Is it stupid to buy a house right now?

Crashy_Time

I think the posters who supposedly must buy right now, in the biggest crisis for decades, and the posters who seem to wholeheartedly encourage this (luckily the banks will be saving some people from themselves, which is really ironic) are in a definite minority in the country now, IMO most people get that this is not a blip or a bump on the highway but a turning point.

Crashy_Time

blue_max_3 said:

bigpappa said:

I know a few people who continue to live in grand edwardian style mansions - 6/7 bedrooms who bought these homes 30/40 years ago on average salaries now sitting on homes worth millions. They are near retirement so hit the jackpot.

Even those people would have had to make great sacrifices to buy their properties at the time. It was never easy.
And they are not responsible for the price increases. That's purely down to further generations being prepared to pay more and more for the properties. Everyone buying a property now is fuelling price rises. It's not like the government dictate prices, it's supply and demand. We only have our contemporaries to blame.

So historic low interest rates, HTB and allowing loose and cheap credit at many times wages multiples to flow for nearly a decade not to blame at all? There is a whole generation now, burdened with debt for everything from their car to their education, who know they have been conned and who are definitely not going to "pay more and more" for properties, many boomers will never see the cash IMO, it will be like the fisherman who thought he had hooked a Great White but found out it was only the back end of his own boat.

JeffMason

Hi All,
Really interesting discussion here. I've noticed a few 'as long as you're going to stay in the house for a decent amount of time' type comments, and wondered what people thought a decent amount of time is?

I'm looking at buying now in London, but don't think this will be a forever home as the size I can afford right now isn't huge and my workplace might change and affect where it is smart for me to live. My estimate is 4-5 years in the property I'd buy now, and I wonder that is thought of as a decent amount of time..?
 

Crashy_Time

Some posters seem to think it is around sixty years, judging by some of the comments they make to me anyway, but ten might be sensible.
https://tradingeconomics.com/united-kingdom/mortgage-approvals
Take a look at this for the last 30 years or so, and definately DYOR. Good luck.

Unicorn_cottage

JeffMason said:

Hi All,
Really interesting discussion here. I've noticed a few 'as long as you're going to stay in the house for a decent amount of time' type comments, and wondered what people thought a decent amount of time is?

I'm looking at buying now in London, but don't think this will be a forever home as the size I can afford right now isn't huge and my workplace might change and affect where it is smart for me to live. My estimate is 4-5 years in the property I'd buy now, and I wonder that is thought of as a decent amount of time..?
 

@JeffMason Part of it is about offsetting moving costs not just the costs of servicing a mortgage if you see what I mean. Fortunately the costs for remortgaging this time round cost me less than £100 so I can live with that but for others it can be expensive if they have to pay for broker/lender fees, legal fees, & any charges associated with exiting your old mortgage. Then if you take into account actually moving home then you have to add on potential removals costs, stamp duty, works to house and all the stuff above so its about working out if it is worth it. It all depends on your unique circumstances. Best to set up a spreadsheet and crunch the numbers!

tom9980

JeffMason said:

Hi All,
Really interesting discussion here. I've noticed a few 'as long as you're going to stay in the house for a decent amount of time' type comments, and wondered what people thought a decent amount of time is?

I'm looking at buying now in London, but don't think this will be a forever home as the size I can afford right now isn't huge and my workplace might change and affect where it is smart for me to live. My estimate is 4-5 years in the property I'd buy now, and I wonder that is thought of as a decent amount of time..?
 

5 years minimum, ideally 10 would be better assuming it is a 2 bed or larger property that is, obviously that is my own personal opinion

Scotbot

JeffMason said:

Hi All,
Really interesting discussion here. I've noticed a few 'as long as you're going to stay in the house for a decent amount of time' type comments, and wondered what people thought a decent amount of time is?

I'm looking at buying now in London, but don't think this will be a forever home as the size I can afford right now isn't huge and my workplace might change and affect where it is smart for me to live. My estimate is 4-5 years in the property I'd buy now, and I wonder that is thought of as a decent amount of time..?
 

I am on my 4th house, I owned the previous 3 for between 3 and 15 years and made a profit on all of them.  Where I now live houses have gone up 30% in the last 5 years so even with a 20% price drop you would have made a profit. I bought 3 years ago and if I sell next year might make a loss on the price of the house but not if I add in the cost of renting for that period.
Sharp movements can happen very quickly. I was going to sell the second property when I took an overseas posting, prices had been flat for several years and I thought it would be a hassle to rent it. In the end I couldn't  sell in time do decided to rent it out and sold 3 years  later during which time the price had nearly doubled. If I  had sold when I originally intended I would not have been able to get back in at the same level.
In your situation , if prices go down you will benefit by being able to trade up to a property which is more affordable as it will have dropped in value more than yours.  Whilst you only plan to be in your next property for 4 to 5 years it sounds like you plan to be owning property for much longer.  This is what posters are thinking about when they talk about staying in a house for a decent time, it doesn't have to be the same house.
Track the market, I doubt prices will rise in the next year so you can take your time but when you find a house you like that you can afford make the move

blue_max_3

The thing to appreciate, is that house prices also dictate rents. Often landlords would want to cover the mortgage plus a profit. Accommodation costs escalate for all unless you live with your parents. The only hedge against rising costs, is to purchase. 
There may be buying opportunities presenting themselves in the coming months, but If you were out of the property market for years or decades, you're probably unlikely to be able to benefit from it. 

Davesnave

Like any other thing you might sink money into, it's probably best to choose a house for long-term potential, not short term gain.

I've owned all my houses for more than ten years and they've performed well viewed as investments, but the main benefit is the enjoyment I've had from  living in them. Without that  it's surely all rather pointless, isn't it?

JeffMason

Thanks all. Really helpful.

This will be a place for me to live in for the next 4-5 years at least.

It's not a purchase with making a profit in mind (although I wouldn't complain if it did) and I would be moving directly from this place to another, taking the mortgage with me and perhaps sizing up or moving out of London. 

(and yes, two bed flat probably, or perhaps tiny house if I can find one)