Buy a house now OR rent one, and buy in a year or two?

twitwoo

My partner and I are currently mulling over this question. 

We're looking to move to the West Midlands or Worcestershire area (with a school-age child) - ideally into an 'average' 3 bed semi with decent sized rooms.
Would prefer a small-medium town, suburb or village with good transport links (to Birmingham & M5).

We're trying to work out how to interpret the UK & regional housing market - not easy with all the media & estate agent white noise!

This is what we think:

1. Little for sale or to rent on the market in this area. 
2. Prices for both sale & rental properties still look high.
3. Interest rates have just been raised, and likely to remain high for a couple of years.  
4. Mortgage accessibility may be affected by banking crisis.
5. Sale prices likely to drop within 1-2 years (reduced demand because of interest rates/mortgage affordability)
6. Rental prices likely to remain high for 1-2 years (due to high demand & lack of supply)
7. We're new to the area, so not sure which areas would suit us long-term.

Our conclusion:

We're better off renting for 1-2 years, to give us time to get to know the area, and hopefully have a better choice of more affordable properties available to buy. We believe that savings on buy price (prices ease between 6-16% within 2 years) will offset cost of renting for 1-2 years.
 

Two questions - 

1. What do you think about our conclusions, and why?
2. If you were moving to this area, where would you choose to live, and why?

jimbog

twitwoo said:

We're better off renting for 1-2 years, to give us time to get to know the area, and hopefully have a better choice of more affordable properties available to buy. We believe that savings on buy price (prices ease between 6-16% within 2 years) will offset cost of renting for 1-2 years.
 

Two questions - 

1. What do you think about our conclusions, and why?
2. If you were moving to this area, where would you choose to live, and why?

I agree with point 1. It is really important to get to know the area. Any gain in buying a great home would be lost if you realised you bought in the wrong place 

ArbitraryRandom

I'd agree with the importance of spending time in an area before buying; especially if you've not lived in a small town/village before as it can be very different from somewhere with a larger population. 

You might chance it if there was something on the market that ticked all of your boxes, but if there's nothing exciting available at a price you think is reasonable (based on the actual sold prices of properties in the area) then buying something for the sake of it would be foolish IMO. 

The only thing to remember is that 3 bed houses in nice village/small town areas and with good transport links are always going to be popular; there might never be many coming on the market at the same time so the prices might not be as quick to fall. Meaning I wouldn't bet on any fall in house prices offsetting rental costs. 

robatwork

ArbitraryRandom said:

I'd agree with the importance of spending time in an area before buying; especially if you've not lived in a small town/village before as it can be very different from somewhere with a larger population. 

The problem with your 5 and 6 and probably all the other points too is summed up by the name of this poster.

JM68

Posting on this MSE thread may get you some views to consider on your question 1, but I doubt you'll get much in the way of responses to your question 2.

Have you tried the mumsnet property/DIY forum for that?

You could consider posting on there with some info you have already mentioned (area, transport links required, type of property), add a few more practical details (e.g. budget, ages of school children), plus any additional stuff you care to add.

People doing those 'tell about xyz area' or 'where to move to in abc area' on that forum usually get lots of responses.

twitwoo

ArbitraryRandom said:

I'd agree with the importance of spending time in an area before buying; especially if you've not lived in a small town/village before as it can be very different from somewhere with a larger population. 

The only thing to remember is that 3 bed houses in nice village/small town areas and with good transport links are always going to be popular; there might never be many coming on the market at the same time so the prices might not be as quick to fall. Meaning I wouldn't bet on any fall in house prices offsetting rental costs. 

We have lived in a village near a small town (with good transport links to Bristol) before, and would be quite happy living in a similar place again.

You're right that houses in these type of places are popular - house prices went up by between 6-10% PA in the village near Bristol after we moved there. However prices & availability were still affected by the last house price correction, and it's recovery lagged the Bristol city property market - which is what allowed us to move there (in 2014).

I realise that it all depends on what happens with house prices generally - if prices keep rising we may end up being priced out of the better areas.   

twitwoo

robatwork said:

ArbitraryRandom said:

I'd agree with the importance of spending time in an area before buying; especially if you've not lived in a small town/village before as it can be very different from somewhere with a larger population. 

The problem with your 5 and 6 and probably all the other points too is summed up by the name of this poster.

Interesting response - we've formed a view based on the information we have available, so we can make the decision which is best for our family circumstances. 

What do you believe is going to happen to Sale & Rental prices over the next couple of years?

Gavin83

twitwoo said:

robatwork said:

ArbitraryRandom said:

I'd agree with the importance of spending time in an area before buying; especially if you've not lived in a small town/village before as it can be very different from somewhere with a larger population. 

The problem with your 5 and 6 and probably all the other points too is summed up by the name of this poster.

Interesting response - we've formed a view based on the information we have available, so we can make the decision which is best for our family circumstances. 

What do you believe is going to happen to Sale & Rental prices over the next couple of years?

It's all guesswork.

Personally I expect house prices in a few years will be higher than they are now but not significantly so. Either way I think you'll be financially worse off by renting.

However I do agree it's a good idea to rent in a new area before buying. We were looking at buying in a town having not lived there before that a lot of people say is lovely. It regularly features on those 'best places to live' lists and I've seen it recommended on here a few times. We considered just buying straight off but decided to rent first to get a feel for the place. Turns out we hated the town and we have since bought elsewhere. It was made worse by the fact that the people who lived there were extremely defensive of their town and wouldn't hear a bad word said about it.

In your shoes I'd probably be looking for a year rental, or at least one with a break clause that allowed me to be out within a year with the aim of buying after that year.

MFWannabe

I agree it’s best to rent in a new area first before buying so you can decide if you like it or not 
as for areas, where in West Midlands? West Midlands is a very big area 

twitwoo

JM68 said:

Have you tried the mumsnet property/DIY forum for that?

You could consider posting on there with some info you have already mentioned (area, transport links required, type of property), add a few more practical details (e.g. budget, ages of school children), plus any additional stuff you care to add.

People doing those 'tell about xyz area' or 'where to move to in abc area' on that forum usually get lots of responses.

Thanks for that suggestion JM68, good call - we're not really Mumsnet users so hadn't thought of it. 

Schwarzwald

Price and rent development is all guess work, nobody will know

 

Biggest risk and challenge, esp with family and kids, I see and would say is the energy it takes and disruption to your family life of moving twice.

I’d expect that many that consider to “rent for 1-2 years, then buy” end up renting much longer as they initially planned as Life happens and then suddenly people are 5 years down the line still renting the a place.

 

Depending on how far away the places that you consider moving too, I would rather stay put where you are now, and Airbnb in different locations around the area for 8-10 times this spring and summer to get to know the area better and talk to people.

 

Hopefully you get to know the places good enough to make a better informed decision