Is now really a bad time to buy?

lisyloo

Let’s try an example.
person aged 54 has £300k property, (home) £600k pension and £100k cash.
they don’t have immediate access to 90% of their assets, but have enough to live off until they can liquidate their assets.
are they relatively wealthy? 
Personally id consider this comfortable but not rich, wealthy is a relative term as lots of ordinary people in the UK might consider this relatively wealthy.
i also think you can count equity in a home if you can downsize.
my IFA considers excess equity and he has to sick to all the regs.

Getting_greyer

nick1234 said:

I personally wouldnt buy until after the real crash which will come when furlough ends in October.  Prices bound to fall and banks tighten lending

Why then?  Do you envisage it more likely people will scramble to offload or wait out for evictions next year? 

Getting_greyer

I love this thread.  

Scotbot

nick1234 said:

I personally wouldnt buy until after the real crash which will come when furlough ends in October.  Prices bound to fall and banks tighten lending

I agree there will be more defaults and forced sales as people lose thrir jobs so prices likely to fall but are people  currently on furlough applying for mortgages and are banks lending to them? Both strike me as a bad idea and I think the tightening on loans is already baked in.

Crashy_Time

Sky news doing the "Loans will be harder to get" -  Sad Face -  routine today, no depth at all on what the obvious problem with property is though....as expected.

Crashy_Time

lisyloo said:

I have never said it was financial planning advice.
neither did I claim you can cover interest rate risk for 30 years (people generally don’t need to do that as mortgages are nominal so the risk is often short term)
i was arguing against your assertion that you cannot access the equity in your home, and that is patently false.
an equity loan is risky if you might need to move, but it might be justified in certain circumstances. Risk isn’t bad per se.
Credit cards are Not a store of wealth, they are not an asset.
who said the posters advising had mortgage debt? Some are professional mortgage advisors who may or may not have their own mortgage.

You based a statement on the notion that a mortgage is always cheaper than renting, as many who bought decades ago and have a VI in prices remaining high often seem to do, the larger the mortgage debt (very large for someone buying now) the longer the term and the higher the risk of interest rate spikes. I said just because someone can get equity loans on their house that doesn`t make them wealthy, quite the opposite in fact, wealthy means having money on hand without needing to borrow against the house. How many people now are getting equity loans, how many people now are "making profit on their mortgage"? If you can`t get an equity loan against the house (very poor financial planning IMO anyway) and you can`t find a buyer at your price, how do you get at the "equity"? Property should be part of a wider diversified savings/investment plan, and the last thing you use to access funds IMO and where did I call CC`s a "store of wealth"?  I said CC`s are a free line of credit if paid off monthly.

Crashy_Time

Getting_greyer said:

nick1234 said:

I personally wouldnt buy until after the real crash which will come when furlough ends in October.  Prices bound to fall and banks tighten lending

Why then?  Do you envisage it more likely people will scramble to offload or wait out for evictions next year? 

Evictions will be the last thing the government needs, people with mortgage debt will be allowed to pay interest only for ever basically, a horrible trap to be in if there is a price crash as many will be stuck where they are with no hope of ever moving. IMO it is the pressure on BTL and Airbnb that will flood the market as hanging on to where you live is one thing while paying council tax on an empty flat is quite another.

MobileSaver

Crashy_Time said:

 it is the pressure on BTL and Airbnb that will flood the market as hanging on to where you live is one thing while paying council tax on an empty flat is quite another.

Why will there be a significant number of empty flats in the future? Where will all these people currently living in them live instead?

Crashy_Time

MobileSaver said:

Crashy_Time said:

 it is the pressure on BTL and Airbnb that will flood the market as hanging on to where you live is one thing while paying council tax on an empty flat is quite another.

Why will there be a significant number of empty flats in the future? Where will all these people currently living in them live instead?

Most people of reasonable intelligence could come up with one reason (clue, it starts with "R") and maybe four of five places the people could be - I`ll start off with  1) At their parents. - Can you really not think of any more?

Parking_Eyerate

Crashy_Time said:

lisyloo said:

I have never said it was financial planning advice.
neither did I claim you can cover interest rate risk for 30 years (people generally don’t need to do that as mortgages are nominal so the risk is often short term)
i was arguing against your assertion that you cannot access the equity in your home, and that is patently false.
an equity loan is risky if you might need to move, but it might be justified in certain circumstances. Risk isn’t bad per se.
Credit cards are Not a store of wealth, they are not an asset.
who said the posters advising had mortgage debt? Some are professional mortgage advisors who may or may not have their own mortgage.

You based a statement on the notion that a mortgage is always cheaper than renting, as many who bought decades ago and have a VI in prices remaining high often seem to do, the larger the mortgage debt (very large for someone buying now) the longer the term and the higher the risk of interest rate spikes. I said just because someone can get equity loans on their house that doesn`t make them wealthy, quite the opposite in fact, wealthy means having money on hand without needing to borrow against the house. How many people now are getting equity loans, how many people now are "making profit on their mortgage"? If you can`t get an equity loan against the house (very poor financial planning IMO anyway) and you can`t find a buyer at your price, how do you get at the "equity"? Property should be part of a wider diversified savings/investment plan, and the last thing you use to access funds IMO and where did I call CC`s a "store of wealth"?  I said CC`s are a free line of credit if paid off monthly.

So now wealthy means “having money on hand without needing to borrow against the house” does it? Why could it not mean owning your own house so you don’t need to worry about paying rent? Given that you never provide any sources for any of your innumerable definitions, wealth is clearly subjective and, as other people have said, relative. Your vested interest (VI) status makes you bend over backwards to argue that homeowners are inherently not wealthy but that’s just your bias, nothing more.
If you can’t access a fund because it is frozen or you can’t afford to sell shares at a 40% loss after a crash, how do you utilise your ‘liquid’ funds then? You might be able to wait it out but then so might a homeowner, who knows? It’s all relative. You really seem to worship liquidity and hate the idea of owning property, for whatever reason that may be, but that doesn’t mean that people who buy a house and get a feeling of wealth from owning are wrong, they are just different to you.