you shovel money hand over fist to someone else, when you can buy something that you will yourself own, that you should do the latter. Some of those lunatics over on HPC have deluded themselves that for TWENTY years they are "ahead of the game" by giving money to a stranger, when even if prices do crash, they are not going to return to the levels that they were twenty years ago!!!

Not sure the HPC site was around in 1997, but maybe you know better? Common sense should dictate not to borrow money to pay bubble prices when rates could rise at any minute?

glasgowdan

Crashy_Time wrote: »

Not sure the HPC site was around in 1997, but maybe you know better? Common sense should dictate to borrow money to pay market prices when house prices could rise at any minute?

Ftfy......

AdrianC

Crashy_Time wrote: »

Some of those lunatics over on HPC have deluded themselves that for TWENTY years they are "ahead of the game" by giving money to a stranger, when even if prices do crash, they are not going to return to the levels that they were twenty years ago!!!

Not sure the HPC site was around in 1997, but maybe you know better?

The domain name was registered in October 2003, so "only" 14 years ago. But that doesn't mean that the sentiments weren't about for several years before that, of course, merely that there wasn't the opportunity to whip each other into a mutual-feedback frenzy over them.

Meanwhile...
In January 2005, the average house price in the UK was shrapnel over £150k.
By September 2007, and the pre-crisis peak, it had risen to £190k.
At the depth of the crisis, March 2009, it had fallen back to... £154k. Yes, still higher than when housepricecrash.co.uk was registered, less than six years before.
Today, it's over £217k.

I make that 30% more than the depth of the crisis, and 14% more than the peak beforehand.
As an average annual growth, that's only 3.75% from the depth, or 1.4% from the peak. Compared to 2005, it's 3.66%.

So since the depth of the crisis, the average growth has been roughly the same as the total period since 2005. Not much more than inflation.

Makes your much-beloved crisis look like a short-term wobble, doesn't it?

Oh, and btw - the figures are from http://landregistry.data.gov.uk/app/ukhpi/explore