Should I be wary buying a house in the current climate?

Crashy_Time

lisyloo said:

Crashy_Time said:

lisyloo said:

pjcox2005 said:

lisyloo said:

What’s the issue with owning a home during this crisis then? just so I know 

I'd consider the issue to be around jobs. If you own a home you could typically be tied to one location, so if you have a weak economy/crash and the job market is decimated (strong word - replace with you can't get a job) are you able to be flexible.
If they're living at home, young etc, then perhaps they choose that time to move to a place where jobs are available in the UK or globally. May be they'd use it and savings as a time to travel if that's a passion. Basically, it just gives more flexibility.
You can argue that owning a house doesn't prevent this, but if they bought just before a crash and are in negative equity then how do they sell without losing out. Could potentially rent it but who to and what happens if it's a bad tennant. Likewise, if you did then relocate and buy a new house in a different area then you've got selling costs, stamp duty land tax potentially on the next one (as you don't get first time buyer relief, and potentially an additional 3% SDLT for owning two) which combined with interest paid on the borrowing could be substantially more than renting and certainly more than living at home.
Not saying it will happen, and likewise if you never have any intention of leaving an area and immune to changing circumstances like splitting up then no impact, but you asked the question, and I think that's the main downside along with not being able to pay your mortgage and the property being repossessed. 

Thanks for your response.
Some of us don’t have a mortgage and don’t work near our home  ( I appreciate most people do).
my point being it’s not home owning per se that’s the issue but associated issues like job, mortgages etc,

The retired (for example) who have neither mortgages nor jobs shouldn’t have anything to be worried about related specifically to their ownership (in fact having no mortgage or rent is a great thing)

Not if you bought in the 90`s, no, but there is an issue when posters are constantly encouraging people to get into massive debt for the mystical and mythical experience of "owning", fortunately though many people can see that the  modern housing market is just a debt scam built by bankers for bankers (I`m still hopeful that one way or another the banking class are going to find themselves badly caught out, and the public will wake up to how pointless expensive property and big mortgage debt is for ordinary people)

The group of homeowners does in fact include people who bought in previous decades and it includes those with no mortgages. The big advantage is that you continuously increase your equity.

The point I was making is that home owning itself isn’t the issue and that sweeping claim from silvertooth was incorrect which I think all of us have agreed one way or another (even you for those who bought in previous decades).
in fact those who don’t have to pay a mortgage or rent are in a much better position to weather any bad times.
those who age taken on “too much” debt will certainly have issues as will those renters who have little contingency and an unsympathetic landlord.
im not sure what you mean about mystical or mythical, in fact the term “bricks and mortar” is often used to mean the complete opposite.

What do you propose as an alternative to mortgage debt when in many places renting is not cheaper and people need somewhere to live. Those with babies and children can’t compromise on some things like single adults can.

What I propose is that if the present volatility starts to seriously rock credit markets house prices and rents won`t be sustainable at high levels. My main prediction has always been that a mortgage debt bubble doesn`t benefit the little guy or girl long term, it was designed to benefit banks and bankers. Another of my predictions, that the Euro and EZ will eventually fail, and that countries will return to their original currencies with all the interest rate volatility that could bring to prop and protect currencies is a step closer with this outbreak, instead of helping each other EZ countries seem to be looking to shut their borders as quickly as possible? I agree with you that for many people there isn`t a viable alternative to mortgage debt, just like there isn`t a viable alternative to a company pension run by fund managers for many people, doesn`t mean it can`t unravel and end badly though? Don`t confuse "No realistic alternative" with "No possible downside" IMO (although as we all know the CB`s have done their utmost, and are obviously now set to do some more, to preserve the debt bubble)

lisyloo

The issue is that some people (I don’t necessarily mean you specifically) have been talking about property collapsing since 2001 and the issue is that some people have needed somewhere to live for the last 19 years. If you are happy to live with mum and dad as an adult or in very modest accommodation or a less desirable area then that is fine but many people are not able to do that (for example they might have kids).
apparently it’s boring that I go on about the fertility window but it’s true that ladies can’t put off having babies for very long as fertility drops and risks increase at age 35.
We are going over old ground but the fact is that people need somewhere suitable to live.

You can (of course)have kids in rented accommodation if you don’t mind getting kicked out when it suits the landlord and possibly having to change catchment areas for schools, so people tell us there are issues with it.

as an investment then I’m not bullish on property but where people need somewhere stable to live that they have to pay for anyway (the majority) then the implicit rent comes into it.

Thrugelmir

lisyloo said:

The issue is that some people (I don’t necessarily mean you specifically) have been talking about property collapsing since 2001 

The market kicked off earlier, 97/98 (? ).  Remember it clearly as was at a dinner party with a large group in Newbury. No one could fathom why house prices were spiralling all of a sudden. 
Years later transpired that the Bradford and Bingley had copied the US lending market concept of securitising debt around that time. From being a tin pot lender rapidly grew in terms of balance sheet size. Northern Rock jumped on to the same bandwagon to even greater extent. Of course we all know what happened around a decade later. With the UK nationalising the loan books of both and injecting in over a £100 billion of liquidity in order to keep them solvent. To this day UKAR is still unwinding the loan books. With the crud being left behind. Though the exposure of the UK taxpayer is now greatly reduced. 
It ain't over until the fat lady sings......... 

Crashy_Time

lisyloo said:

The issue is that some people (I don’t necessarily mean you specifically) have been talking about property collapsing since 2001 and the issue is that some people have needed somewhere to live for the last 19 years. If you are happy to live with mum and dad as an adult or in very modest accommodation or a less desirable area then that is fine but many people are not able to do that (for example they might have kids).
apparently it’s boring that I go on about the fertility window but it’s true that ladies can’t put off having babies for very long as fertility drops and risks increase at age 35.
We are going over old ground but the fact is that people need somewhere suitable to live.

You can (of course)have kids in rented accommodation if you don’t mind getting kicked out when it suits the landlord and possibly having to change catchment areas for schools, so people tell us there are issues with it.

as an investment then I’m not bullish on property but where people need somewhere stable to live that they have to pay for anyway (the majority) then the implicit rent comes into it.

You don`t truly believe that people`s "nesting" drives are what has been propping up the property bubble do you?

lisyloo

Crashy_Time said:

lisyloo said:

The issue is that some people (I don’t necessarily mean you specifically) have been talking about property collapsing since 2001 and the issue is that some people have needed somewhere to live for the last 19 years. If you are happy to live with mum and dad as an adult or in very modest accommodation or a less desirable area then that is fine but many people are not able to do that (for example they might have kids).
apparently it’s boring that I go on about the fertility window but it’s true that ladies can’t put off having babies for very long as fertility drops and risks increase at age 35.
We are going over old ground but the fact is that people need somewhere suitable to live.

You can (of course)have kids in rented accommodation if you don’t mind getting kicked out when it suits the landlord and possibly having to change catchment areas for schools, so people tell us there are issues with it.

as an investment then I’m not bullish on property but where people need somewhere stable to live that they have to pay for anyway (the majority) then the implicit rent comes into it.

You don`t truly believe that people`s "nesting" drives are what has been propping up the property bubble do you?

you don’t answer the fundamental question of where to live if the alternative is high rent.

most people are going to have to pay high prices ANYWAY (not everyone can live with mum and dad).
The choice is whether to pay your own mortgage or someone else’s (and landlords wouldn’t do it if it wasn’t profitable).

you can keep moaning about the rigged system as much as you like but you haven’t answered how to address the fundamental choice that most people have to make.

Crashy_Time

High or low rent renters can bail out of the cities much quicker than those tied to mortgage debt if this gets bad, that alone is a very very good insurance premium included in the rent.

MobileSaver

Crashy_Time said:

High or low rent renters can bail out of the cities much quicker than those tied to mortgage debt if this gets bad,

You really are clutching at straws Crashy in a desperate attempt to convince yourself you made the right decision all those years ago!

Where exactly can all these renters bail out to? Is there a glut of rental properties somewhere? With all the uncertainty do you think landlords are going to be more or less cautious with deposits/credit-checks for new renters? Do you think it will be harder or easier for someone to rent a new place?

Anecdotally a friend whose long term renter just moved back to London had a waiting list of people to take his place. I've just checked Rightmove for the nearest big town (rural mid-Wales) to me; there is literally just ONE rental property available and it was added to Rightmove just a few days ago...

Herzlos

Crashy_Time said:

High or low rent renters can bail out of the cities much quicker than those tied to mortgage debt if this gets bad, that alone is a very very good insurance premium included in the rent.

To where?

If things get bad you're better off mortgaging than rent - if you need to flee, you're not going to care if you default on the mortgage and lose the house - you'd be in about the same situation as renting. However with a mortgage and you do stay, then it'd be harder to get kicked out and you're not dependent on any 3rd party (like that paramedic who was kicked out of his rental because his landlady feared contamination), I believe it's also harder to repossess a mortgaged house than evict a tenant.

You're really getting desperate to try and justify your poor decision. Get over it and move on with your life!

There are benefits to renting - if you're a contractor for instance and move between cities and countries on a regular basis, but for almost everyone else the stability is a big deal.

GDB2222

The OP asked a perfectly sensible question, whether house prices are going to drop this year, so he will be able to buy a similar property for less money if he waits? It’s a shame that people here have not tried to answer that. There are clearly serious consequences from being in negative equity, which have largely been brushed aside.

I think it depends how quickly CV is brought under control, so the lockdown can be relaxed and people can get back to work. Or indeed whether it will run rampant. The jury is out on that, although the lockdown, whilst far too late, should be effective in the long run. The stock market is down 25%, and it is difficult to believe that the underlying value of residential property is not also down. There are long lags before that becomes visible, though.

Personally, I’d hang on a bit before buying, to see what happens. I can’t believe that house prices are going to race away from you, and there’s a good chance that they will reduce. There doesn’t have to be a crash in property prices to make it a sensible strategy to wait and see.  Even a modest reduction in prices means a big saving for most people. That saving is likely to be far more than the extra cost of renting for a short time.

MobileSaver

GDB2222 said:

The OP asked a perfectly sensible question, whether house prices are going to drop this year, so he will be able to buy a similar property for less money if he waits

Let's be honest, no-one can answer that question. What we do know from past experience is that when prices drop so do transactions either because of reduced supply or more stringent lending criteria so prices may drop but there's no guarantee that means you can buy the same or a similar property for less.

GDB2222 said:

Personally, I’d hang on a bit before buying, to see what happens.

That may be fine for some people but fundamentally the OP has to live somewhere in the meantime so it depends on where they are living now on whether waiting would work for them. Just look at Crashy, ten or fifteen years on, still living in a bedsit in an undesireable part of town waiting for prices to crash. How long should the OP hang on for and at what point do they know prices won't fall any further?

At the end of the day, trying to time the market is a mug's game and a complete gamble; there are much more important issues to consider than just the headline price you will be paying for your new home.