First time buyer - is it a good idea to wait to buy first home with a predicted market crash?

wileyspear

Me and my partner are first time buyers and are ready to start our mortgage application at the end of this month. I'm constantly being told by current homeowners to wait to see if/when the market crashes and house prices come down but I'm not sure if this is a good idea. Current rental contract is up at the end of March 2023 hence why we are looking to get started now. I would be open to continuing renting for another 6 months or so if it was going to be much more beneficial when buying our first home.

Is it a good idea to wait for the crash, or should I carry on as planned and just get onto the ladder?

If it helps we would have a budget of around £300k in the north of England.

housebuyer143

People have been talking of a crash the last decade and it's never come. 
Is the economic outlook getting uneasy, yes. But it won't 100% result in a housing crash. Maybe stagnation. 

As you can see, the government has no plans to let the housing market cool as this cut in stamp duty has shown. 

Buy if you want to and don't try and time the market.

comeandgo

I think this government has shown time and time again that they don’t want the housing market to collapse.  They keep tweaking things.  If you have a property you love I’d go for it and deal with the whatever in the future.

RM_2013

Sometimes there’s never an answer as to the best time to buy a house.  I’d say do it when the time is right for you.  So if you can comfortably afford the mortgage payments and are ready to own your own home then just do it.  Experts can predict the market changes but no one can say for 100% certainty what’s going to happen.  You could wait and wait for the right time - sometimes you just have to jump in and do what’s right for you.  Good luck 

MEM62

There is no point in waiting for some mythical crash that may never come.  For a start you would be wasting money on rent that could be paying off some of your mortgage capital.  And what happens when the crash does not come and prices just keep increasing?  You can only make decisions based on circumstances now, trying to predict the future can be costly.  

FirstCoffee

Rates are rising. They could continue rising to the point where the current rates look cheap. Or they could fall in 12 months.

House prices have been rising for decades. This might continue for years. Or there could be a crash just around the corner. Nobody knows.

And this is what's disorienting when we're trying to take this kind of decision. Not knowing what's just around the corner.

Ultimately, we all go through this. You have to just be comfortable with this level of ignorance, and confident that, should the economy take a turn for the worst, you'll be able to either see it out, or course correct as needed.

Generally speaking, getting on the ladder is a good thing, and the old adage about investments sort of applies - time in the market, not timing the market. If this is first and foremost a home, then as long as you can afford the mortgage payments (stress tested to some interest rate hikes) I would try to ignore whether you could have done better if you'd waited/not waited.

Not a satisfyingly illuminating answer to your question, I know! But sometimes you just have to accept that certain factors are out of our control, take the jump and know that you'll deal with whatever comes after.

[Deleted User]

Difficult to say for sure. Even if you wait for the near-term house price falls (that look fairly inevitable at this point) your mortgage will be just as expensive overall if prices fall but mortgage rates go up faster so you end up paying say 7% for a mortgage on a £250k house next summer instead of 4% on a mortgage on the same house priced @ £300k today.

I would be cautious about the people saying "house prices haven't crashed in the past decade". For the last ten years we've had incredibly low interest rates (now expected to hit 6% base rate next summer from essentially 0% a year earlier, so probably 8% real mortgage rates...) and huge quantitative easing, which is now being unwound, plus on top of that an energy crisis, a war, a bearish stock market, a bond market crisis and growing inflation.

So my bet is a moderate to large crash in the next couple of years, before then starting to rise again (assuming the world has largely sorted out all its current problems).

Note also I expect the government will probably pull some ill-advised tricks out of the hat to support house prices further, perhaps allowing mortgages to be offset against tax again (like it used to be with MIRCS) or other similar tricks, and that worked to reinflate house prices a decade ago, so perhaps it'll work again this time?

Sarah1Mitty2

wileyspear said:

Me and my partner are first time buyers and are ready to start our mortgage application at the end of this month. I'm constantly being told by current homeowners to wait to see if/when the market crashes and house prices come down but I'm not sure if this is a good idea. Current rental contract is up at the end of March 2023 hence why we are looking to get started now. I would be open to continuing renting for another 6 months or so if it was going to be much more beneficial when buying our first home.

Is it a good idea to wait for the crash, or should I carry on as planned and just get onto the ladder?

If it helps we would have a budget of around £300k in the north of England.

With the crisis unfolding basically by the minute I suspect the deals you will be offered are going to be vastly different to what you may have been offered even a couple of weeks ago. Press Pause and see what happens I think.

youth_leader

I'm encouraging my daughter to buy now, although I am sorry she will not have as much disposable income because of the higher interest rates on mortgages.  So long as you like the location and the house, staying in shouldn't be too bad! 

peterhjohnson

Suppose you buy a house and the worst happens and there's a crash  followed by you needing to move. Not actually  a problem. Sure, you don't get as much from selling your old house (because of the crash) but you pay less for your next house  (because of the crash)

Martico

FirstCoffee said:

If this is first and foremost a home, then as long as you can afford the mortgage payments (stress tested to some interest rate hikes) I would try to ignore whether you could have done better if you'd waited/not waited.

This would be my view as well