Is it stupid to buy a house right now?

lisyloo

bigpappa said:

danlightbulb said:

lisyloo said:

i don’t think those happy in their homes with their families have anywhere near as much vested interest as those who are unhappy and trying to get into the market but haven’t achieved what they wanted for decade.

I do agree with this. Someone in a decent house and stable job has no need to think about it. They can continue paying their manageable mortgage (which will be quite low now if they're 20+ years in to it).

However this doesn't mask that there is a massive issue in the current market for people who don't own. Firstly, many people are completely priced out full stop and left locked into rents. What are those people supposed to do? 

For those who do have the ability to buy at the bottom end (I'm in this bracket), there is a severe lack of supply of good quality houses. There are lots of heavily overpriced dumps, but very limited good houses. If those dumps were cheap, then fair enough, buy one and build it up, trade up over time. But when even buying a dump is stretching someone to their absolute limit - then what?

At the end of the day it comes down to intergenerational fairness. Many members here are in an older group who were able to buy either before the house prices started running away with themselves or in the early days of inflation starting (late 90's/early 00's). These people probably weren't earning mega bucks when they bought, yet were able to buy a good sized, decent, desirable house that they are now sitting pretty in for decades whilst others are left behind. If you're the type who's spent the last 30+ years in the same house, genuinely think about whether you could buy that house now on the modern day equivalent of the salary you were on when you bought it, and how quickly you could save up that 10% deposit on your house now.

A 25 year, £30k mortgage in the 80's or early 90's, even at 12% interest rates, is still only £300 a month. If that mortgage was now coming to its end on current rates it would be under £100 a month. The house that many here may be sitting comfortably in paying under £100 a month may be costing someone else £1200+ and their salaries are no higher than yours are.

You should be able to understand why there is resentment there. 

Those wanting a crash don't want to stuff normal people over, but what choice do they have left when their needs are not being catered for? There is a massive inequality and its getting worse.

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.

There are yes, but it’s not the same for all “boomers”.
plenty of women in particular with poor pension provision Often through divorce or adverse circs, not everyone of that generation has a fantastic pension and a sought after home.
but yes some have benefitted

blue_max_3

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.

danlightbulb

lisyloo said:

Totally agree, but there is a difference between those who have genuine grievances and the crash trolls who wish for misery on others so they can get a bargain as they’ve failed to time the market.
my comments were aimed at the former (as indeed some of crashys comments were aimed at me).
I have sympathy for those at the rough end of a genuine grievance. 

What are they meant to do? Make the best of it or make another plan. If I was struggling to buy I’d look at career options, other countries, living with mum and dad, moving to a cheaper area or perhaps just giving up on buying. I’d analyse all my options and then put everything into going after it, the thought of just being miserable all the time doesn’t really appeal. Are their people who can’t change their circs? Almost certainly there are people with limitations of various kinds, Ive had elderly dependents for many years which has limited where I’d consider living. If you can’t change it or leave it then you have to accept it but I’d like to think I’d fully explore all the options.

there are people on certain websites who’ve been waiting for a crash since 2001citing - sars, mers, bird flu, swine flu, 9/11, gfc etc. Etc. Whilst during that period others have worked hard and bought a home and are now mortage free. 

That’s a totally different issue to your (completely valid) point of genuine grievances.

Its a difficult one. Yes, I guess fundamentally the majority of people could change their circumstances to some degree (there are alot of people who don't have the means to though).

But, moving country, moving county even, leaving their families and friends behind. Those are huge sacrifices and quite extreme to expect people to do that, when the previous generations didn't need to. Talk about pulling up the ladder, making them leave the country?! There is also the issue of salaries - the places that are cheap often are cheap because salaries are low. Its no good moving to buy a house if your salary drops by proportionately the same amount. Or moving country, the language barrier. These  are incredibly difficult things to overcome yet often thrown about during property price discussions by those already secure.

Living with mom and dad, yes alot of people are forced into doing that at a greater and greater age. Its not good really though is it, its not a healthy thing to have to do, not being able to leave home for years during early adulthood and live your own life?

Your comment about failing to time the market, really is not very fair for the majority of people. Can hardly blame someone's poor timing if that someone was only 10 years old when house prices started going wild. By the time they got qualified and got a job (even a good one), house prices had already inflated way faster than their short term earnings potential and continued to accelerate away from it.

danlightbulb

blue_max_3 said:

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.

This isn't really correct. The government had a massive hand in property price inflation when they deregulated the banks and relaxed lending, policies which continued to be pushed more and more forward through the 90's but which were taken hugely forward when Blair came to power in 1997. It is the availability of money, that has allowed people to pay more whilst at the same time forcing them to pay more, coupled with pressures on the supply side.

Who benefits from this? It is the people at the tops of the chains extracting the vastly inflated cash sums, the lenders who earn interest and fees from selling packaged mortgages on, and the Governments who earn more and more cash from stamp duty transactions and other trickle down spending. The people who were already wealthy, made more and more money by effectively enslaving more and more people into greater and greater debt burdens that will last their entire lives. 

However there are lots of people in the middle that have benefited massively too. Factory workers in the 80's and 90's who are now living in half million or million pound houses, which their salary would never have got them into on its own merit. These people have become  dependent on these to fill an income hole throughout their lives and in retirement. They have no incentive to vote for anything which makes the system fairer to the generation that missed out, as that reduces their wealth.

I agree that buying a house was still a sacrifice back in the day, but proportionally speaking, it is a far more difficult thing to do now. House prices to salaries ratios have gone up and up, and absolute debt levels required to buy a house are absolutely massive - leaving barely any room to absorb interest rate rises if they happened and were sustained. Anyone buying now is massively exposed, and the savvy amongst us know this and its very worrying. It is like being the last one in a pyramid scheme.

blue_max_3

danlightbulb said:

This isn't really correct. The government had a massive hand in property price inflation when they deregulated the banks and relaxed lending, policies which continued to be pushed more and more forward through the 90's but which were taken hugely forward when Blair came to power in 1997. It is the availability of money, that has allowed people to pay more whilst at the same time forcing them to pay more, coupled with pressures on the supply side.

Who benefits from this? It is the people at the tops of the chains extracting the vastly inflated cash sums, the lenders who earn interest and fees from selling packaged mortgages on, and the Governments who earn more and more cash from stamp duty transactions and other trickle down spending. The people who were already wealthy, made more and more money by effectively enslaving more and more people into greater and greater debt burdens that will last their entire lives. 

I agree that buying a house was still a sacrifice back in the day, but proportionally speaking, it is a far more difficult thing to do now. House prices to salaries ratios have gone up and up, and absolute debt levels required to buy a house are absolutely massive - leaving barely any room to absorb interest rate rises if they happened and were sustained. 

We bought in 1985 and had to lie about our salaries. I think we had 3.5x our joint salaries. It only bough a small starter home on a new estate in an industrial area. This doubled in value over three years and we put it into another place in 1988, which was 4x the cost. Again, we had to fiddle our salaries and that was with the deposit from the previous home. And we had to deal with double digit interest rates too!
The point is, I don't think things have changed that much. You can buy in parts of the North of England for very little. The availability of money has made no difference whatsoever there. A cheap house is still a cheap house. The only difference is no-one wants to spend a fortune for it.
If availability of money was as easy as you suggest, we'd all be able to buy any property we wanted. In fact, since the banking crash, it has been more difficult to finance a home. And prices have soared since.

Crashy_Time

lisyloo said:

Unicorn_cottage said:

Remember never listen to Crashy types. I blocked him ages ago apparently as the legend goes he never bought a house and is still waiting.

I listened to crashY types in 2001, decided to buy in 2003, became mortgage free in 2019.

There isn’t a blanket answer but if it’s a perfect place and you have to pay for rent anyway and you’ve mitigated the risks as much as you can e.g. fixed rate, then it’s best just to go ahead as there are always things to worry about.

You can`t fix the rate for the full term of the loan, as has been pointed out to you every time you bring this up, and many people buying now are looking at 30 year mortgages plus being in hock to their family to "get on the ladder", that leaves plenty of space to get caught out by rising rates. There was nothing like the bubble we have now in 2001, interest rates were cut in America in part as a reaction to 9/11 that year, but things didn`t really get going until a year or so later, and we know where it ended up in 2008, but your experience of buying in 2001 has no relevance to someone stretching themselves to the limit today. Just imagine what people who stretched themselves to the financial limit, especially in London, Pre-Covid must feel like now?

Crashy_Time

bigpappa said:

Around where I live the homes have gone for full price post opening up. These are in a very sought out area.

It seems there are two markets - those people who were not affected by the virus at all - people generally working in the public sector, healthcare, IT.

What postcode is that?

Renonewbie

So.....
Is it stupid yes or or no?   

Davesnave

Renonewbie said:

So.....
Is it stupid yes or or no?   

It's like 9/11. Depends who you listen to and what you consider relevant, though in the case of house buying decisions one doesn't usually need to suspend the law of physics.

eidand

Renonewbie said:

So.....
Is it stupid yes or or no?   

As usual it's  a personal question and depends on everyone's circumstances.
For me, buying a house is not stupid, provided you have the job security to pay the mortgage and you're not looking at it as an investment only.

Too many people look at price only. I bought for X, now due to crisis I can only sell for X - 10%. Yes, but for the duration you owned that house you did not pay mortgage and you had your own place to arrange as you love it.
House ownership is not just about the numbers. I find it silly when people buy a property with a view of selling in 2 years or so and hoping to make huge profits. Sometimes it works, sometimes it doesn't. There will always be something to be careful with, a certain economical situation etc, but at some point you do need to be smart about finances and make the plunge.

I do believe that over long term house prices are only going up. Why ? Well, limited land mass, growing numbers of people, not enough houses being built. With remote work being more of a thing, I expect properties will be snapped up in the next few years. If there is a good internet connection, I expect everything cheap will go. Up north, Scotland Wales etc  I could be wrong of course, but it's just my gut feeling.

Bottom line after all this waffle ... no, I don't think it's stupid to buy a house at any point, as long as you're mart about it and your circumstances.