To Buy or Not to buy...

neilp

Incidentally, while I realise there are quite a few house price crash threads, I thought I would share that in the area where I'm looking (Oxfordshire and Buckinghamshire), asking prices at the bottom end of the market (I would be a FTB) have probably already fallen by at least 5% since the start of the year. Virtually everything I see advertised is with no upper chain, so probably a buy-to-let. I have no idea how far the market is going to fall, but fall it is, and there is no reason to suspect that this won't continue.

Because of this, and the discussion of the perils of flats (especially new builds) in this thread, I would say that even a cheeky offer would be unwise at this stage!

CHARDONNAY_3

I agree with the others.

Don't buy yet.

In my area an old council housing estate was knocked down and a new estate of houses and flats were completed in spring 2007. At this time the 2 bed apartments were on the market for £120,000. All but one sold. That remaining one is still up for sale, only now the asking price is £100,000.

It's only one example, but it goes to prove a point.

spiritus

I may be mad but I am an FTB and am going ahead with purchasing a mid terraced for £ 131k. The asking price is £ 142k. The offer's been accepted. If and when prices start falling then I guess the 8% reduction from the asking price might help to cushion the blow a little.

Am I wrong in saying that if the right house comes along at the right price today then it's perfectly ok to buy now ?

neilp

Not if you plan to live there long term, and are sure you will be able to afford the repayments, even if rates rise or your circumstances change. The risk is that if prices fall to a level that leaves you with negative equity, meaning you have not got the option of selling it.

spiritus

neilp wrote: »

Not if you plan to live there long term, and are sure you will be able to afford the repayments, even if rates rise or your circumstances change. The risk is that if prices fall to a level that leaves you with negative equity, meaning you have not got the option of selling it.

I can absorb an interest rate rise but of course I think we will ALL have problems if interest rates rised significantly !

Nenen

spiritus wrote: »

I may be mad but I am an FTB and am going ahead with purchasing a mid terraced for £ 131k. The asking price is £ 142k. The offer's been accepted. If and when prices start falling then I guess the 8% reduction from the asking price might help to cushion the blow a little.

Am I wrong in saying that if the right house comes along at the right price today then it's perfectly ok to buy now ?

The problem is that, to my knowledge, no one on here has got a crystal ball that is guaranteed to be 100% accurate!

There are as many different opinions on this (some well-thought-out and reasoned, some extreme and some very forcefully put) as there are houses and people's situations. Having read the majority of the different opinions for over a year now, I'd say that the 'happy medium' position is that although the majority would advise a FTB to wait a bit, if you are absolutely certain you are not over-stretching yourself on the mortgage and that you will be happy living in the house for at least 5-8 years (the amount of time it took some people to get out of negative equity during the last HPC) and/or you have a substantial deposit to put down then over time (10+ years) you will be fine and should enjoy living in your new home.

Of course you may kick yourself to see the same sort of house house you are buying now go for 5-25% less in a year or sos time (depending upon the 'expert' you choose to listen to). However, that has to be weighed against the pleasure you will have in owning your own home and the 'slight' risk (according to the vast majority of 'experts' I've heard of) that house prices could actually start to rise anytime soon.

Having been around during the precious crash the people who were most severely affected were:
1) the young couples who stretched themselves to the max to buy a tiny one or two bed home, then went into negative equity at the same time as having a couple of children so were forced to live in very cramped conditions for a number of years.
2) The people who overstretched themselves, not realising that interest rates would rise to crippling levels and/or they lost their jobs, were ill and couldn't work so ended up losing their homes.

If you don't think either of those scenarios are likely for you then you *might* be fine. At the end of the day, buying/selling houses is a bit of a gamble... the ones who strike lucky buy at the bottom of the cycle and eventually downsize (or emigrate) at the peak! For the majority of us, over the long term buying a house is generally considered to be a good investment... although even that is now subject to debate! The bottom line is that most Brits do love to own their own homes and you can't always put a price on that!
Good luck

neilp

You are right that most mortgage holders would suffer if rates rose too far. I guess the risk you need to weigh up based on your current - and likely future - situation is whether you could find yourself in a situation where you can't make repayments, while negative equity means you can't sell your property.