Buying a house after a property market crash?

techno79

People keep talking about a market crash which got me thinking. If you're looking to buy a property, what are the pros and cons between buying a house just before a crash and just after a crash.

My logical mind thinks: just before a crash, you can probably expect a lot of choice in houses but your newly bought property will tank in value after the crash. The immediate drop in price shouldn't affect you if you're looking to keep the house long term. If that same person waited to purchase a house after a crash, then their house budget would go much further but also, a lot of properties would come off the market as only those really desperate to sell would do so.

Therefore, for someone looking to purchase a new house and to keep it long term (i.e. over 8 years), is it better to purchase now or just after a market crash? Should a new buyer be worried about when to buy with talks of a market crash?

Thanks in advance

Linton

You will never know when a crash is just about to happen. You won’t know that a crash is over until prices have risen significantly. If you look back in this forum I think you will find that there are people who have been waiting for a crash for perhaps 20 years.

So I suggest you buy when you can afford to but don’t spend everything you have. You are likely to find that the house you really want is always just beyond your ability to pay for it. Dont take risks.

getmore4less

Just read what a disaster that sort of thinking did for the resident there is never a good time to buy houses can only get cheaper Crashy.
Crashy sold near a peak and let 2 crashes pass them buy and won't spot the next one till its too late by then they will be convinced there is going to be another one along tomorrow....

Buy right you will save money over renting may not benefit from the best appreciation possible but long term you will be a winner.

ProDave

I tried to move in 1989 just after the crash.. It was A) almost impossible to find a buyer (I gave up after a year and waited) and there was very little for sale as most were in the same position as me.

And mortgages became harder to get.

Possibly a good time to be a cash buyer?

sevenhills

techno79 wrote: »

Therefore, for someone looking to purchase a new house and to keep it long term (i.e. over 8 years), is it better to purchase now or just after a market crash? Should a new buyer be worried about when to buy with talks of a market crash?

Thanks in advance

I bought my first house 30 years ago, I lived in it for 10 years, then sold it because I got a devorce.
The value of the house did not increase in that 10 years.

steampowered

Obviously, the best time to buy is just after a crash.

Particularly if you are able to pay cash without needing a mortgage. A crash in asset prices often goes hand-in-hand with it being more difficult to borrow money.

The problem is that if you sit around waiting for a crash to happen - you are out of the market and losing out on inflationary gains.

If you were able to accurately predict when houses (or shares, or any other asset you can to name) were going to crash, you could make an awful lot of money.

51mm5

There are crash cheerleaders who have lost out financially by trying to time the market by buying a property at what they think is cheap and losing out. Crashy time will be here any moment to tell you to wait for the crash. He/she has been waiting for 15 years + for a crash that never materialised.

Davesnave

We sold during the last Crash and bought at the end of it, so we saw both sides of the coin.There really was a Crash, but Crashy seems to have missed it.

We didn't have to sell, but we wanted a lifestyle property and age wasn't on my side.

Selling was tough; like 4 times over tough, and we 'lost' about 16% as the market fell. On the other hand, I was sure there would be desperate people out there willing to drop their prices and thus even-up the score.

I was wrong. I didn't appreciate how many would deny the existence of a global recession and how long they'd hold out, so doing a deal on the much reduced selection of properties seemed impossible. We needed something very specific too, so that meant searching in 7 counties.

We found somewhere after 6 months, but we bought it as a stop-gap, because of banks collapsing. We worried that all we had in the world was just pixels on a screen. Bricks & mortar felt safer. While this place wasn't immediately lovable, it was cheap, ticked boxes and we knew it would be easy to sell later.

However, this stop-gap house grew on us, so we invested money in improving it. Those tick-boxes matter, but we also liked the new area. No one can be certain they'll fit-in and enjoy a fresh location.

Would we make money if we sold now, almost 10 years on? Yes, but probably little more than if we'd sat on our bums in the old place.Legislation has caused this property to become more valuable, regardless of our building work and other improvements. There are always wild cards with the potential to help, hinder, or mess-up plans completely.

techno79

All great comments and views that I hadn't considered before. Thank you everyone.

george4064

As others have said, just buy when you can afford to as this will save you money in the long run compared to renting (irrespective to what house prices do).

wesleyad

techno79 wrote: »

The immediate drop in price shouldn't affect you if you're looking to keep the house long term

One problem with this is if you have a reasonable mortgage say (80% LTV) and the prices crash, then when you come to remortgage they might not offer enough (as you are now in negative equity), forcing you to stay with the same mortgage company on crap rates.