A Good Time For First-time Buyers?

dolcevita

beinerts wrote: »

Here's my situation, for contrast. I'm in my first home, bought in 2006, it's worth about £190,000 and I've got a £150,000 mortgage on it. I'm quite content for several reasons:

.

Ah. The voice of experience.

beer_tins

brit1234 wrote: »

The only point I agree is 4, it will be a lot cheaper to move up. However I disagree with the rest, have you got anything tangible to back this up.

What I see is:
1, Repossessions rising fast
2, Estate agents increasingly going bust, cutting staff and very slow business.
3, Lending tightening very quickly to levels close to 10 years ago.
4, Far longer sale times
5, Rapidly growing amounts of homes for sale.
6, Majority of buy to let lenders not lending, going bust or hiking rates affect new mortgages and remortgages.
7, Builders not being able to sell buy to let property flats
8, Credit crunch continuing for the next year.
9, US already in recession and us following
10, Inflation rising fast
11, Interbank lending rates static despite to cuts in interest rates stopping banks reducing mortgage costs.
12, Finally Property prices being 35-50% overvalued allowing a big scope for falls

The simple fact is the housing cycle typically follows a 18-20 year cycle with a crash in the end part of the cycle. We are entering that point now after the 1990 crash with our prices even more inflated than then. The market is extremely vulnerable.

Wait a few months and you will see the market get far worse.

Well I haven't seen any reduction in asking prices or time properties are on the market where I live. Maybe that's not typical of the country as a whole. Yes there is a tightening of credit markets meaning lenders being more selective, i.e. higher deposits required, higher rates, more selective lending. All of those things reduce the amount of buyers or the amount that they can spend, but I still don't think it will cause catastrophe. As for the market being 35-50 inflated, well the wide range tells you that the figure is little more than a guess and at any rate it is due to a housing shortage in the country and unless that changes (more houses or less people!) it is unlikely to change much. Finally, I don't see how high inflation will have a downward effect on nominal house prices (it may do on the value in "real" terms). Only time will tell if the market falls and if so, by how much. It would be interesting to revisit in 1 year. I would say by then prices will have remained largely static and people will still be predicting imminent doom. I suppose no one knows for sure though...

jamescredmond

my advice, for what it's worth: keep out of the market for at least a year (if your housing arrangements allow).

all the signals (IMO) suggest a gradual and sustained slowing, as opposed to 'crash'.

I think it would be great if you could buy at the bottom of the market, but
even if you don't: think long-term and treat the property as a home as opposed to investment.

regards

beer_tins

dolcevita wrote: »

Ah. The voice of experience.

Any I suppose you are a property guru who has made millions over the years through your acute knowledge? Care to share your own infinite wisdom? No? didn't think so...

beer_tins

jamescredmond wrote: »

my advice, for what it's worth: keep out of the market for at least a year (if your housing arrangements allow).

all the signals (IMO) suggest a gradual and sustained slowing, as opposed to 'crash'.

I think it would be great if you could buy at the bottom of the market, but
even if you don't: think long-term and treat the property as a home as opposed to investment.

regards

I agree completely. Be careful though, some posters don't like people who's opinions are different from their own...

dolcevita

beinerts wrote: »

...... Yes there is a tightening of credit markets meaning lenders being more selective, i.e. higher deposits required, higher rates, more selective lending. All of those things reduce the amount of buyers or the amount that they can spend, but I still don't think it will cause catastrophe...

To give a simple example :

If you were a ftb with a 10k deposit, by borrowing 95% you can afford a 200k house.

If the LTV were reduced by just 5% to 90% then your 10k will only buy you a 100k house.

That puts massive downward pressure on house prices.

That along with every one of brit's points mean that this time next year, house prices will be lower than they are now.

This is 100% guaranteed.

dolcevita

beinerts wrote: »

Any I suppose you are a property guru who has made millions over the years through your acute knowledge? Care to share your own infinite wisdom? No? didn't think so...

How did you guess?

And I will gladly share my wisdom with you.

All you have to do is take your fingers out of your ears and listen.

beer_tins

dolcevita wrote: »

To give a simple example :

If you were a ftb with a 10k deposit, by borrowing 95% you can afford a 200k house.

If the LTV were reduced by just 5% to 90% then your 10k will only buy you a 100k house.

That puts massive downward pressure on house prices.

That along with every one of brit's points mean that this time next year, house prices will be lower than they are now.

This is 100% guaranteed.

You can still get a 95% mortgage and even a few 100% ones (OK not many of those any more). Or you'll have to save a little longer to get a bigger deposit. Banks will still lend you up to 4x salary (though I wouldn't borrow nearly that much personally). I have no doubt prices will be lower in real terms next year. It just wont be as big a drop as some are saying IMO.

neverdespairgirl

beinerts wrote: »

Here's my situation, for contrast. I'm in my first home, bought in 2006, it's worth about £190,000 and I've got a £150,000 mortgage on it. I'm quite content for several reasons:

What part of the UK are you in?

A 10% drop in house prices would see yours down to £171,000, and a 20% drop down to £152,000.

Sticking my neck out, I reckon the average house will be 10 - 15% lower, at least, by the end of 2008.

Toto

beinerts wrote: »

It really depends on your own situation. You certainly don't have to rush into it out of fear of the market running away from you. If you have a 10% deposit and the amount you want to borrow is affordable then it might well be a good time for you to buy. The right time for you, in terms of what "stage" of life your at may not coincide with the best time in the market to buy, so it may still be good for you, even if not as lucrative as it was a few years ago! In general terms, if you like the place and area and it's affordable, why not?

.

I struggle a bit to understand why people think as long as you can afford the house it's the right time to buy. yes if people are planning to stay long term the house prices don't make a difference until they come to sell. But paying less for a house is always better, no matter how long you plan to live in it. I'd rather pay a mortgage on a £150k house than the same house at £200k wouldn't you?