Housing market continues to slow....

Kenny4315

Yeah sure over 25 years its cheaper to buy than rent, but that is not the question that people renting vs buying should be thinking about at this point in time though. The question now is, is it better to rent for a couple of years and then buy once the market cools or buy and take the negative equity risk.

The answer in terms of economics to this is RENT, even if its the same as buying in terms of costs month on month (which it isn't at present - its lower) with a cooling market, there is little or no risk renting, and a big risk buying, on a monthly basis build up your savings and then go in as a cash/ftb buyer who can move quickly when folk panic, that's worth 5% off the asking price for anyone who needs to sell fast. ie novice buy to letters, folk up to the hilt in debt, etc, etc.

Of course bank and building societies are going to talk up the home buying value, after all they need to do everything possible in order to avoid a crash that'll hit them hard.

At some point people are going to wake up and say 'I am living in a house that cost £120k five years ago and I've recently bought it for over £300k ...... oh dear I have been a bit silly ........ PANIC !!!'

deemy2004

Yeh its easy to get lost in time...

What people need to do is take a step back and LOOK, REALLY LOOK at house prices... They are ridiculously over-valued, but so many people believe that they are fair value !

dippy

Woby_Tide wrote:

That'll be around the anniversary of this threads predecessor where prices were all set to crash last August

http://forums.moneysavingexpert.com/showthread.html?t=5377&highlight=crash

*groundhog day*

But what we didn't have last year is [size=+1] "House prices have fallen every month for a year" in England and Wales. [/size]

http://news.independent.co.uk/business/news/story.jsp?story=650037

meanmachine_2

Regarding rampant house price inflation, you only become blind to the idiocy of it all if you think a property is going to be EVER MORE expensive in six months' time.

Without that threat or fear hanging over you suddenly the scales fall from you eyes and the facts of the market hit you square in the stomach.

Fact: A property that is now "valued" at £190K in 2005 was valued at just £60K in 1995.

Nothing's happened in that time to justify a rise in the property's value. The walls haven't been gold plated. The population hasn't tripled in that time.

Suddenly you wake up to the madness of rampant house price inflation and realise "you know what, f*** it, life's too short."

I'm happy to rent a much bigger house for much less rent than my neighbour who bought in 2004 and is crippled by a vast mortgage.

I do worry about the sanity of people like Woby. Have property prices not fallen in the last 12 months? And if that continues, or even accelerates in the next few years, won't that leave house prices - in real terms - MUCH cheaper than they were in 2004?

Summer 2004 is when the correction began. It's not a question of if it'll happen, but when the slide will end. Rightmove suggest it'll last for seven long years. I don't doubt it.

Woby_Tide

dippy wrote:

But what we didn't have last year is [size=+1] "House prices have fallen every month for a year" in England and Wales. [/size]

http://news.independent.co.uk/business/news/story.jsp?story=650037

Prices have fallen each year since July 2004.

Insightful journalism...!

And meanmachine once again you hold me up as being someone who is denying the market has cooled etc. whereas yet again I have to point out to you that all I'm advocating is that if someone feels that the property they want to buy is at a price they can afford and think reflects the value and they can service the debt in whatever eventualities could happen then they can do that. I've also stated many times that to use blanket national figures isn't the best way to be monitoring the changes in the very individual local markets that make up the market, they have many variations so whilst prices have dropped in some areas, they've still risen in others, each area is at different stages of cycles. It's a risky decision to take, but it's an inidviduals choice. I know you want to get on the property ladder and that currently the market conditions(in your area...) make it untenable, but banging your drum to tell everyone else they can't/shouldn't isn't right either.

dippy

Woby_Tide wrote:

Prices have fallen each year since July 2004.

Insightful journalism...!

A typo does not affect the data on which the article is based. According to Hometrack, house prices have been falling every single month since July 2004 .

dippy

to be more accurate, that last post should have been "average house prices ...."

meanmachine_2

Woby, what part of "money saving expert" don't you understand?

If a London purchaser had bought in June 2004, presumably on your advice, they would have LOST over £10K across the year, based on Hometrack figures.

If they'd taken my advice - and advice is all it is - they would have saved themselves that money.

In a stagnant or falling market, you willsave money if you delay your home purchase. Do you agree or disagree with that?

This site is for people who wish to cut down on the amount they spend.

Should the market start to rise, then your advice would become valid and mine would become invalid. Except...in those circumstances I would be advising people to buy again as that would make sense.

Given your bad advice over the past few months I can only assume you have a vested interest, either regarding mortgages, or property.

If not, then I suggest you buy yourself a new calculator.

Woby_Tide

Ok so now you are making up stories that I advised people to buy houses in London, care to point out that advice and where I gave it? As I've said, in my last post, if a person has investigated the current situation of the market in their area and for those types of properties they wish to purchase and feel that it is suitable for them and serviceable, then go ahead(if they're in it for a quick buck though they'll be disappointed, if it's a long term investment in a 'home' it's their choice). If they have any doubts, then don't. I've never once advocated that everyone should go out and buy a property as the market is rising everywhere, I've also never stated that absolutely everyone shouldn't move as the markets crashing, everywhere, as it's strictly not true.

Vested interest? Shockingly yes as I live in the UK and require a home to live in. Isn't that why we're all on this topic?

meanmachine_2

Apologies if you didn't give that advice. I really can't be bothered to search the archive.

Perhaps if you state your position as it stands today, that would help clear up matters.

I recall however you claiming the other day that people who had predicted a market correction 12 months ago were wrong. In fact they were right.

See why I'm confused?

Do you now believe that prices are going to go up in the next 12 months, or go down or stay the same?

None of us can really know, but it seems likely that at best/worst they will stay where they are. So my advice to FTBers would be, if their rent is lower than their mortgage, to save the difference and stay where they are....for now. Ever pound saved is £2 that you don't have to give back to the bank.

I don't think ANYONE would disagree with that money saving advice, do you?

Or do you?