FTB's - don't buy now!

dannyboycey

Gonzo wrote: »

Wow!
This is like cage fighting but without the dodgy T-shirts.

I have my little red pants on and yellow hulk hogan t-shirt

chriz1000

Well to give balance to the debate if you can afford the house and can see yourself living there for many happy years then buy now. Why? Mortgage products are being removed so although prices may become a cheaper you may not meet the criteria to get a mortgage in two years time. Also the rates and costs may continue to rise making the mortgage even more expensive than it would have been if you borrowed a larger amount of money now.
The reason prices will come down is because less people can obtain a mortgage even if they can afford it, so it’s all well and good saying I’ll wait for the right price, but when/if it finally comes around what good is it if you can’t get a mortgage.

Rental prices will increase. I know several letting agents in the south east and south west. Properties are flying off there books as there’s an influx of tenants with a shortage of properties. This is being caused by people selling up and landlords not investing in rental property. Just like what happened to the housing market supply and demand pushed up the prices. The same thing will happen to the rental market. I would be very surprised if we don’t see a substantial increase in rental prices over the next two years.

Remember thanks to a lovely thing called inflation your mortgage repayments will actually become cheaper by at least the level of inflation every year (as long as you get pay rises in line with inflation)

People think nothing of buying a car, sofa, computer etc.. All of which become cheaper over time as newer better models come out and when you do buy it, it will decrease in value at a phenomenal rate and eventually be worthless. People need to stop seeing houses as investments or assets. View it the same way that you view any other commodity and you can’t lose.

HelpWhereIcan

Fully expecting the cries of "Vested Interest, burn him, burn him!!!"

http://www.property-investor-news.com/hot_news/hot_news1.htm

Documents some of the history of house price punditry over the last few years.

“Is another property crash imminent?” asked Anne Spackman, then property editor, on September 13 1997. “Overheating” in London’s property market was reminiscent of the late 1980s. Spackman - now managing editor of The Times - quoted an anonymous housebuilder saying that people had been paying crazy prices and “the next year is going to sort the men from the boys.”

In November 2002, Steven Bell, global chief economist at Deutsche Asset Management, was quoted in the Daily Express in explicit terms: “House prices, particularly in London, are set to fall by 10 per cent over the next year and could drop by 20 per cent.”

In 2003, the 2 Andrews nearly convinced me to argue with the wife that we should STR rather than buying when we moved.

Andrew Oswald, a professor of economics at Warwick University. In November 2002, he wrote: “I think we are about to go through the great housing crash of 2003 to 2005.” He had been right about the end of the 1980s boom, he pointed out. The coming crash would be even more hellish.
“I advise you to sell your house, and move into rented accommodation,” he wrote, before ending on the dramatic note: “Panic will then set in.”

Andrew Farlow, an economics tutor at Oxford University, struck a similar note in a research paper published in the same month. “Today is probably the riskiest time in a generation to get on the housing ladder,” he advised.

Friends of ours did STR in November 2003 before 'chickening out' in July 2004.

Credit conditions will worsen again this year. Hopefully they will improve through 2009.

My crystal ball is no better than anyone else's, but think most people expect falls of up to 10% over the next 2 years with a fair amount of regional variance, but a full blown crash of 40%?....

All I can add is that it has to depend on why you are buying.

Anyone buying a house to invest in had better do their homework and buy at the right price and ensure that they have rental surplus.

If you are a FTB buying a home to live in, you should be choosing solely on budget and how long you think you will be living there with the aim being the medium to long term (5-10 years).

Only the fool looks to make money out of their home. Only the careful will make money out of investment property in the next few years.

dannyboycey

chriz1000 wrote: »

Mortgage products are being removed so although prices may become a cheaper you may not meet the criteria to get a mortgage in two years time.

If you don't fulfill the lending criteria, thank your lucky stars. It's because you can't afford to pay it back!! Better to pay off debts and save up a deposit until you meet that criteria - life will be so much easier if you go about things that way.

I don't get this "must buy a house now before I miss the boat" mentality. Don't buy what you can't afford. Simple.

dannyboycey

HelpWhereIcan wrote: »

Only the fool looks to make money out of their home.

I've done quite well so far thanks and I'm no fool (not financially anyway ). Buy low, sell high, then repeat - it's child's play really. Sadly, a lot of people will get burnt because they think you can buy at any price, slap some magnolia on the walls, throw down some decking and retire to tuscany.

carolt

chriz1000 wrote: »

Well to give balance to the debate if you can afford the house and can see yourself living there for many happy years then buy now. Why? Mortgage products are being removed so although prices may become a cheaper you may not meet the criteria to get a mortgage in two years time. Also the rates and costs may continue to rise making the mortgage even more expensive than it would have been if you borrowed a larger amount of money now.

...

Remember thanks to a lovely thing called inflation your mortgage repayments will actually become cheaper by at least the level of inflation every year (as long as you get pay rises in line with inflation)

People think nothing of buying a car, sofa, computer etc.. All of which become cheaper over time as newer better models come out and when you do buy it, it will decrease in value at a phenomenal rate and eventually be worthless. People need to stop seeing houses as investments or assets. View it the same way that you view any other commodity and you can’t lose.

Firstly, whilst I don't disagree with your first paragraph, it belongs on a different thread. You may notice this thread is called 'FTB don't buy now!' rather than 'Everyone, don't buy now!' - for a reason. please see previous posts on the subject ad nauseam.

Secondly, you may be right that inflation will reduce the value of your mortgage debt - but only if your interest rates are less than inflation rates. For people buying NOW - not last year say, unable to get a deal on their mortgage payments, they could well be stuck paying far more in interest payments than their salary is likely to increase to, for many years - and all to buy an asset falling in value!

With, say, a sofa, it costs a fair bit - though I'm not sure sofa prices have depreciated by that much in recent years... (?). But the point is, people don't usually have the interesting alternative of renting their sofa, while waiting for sofa prices to fall. And buying a sofa is far less of a major decision, because people don't usually end up facing major debts as a result (unless you manage to buy a very expensive sofa!!). In fact, comparing the two makes it clear how ludicrous your comparison is.

Enough said!

WTF?_2

chriz1000 wrote: »

Remember thanks to a lovely thing called inflation your mortgage repayments will actually become cheaper by at least the level of inflation every year (as long as you get pay rises in line with inflation)

Even if the typical person did get regular annual pay rises in line with inflation, it'd be adjusted to CPI.

This is a completely useless measure of inflation. Does anyone here really believe that their living costs rose by about 2% over the last year :rotfl:

Actual inflation is running for me I'd guess at something like 10%. Obviously it depends on your lifestyle but with food and energy costs rocketing, it's clear that everyone will be hit. Isolated example: Was at Tesco the other evening and noticed that veg oil for cooking had risen to a quid a litre. Four or five months ago the same oil was 57p a litre.

And as the Central Banks 'print money' to bail out the bad debts of the banks there are going to be absolutely massive amounts of cash emptied into the system which will send inflation into overdrive, pushing up prices. This won't even be vaguely accurately reflected in the CPI you can bet.


Add to that that many people these days don't actually get annual rises and that pay pressure is downwards and you see that the chance of 'wage inflation' eroding away your debt is slight. In fact, all inflation is going to do it cause people to have less spare cash after paying for essentials and serve to squeeze their finances even further.

carolt

snarffie wrote: »

Now hold yer horses sonny-Joan. You asked for an example. I gave you two. Now you say they don't qualify, because they went 'out on a limb.' :rolleyes:

You are a classic HPC member. Shout down everybody else to get YOUR VI message heard.

Please understand that from a financial point of view, I would benefit from a drop in prices. I'm just saying that I've heard it all before. Many times.

I'm no HPC member, sorry.

And I've never made any bones about the fact I would benefit if prices fell. But I'm afraid that the fact that I would like it to happen doesn't mean it won't happen. There is no correlation between those facts.

And, as a careful observer, over the last few years, I have certainly never seen such a uniform, across the board agreement that prices would fall.

In many ways, I don't want it - recessions aren't nice for anybody and housing crashes have great human costs. But, unfortunately, the excesses of the last few years mean that payback time has to come sooner or later, and most commentators are saying it will be soon.

I'm not going to bother finding dozens of references for you of current articles/quotes from individuals working in finance/housing saying they've never seen it this bad in their lifetimes. I'm sure you've seen them too.

If you don't want to believe them, that's up to you.

But, whilst I do appreciate the time taken to dredge up your examples and contribute to an informed debate, I'm not going to agree that two swallows made a summer. (Oh, what a lot of metaphors we have here today!)

HelpWhereIcan

dannyboycey wrote: »

I've done quite well so far thanks and I'm no fool (not financially anyway ). Buy low, sell high, then repeat - it's child's play really.

If someone bought their main residence solely with the intention of selling it and making money at a future date that makes them a fool.

The fact that they have made money in a rampant bull market over the last few years may make them a lucky fool, but a fool all the same.

Your main residence is to live in. Investment property is for making money.

dannyboycey wrote: »

Sadly, a lot of people will get burnt because they think you can buy at any price, slap some magnolia on the walls, throw down some decking and retire to tuscany.

Agreed, they will.

The next couple of years will see some astute investors make a lot of money at the expense of those who could/would not do their own due dilligence.

Money can be made or lost in any kind of market (I dread to think of how many people made a paper profit on Property Ladder while ignoring the opportunity cost that their p*ss poor choices cost them).

But again, that does not mean that people who are looking to buy a home, a place to live should be assessing things solely on how much the property could be worth in 2 years' time.

JonnyBravo

snarffie wrote: »

Now hold yer horses sonny-Joan. You asked for an example. I gave you two. Now you say they don't qualify, because they went 'out on a limb.' :rolleyes:



You are a classic HPC member. Shout down everybody else to get YOUR VI message heard.

Please understand that from a financial point of view, I would benefit from a drop in prices. I'm just saying that I've heard it all before. Many times.

That's because you're in the ghetto.....

That's what happens in here.....

Their ghetto..... their rules..... (seems fair)

Don't try to fight it, they have social justice and (usually) jealousy on their side. Formidable allies indeed. And that's before dannyboycey pulls on his "little red pants... and yellow hulk hogan t-shirt"

It does make for the odd interesting read as they manage to wind up the occasional "biter"..... don't get sucked in.....




ahhhh I'm too late I see..... you're trapped..... sorry to see another brave soul crushed by the reasoning of (hp)c arolt and her merry band.....