Why not buy a property now?

formulaonefan

I'm trying to understand why not buy a property now?

If I have 25% deposit
If I have got a property 20% less than the asking price?

Is there any reason not to buy now?

I'm a FTB and I don't think there is going to be a crash. There is going to be price correction atleast 20% in the next two years (10% this year and 10% next year)

What do you think?

Doozergirl

If that's what you think, you're prepared for falls and can comfortably afford your repayments, then buy a house if that's what you want to do.

If you want a home, then it doesn't really matter. Especially if you think you have got a genuine deal on your buy - it dulls the argument of being able to buy cheaper in the future somewhat.

carolt

Read the posts here and then decide. A quick read will make it clear that there are some firm bears and some equally firm bulls. Read the 'official' predictions of house price trends and see if you agree.

If after a thorough read of the available info you still feel that house prices will not fall that much, then whether you should buy now is a question of how comfortable you are with the risk you perceive. If you feel that the risk of falls/losing equity is small and the consequences don't bother you, then by all means buy.

Personally, with a young family, I am very risk averse, so would not be a FTB now. But my longer term predictions differ from yours, and the alternatives to buying eg renting/living at home etc may be more unpalatable to you than they are to me.

Good luck with your decision; time will tell if your predictions are right re prices.

dannyboycey

formulaonefan wrote: »

I'm trying to understand why not buy a property now?

If I have 25% deposit
If I have got a property 20% less than the asking price?

Is there any reason not to buy now?

I'm a FTB and I don't think there is going to be a crash. There is going to be price correction atleast 20% in the next two years (10% this year and 10% next year)

What do you think?

Because, by your own calculations, you are set to lose the majority of your deposit (25% deposit / 20% fall). On a 200k property you could save yourself 40k by waiting 2 years. That's over £384 per week for sitting on your bum!! That's why I wouldn't touch property with a barge pole at the moment. You are your own person though, so if you are happy to throw money away for the sake of a house, go for it. Just make sure it's a good one!

formulaonefan

dannyboycey wrote: »

Because, by your own calculations, you are set to lose the majority of your deposit (25% deposit / 20% fall). On a 200k property you could save yourself 40k by waiting 2 years. That's over £384 per week for sitting on your bum!! That's why I wouldn't touch property with a barge pole at the moment. You are your own person though, so if you are happy to throw money away for the sake of a house, go for it. Just make sure it's a good one!

Lets look at an example: 200K is the value of the property now (200K is NOT the asking price. It is the value of the property. Asking price might be 240K). I buy it for 160K (20% less than the value. Lets say I bought it less because the sellers are desperate to sell). Over two years property market correction happens and it loses 20% value. That would make it 160K which is the value I bought the property.

So how would i lose?

The reason I'm saying property correction of 20% is the only worst likely chance of happening over two years is based on shortage of properities. Increasing population and shortage of property supply will only make 10-20% correction in this tubulent time. So a crash is not likely.

That's my view.

formulaonefan

Another quick question: What is the cause of Shortage of Property Supply? I think its increated population rather then BTL's. What do you all think?

Toto

If that's what you think will happen and you're ok with it then go for it.

I've been semi looking half heartedly for 18 months for the right house. And I've seen some lovely houses but to be honest all of them without question have left me feeling, that's over priced. So, for me, I can't find anything which I am prepared to pay for and as yet have not found a seller who is willing to come down to what I think is a reasonable price. Who knows if that will change in the next year or two but being old enough to remember the crash in the 90s and to have noticed the stupid climb in prices over the past 5 years I just can't bring myself to part with my cash right now. And the more my savings grow the harder it is for me to part with it.

So good luck and well done if you've found the right house at the right price, I think you'll find you're in the minority at the moment. But there are quite a few of us here hoping to join you over the next few years, but for me there would need to be a crash before I'll take the plunge.

formulaonefan

Doozergirl wrote: »

If you want a home, then it doesn't really matter.

I does matter because if I want to sell and move (ie. due to job change etc) and If I can't sell then its not good is it? So I personally don't think a house to live in means property crash doesn't matter. Nothing is certain in our life. I may buy a house on which I plan to live for the next 5-10 years but there are other aspect (ie. job, relationship, area, health etc) comes to play. It would be good if there is re-sale value. I don't plan to move for another 5-10 years but if I have too then I should be able too. So it doesn't matter. That's my thinking.

formulaonefan

Toto wrote: »

If that's what you think will happen and you're ok with it then go for it.

I've been semi looking half heartedly for 18 months for the right house. And I've seen some lovely houses but to be honest all of them without question have left me feeling, that's over priced. So, for me, I can't find anything which I am prepared to pay for and as yet have not found a seller who is willing to come down to what I think is a reasonable price. Who knows if that will change in the next year or two but being old enough to remember the crash in the 90s and to have noticed the stupid climb in prices over the past 5 years I just can't bring myself to part with my cash right now. And the more my savings grow the harder it is for me to part with it.

So good luck and well done if you've found the right house at the right price, I think you'll find you're in the minority at the moment. But there are quite a few of us here hoping to join you over the next few years, but for me there would need to be a crash before I'll take the plunge.

Now I'm confused! If everyone is holding back for another year or so! Then surely there will be serious slide in property values. oh my! what to do!

btw. I saw your footer, what saving challenge before dec is that? Is it a group challenge or personal one to one challenge? How can I join?

carolt

formulaonefan wrote: »

Another quick question: What is the cause of Shortage of Property Supply? I think its increated population rather then BTL's. What do you all think?

Personally, I think the 'shortage of property supply' is a fallacy. It was an explanation put about in the boom years of why we were in that famous 'new paradigm', in which everything was different now.

If there really was a shortage of property, then you would see the streets full of homeless people. You don't. (Not yet anyway.)

There are enough properties for there to be around a miilion empty properties in the UK, according to the BBC. There are enough properties that rents have hardly risen over the last few years, which would not have been the case had there been a genuine shortage of supply. This has been despite enormous immigration.

What there is, however, is a shortage of suitable priced property to buy, and insufficient property for everyone to own 3 or more: one as a home, one as a pension and one as a holiday home. We might just have to return to a situation where most people only buy, or expect to buy, one home - unless Gordon's miracle 3 million extra homes plan bears fruit (I'll believe it when I see it).

No, as the credit crunch has demonstrated, far from rising property prices being caused by a shortage of property, they were caused by an excess of 'free money'; too much debt being offered too cheaply and lax lending standards, eg lack of checks on those borrowing these vast sums.

And as we all know, that situation has started to change - drastically.

WTF?_2

carolt wrote: »

Personally, I think the 'shortage of property supply' is a fallacy. It was an explanation put about in the boom years of why we were in that famous 'new paradigm', in which everything was different now.

If there really was a shortage of property, then you would see the streets full of homeless people. You don't. (Not yet anyway.)

Also, a genuine shortage of supply would have seen sky-high rents as well as sky-high house prices, something of which the housing bulls have never been able to explain the lack of.

The watchword now for housing is affordability not availability.