How do you not get stressed / affected by house price?

steampowered

Don't try to make or lose money with your property. If you try to do that you will probably fail, because you don't have any special information the market doesn't. See your property as a place to live.

You have to take a long term view of things. You will likely want to be a home owner until you die. There will be numerous recessions during that time. 50+ years is more than enough time to go through the ups and downs of recessions.

As hazyjo pointed out, if house prices drop due to a recession, that also means that the cost of a property you might want to move into goes down. If property prices drop by 15%, that will reduce the cost of a £200,000 property more than it will reduce the cost of a £400,000 property. So, if you are currently a 2-bed and want to move into a 3-bed, it actually becomes easier to do that, as long as you aren't sitting in negative equity.

hazyjo

GarciaLorca said:

Thank you all for the reassurance.  Sorry I should have clarified - I'm not renting for the sake of it - I'm moving in with long term partner somewhere larger before we buy together in a few years.  
I guess I have been spooked / panicked by loads of people in my development putting their properties up for sale recently after lockdown.  But then there may be all sorts of reasons they are doing that and even if they are panic selling - maybe they're making a short sighted mistake and it's better to sit tight and ride it out and hopefully make more money. 

Will you lose money if you sell now?

Why rent it out instead? Not an easy thing being a landlord!

Smodlet

OP, you sound like a very capable person; you will make the right decisions for you especially if you just read around this thread.  Believe me, an hour or two on here is worth your time:  You will find every kind of nightmare and a few dreams come true.  If you have the patience, you can also read some hilarious stories.

It sounds as if you are in a good position to me; you own a property in London; those values will always rise in real terms if you can wait.  Please keep the faith, especially in your own decisions, and keep on doing your research.

GarciaLorca

hazyjo said:

GarciaLorca said:

Thank you all for the reassurance.  Sorry I should have clarified - I'm not renting for the sake of it - I'm moving in with long term partner somewhere larger before we buy together in a few years.  
I guess I have been spooked / panicked by loads of people in my development putting their properties up for sale recently after lockdown.  But then there may be all sorts of reasons they are doing that and even if they are panic selling - maybe they're making a short sighted mistake and it's better to sit tight and ride it out and hopefully make more money. 

Will you lose money if you sell now?

Why rent it out instead? Not an easy thing being a landlord!

Probably would not lose money but equally I would probably only command the same price I purchased 4 years ago which is not the best position but also not the worst.  Renting it out is transitionally much easier - it just takes it off me for a while as I sit it out and I can move in very quickly with partner.  We just didn't want to delay our plans any longer and similar properties have been sitting on the market for months and I didn't want to take that risk and potentially make less than I could in 2-3 years.  I know being a landlord isn't easy but I am not intending to do that long term, max 2 years.  I'm also very invested in the property emotionally and quite looking forward to remaining involved in managing it.  I'm aware of all the legal obligations.  Hope that makes sense.

hazyjo

If you're invested in it emotionally  and think it's a good idea to rent it out, you've not done enough research.

Number one rule as far as I'm concerned, don't let anything you're emotionally attached to.

Good luck.

numbercruncher8

That's spot on.
Are you sure you're invested in it emotionally, or is that simply cognitive bias because of the price? For instance I really liked my old house but once it was gone, you quickly get over it. Doubly quick if you're going to a better place.

If you're stressed or affected over potential house price moves (the magnitude of which is not certain), you may be doubly affected if a tenant starts treating your beloved flat not up to your standard. Once you let, you also have to give the tenant the right (within the law) to live how they want. A bad type of landlord IMO is the one that wants to be involved. 

Have you also considered the effect of taxation? Rent received is taxable, and you cannot net off the rent paid on the new place. 

It may be simply better to just get it all done now instead of waiting for price movements that may/may not arise. The previous price paid years ago isn't relevant now. 

jimbog

Some sold up in the past as they were concerned about a crash. Yet they are still continually fretting about house prices. I think you’ll end up doing the same - being paranoid about having done the right thing. 

Primarily it’s your home first and an investment second

SuperHan

I don't stress because if prices drop before I sell my house, the price of the house I'm buying will also drop. I intend to be here long enough to weather any negative equity position which is meaningless until you want to sell.

I also say that as someone who owns a flat affected by the cladding scandal that has a £130k mortgage on it but a value of £0. I have let that out (for obvious reasons, I can't sell it), but it doesn't make me any money and is really a stop gap until I can get an ESW1 form and sell it - hopefully for the outstanding mortgage amount. I'll have "lost" about £50k if I do that, but I paid for somewhere to live for 7 years and that money is already spent so my life won't be negatively affected by a sale at a loss (although a sale at above the outstanding mortgage amount would positively affect me!).

It's really just perspective.

Crashy_Time

GarciaLorca said:

Thank you all for the reassurance.  Sorry I should have clarified - I'm not renting for the sake of it - I'm moving in with long term partner somewhere larger before we buy together in a few years.  
I guess I have been spooked / panicked by loads of people in my development putting their properties up for sale recently after lockdown.  But then there may be all sorts of reasons they are doing that and even if they are panic selling - maybe they're making a short sighted mistake and it's better to sit tight and ride it out and hopefully make more money. 

For people who bought London property at Peak Bubble (last few years) the opportunity to "make more money" is gone for good IMO, many will be stuck in their expensive debt boxes for life now.

Crashy_Time

steampowered said:

Don't try to make or lose money with your property. If you try to do that you will probably fail, because you don't have any special information the market doesn't. See your property as a place to live.

You have to take a long term view of things. You will likely want to be a home owner until you die. There will be numerous recessions during that time. 50+ years is more than enough time to go through the ups and downs of recessions.

As hazyjo pointed out, if house prices drop due to a recession, that also means that the cost of a property you might want to move into goes down. If property prices drop by 15%, that will reduce the cost of a £200,000 property more than it will reduce the cost of a £400,000 property. So, if you are currently a 2-bed and want to move into a 3-bed, it actually becomes easier to do that, as long as you aren't sitting in negative equity.

But if you bought recently and prices drop 15% you will be?