Is a recession a good time to buy?

weez.

Hi everyone,
I was just looking for some general opinions on buying a house during a recession. Now I know as we keep hearing these are ‘unprecedented times’ so it’s impossible to predict anything.

But we’re looking to take advantage of the no stamp duty, and our last opportunity to use the Help To Buy scheme for a second time (you can only use it again until January 2021 I believe.) to upgrade to a bigger home.

The home we’ve fallen in love with is being built by a small developer who’s also - according to the estate agent - potentially willing to accept an offer way under the asking price! We haven’t put in an offer quite yet as we’re weighing up our decision.

I can see a lot of pros and my other half can see a lot of worries and uncertainty.

I’d love to hear opinions from others who’ve perhaps bought in a recession previously or who have a better awareness of the market.

Thanks in advance!

RelievedSheff

There is no right or wrong time to buy a property if it is going to be a long term home.

seradane

weez. said:

... it’s impossible to predict anything.

Basically this.

But if it's the right time in life for you, personally, to buy, and you've found somewhere you can comfortably afford, and you've got jobs that are somewhat secure (I mean as much as you can ever predict these things) and plan on living there for some time, then really you are unlikely to go too wrong. If prices go up or down it doesn't matter if you're not selling and you can keep up your repayments.

cts_casemod

The unpredictability is only a factor if either of you is made redundant or if you're planning to sell in the short term. In the long term property will keep its value. You may also consider if you have to sell your house for a lower price - but again - if you sell lower and also buy lower - it ends up being the same. It's all a matter of perspective.

eidand

I bought at the peak of market just before the last downturn.  My job was secure, mortgage payments not a problem so it didn't really affect us at all. The house went down in value initially, but then it recovered and we have now sold at 30% more than what we paid for it. 
Bottom line is this, if you are not in danger of losing your job or you know that what you do is always in demand then buying property is definitely a good thing. Don't look at this short term either, we stayed in our current place 13 years. For us it was a home, not an investment. I'd much rather pay my own mortgage, than someone else's.
Even if you sell for less than what you bought for, you still had your own home, you did not pay rent and were not at someone else's whim.

steampowered

In general terms, recessions are an excellent time to buy - if you can afford to do so. People who bought in the 1992 recession picked up bargains.

However, this recession is a bit different, because we are in an era of record low interest records, quantitative easing and record government borrowing (e.g. the stamp duty cut) to prop it all up.

That does inflate asset prices. There is a chance that house prices might drop substantially if that merry-go-round stops.

So, you could do very well or you could be investing just before a drop - you just don't know which way it will go, so at the end of the day you have to take a long term view as to whether this is somewhere you really want to live for at least the next few years.

annetheman

cts_casemod said:

The unpredictability is only a factor if either of you is made redundant or if you're planning to sell in the short term. In the long term property will keep its value. 

This is the best advice. 

The other consideration is if you want to remortgage in the next few years.

I have asked my broker but my concern is assuming the value of the property goes does down as it very well could during a recession, as a S/O buyer, staircasing will be "cheaper" (i.e. the other 50% will be lower value and require a lower loan amount) but getting a mortgage will be more difficult/impossible as the property could be in negative equity.

Anybody have any advice on remortgaging in a recession, too (sorry to hijack your question OP!)?

RelievedSheff

annetheman said:

cts_casemod said:

The unpredictability is only a factor if either of you is made redundant or if you're planning to sell in the short term. In the long term property will keep its value. 

This is the best advice. 

The other consideration is if you want to remortgage in the next few years.

I have asked my broker but my concern is assuming the value of the property goes does down as it very well could during a recession, as a S/O buyer, staircasing will be "cheaper" (i.e. the other 50% will be lower value and require a lower loan amount) but getting a mortgage will be more difficult/impossible as the property could be in negative equity.

Anybody have any advice on remortgaging in a recession, too (sorry to hijack your question OP!)?

If it comes to it you just drop onto the lenders standard variable rate. It isnt the end of the world.

annetheman

RelievedSheff said:

annetheman said:

cts_casemod said:

The unpredictability is only a factor if either of you is made redundant or if you're planning to sell in the short term. In the long term property will keep its value. 

This is the best advice. 

The other consideration is if you want to remortgage in the next few years.

I have asked my broker but my concern is assuming the value of the property goes does down as it very well could during a recession, as a S/O buyer, staircasing will be "cheaper" (i.e. the other 50% will be lower value and require a lower loan amount) but getting a mortgage will be more difficult/impossible as the property could be in negative equity.

Anybody have any advice on remortgaging in a recession, too (sorry to hijack your question OP!)?

If it comes to it you just drop onto the lenders standard variable rate. It isnt the end of the world.

That's precisely what I'd like to avoid, hence I would be wishing to remortgage during the recession and asked for advice on that.

I'm guessing I would need to delay my staircasing and then as soon as possible, once a market recovery is ongoing, remortgage if lenders are lending. I will start saving for a very chunky deposit as soon as I complete *fingers crossed*

Crashy_Time

RelievedSheff said:

There is no right or wrong time to buy a property if it is going to be a long term home.

The tail end of the biggest bubble in history and the start of a major recession is the wrong time, whatever kind of home it is going to be.

Anamox

Crashy_Time said:

RelievedSheff said:

There is no right or wrong time to buy a property if it is going to be a long term home.

The tail end of the biggest bubble in history and the start of a major recession is the wrong time, whatever kind of home it is going to be.

Extrapolating data from your comment history it looks like you've been predicting this bubble bursting imminently for more than half a decade... considering we're still 4 million houses short and mortgages are now stress tested to the extremes (thus most of us can now afford the houses we buy) it seems unlikely anything will be happening anytime soon. Even when you factor in COVID-19 job losses, they are predominantly in industries in which the workers likely don't own a house and aren't likely to have ever been prospective buyers nor are about to default on a mortgage. The higher level redundancies we're seeing are with people that are most likely qualified enough to move into another role elsewhere.