Why not buy a property now?

carolt

teabelly wrote: »

Plus if norfolk and the rest of the east coast start to disappear under water then there is going to be a mass migration inland which can only mean prices will rise for property higher above sea level and out of flood plains.

Possible but....unlikely.

Thanks for giving me a great laugh though - the best I've heard on here in a 'straight' post for ages....

carolt

PasturesNew wrote: »

Let's do some maths using your figures.

You want to buy a house at £100k
You have a £25k deposit
You are buying the house at £80k
Mortgage is £80-25k = £55k

Or, wait two years:
House at £100k will have dropped by 10% per year, so it is down to £90 after year 1 and £81k in year two.
Your £25k savings at 5% after basic tax paid is now worth £27.5k
You've saved another £6k each year, so total savings are more like £40k
You get no discount on the house price of £81k
Your mortgage is now £81-40k = £39k

However, if you are buying it now at £80k, it isn't 20% under value ... THAT is the value today.
What if the prices drop more than you think?
You will also be able to probably find another "20% off" bargain in 2 years' time.

Wait for the froth to go off the situation at least, say another year.

Unless you really HAVE to have THIS house because it is THE best house EVER and you will never want to leave it. And you promise to love it forever, forsaking all others with a bigger garden or more bedrooms for at least the next 10 years.

That makes sense, but if your heart overrules your head - and buying a house isn't just a financial decision, of course - then ignore the financial advice and buy anyway. People on here just want you to think carefully before doing something you might, possibly, regret.

Only you can know how much you want that house, and only time (not us lot) will tell if it was the right decision financially.

Good luck with your decision.

LillyJ

Let me buy your house in 4 years time when you are repossessed ok? :rotfl:

What a pointless comment. The whole country isn't going to be repossessed, and certainly those with 25% deposit are not in a high risk category, even you must admit that. You have no idea what proportion of his income he is proposing to spend on a mortgage.

When you lot are falling over yourselves to buy in a few years time when all these repossessions you keep going on about happen, house prices are going to recover pretty quickly!

To be honest I am not bothered if there is a crash or not. I think there will be one, but I don't think we are going to be buying 3 bed semis in the home counties on the credit card somehow.

I am buying as I am investing in my emotional and family security, rather than my financial security. I don't think I am going to be reposessed somehow, I can't see a situation where it would occur. Unless interest rates rose to 20% and even then we would be able to afford the repayments.

teabelly

The US over built by 3 million houses for a start. The norfolk argument is more tic than serious and drowning Essex can only be a seen as good thing You might laugh about houses that don't get flooded but it is becoming a serious issue and people are more likely to buy a property that isn't on a flood plain if they have the choice. Insurers are charging hefty premiums for those that are or refusing cover already and have been doing for a few years.

Population growth is major driver of prices. The credit crunch is what is stopping everything in its tracks at the moment. Once the LIBOR drops then lending will start again, until that happens then it is mexican stand off. Population forecasts are saying more people will be living in the UK over the coming years. Therefore there will be continued increased demand for housing until the baby boomers die off which is probably another generation or two away. The target of 3 million new homes is never going to be reached as developers have just been burnt over new build flats and will probably, if anything, reduce building.

As I have said before new build flats will be hit the most as there are too many, they were over priced as any blind idiot could have seen and a good chunk were built in the wrong places. Bread and butter houses like terraces in decent areas won't be hit anywhere near as hard if at all. More availability of property for sale means buyers will be more fussy as we have seen with city centre rubbish not shifting where 2 years ago it would have been snapped up.

The 'average house' figure is a nonsense to judge by as it is affected by the particular mix of property. You have to analyse by all property types in all areas and see whether there are consistent falls where sold prices are falling or whether it is just asking prices that are falling back to last year's level. A drop of 10% only takes prices in most areas back 18 months and in some areas of London only 6 months. A 20% drop in somewhere like Chelsea would again drop prices back less than a year so even the mad figures for somewhere like London are pretty meaningless rather than catastrophic.

It makes no odds to me either way but I still think any falls are going to be small and short lived in most property apart from new build tat which will stay down for a good few years.

As soon as the LIBOR drops to closer to 5% then the investors will be piling in while the media will still be scare mongering so they can make a killing buying up from panicking sellers. The vultures are already circling.

DaveyDave_3

PasturesNew wrote: »

Let's do some maths using your figures.

You want to buy a house at £100k
You have a £25k deposit
You are buying the house at £80k
Mortgage is £80-25k = £55k

Or, wait two years:
House at £100k will have dropped by 10% per year, so it is down to £90 after year 1 and £81k in year two.
Your £25k savings at 5% after basic tax paid is now worth £27.5k
You've saved another £6k each year, so total savings are more like £40k
You get no discount on the house price of £81k
Your mortgage is now £81-40k = £39k

However, if you are buying it now at £80k, it isn't 20% under value ... THAT is the value today.
What if the prices drop more than you think?
You will also be able to probably find another "20% off" bargain in 2 years' time.

Errr. hang on. What about the 20k you've spent on rent in those 2 years?. To be honest, whilst I'd expect prices to at say 10% per year for a couple of years as you suggest, I wonder whether actually now isn't a bad time to buy. Firstly, EAs are desperate and there are very few buyers in the market. Therefore you actually stand a reasonable chance of getting your offer considered seriously. Also, I would imagine that most desperate vendors will take a 15% hit now on the asking price. If you preceive there to be a 'perfect' time to buy in say 2 years, don't you think that everyone of the huge numbers of backed-up FTBers aren't going to think the same!. And then we'd back into a rising market.

Neillgb

Estate Agents and others with vested interests see a 'correction', others see a crash.

Not too important whether there are people that want a property or not, if it is not affordable it will not sell. I want a £5m country house with extensive gardens in Sussex. Regretably I don't have the funds to hand and nobody seems forthcoming with a mortgage because my income multiple, self certified of course, is just below the required level. Cough........ahem.

The way things are at the moment with regard to an increasing population is that, for the most part, they are not on large salaries and therefore they are limited with regard to what they can buy and indeed rent.

The only hope for prices, in the short term, is if HRH Brown decides that the British taxpayer should support the Housing Market in one way or another which is of course grossly unfair to people without an interest. I strongly suspect that the Banking lobby that popped round for a free breakfast, at tax payers expense, will have made various suggestions wholly designed to help the struggling mortgage payer. Obviously, as we all know on this site, banks do put the interests of their customers first and would not suggest anything for selfish reasons.

We are already supporting a bust bank called Northern Rock so why not support everybody else that , for one reason or another, is living beyond their means. Or indeed somewhere beyond their means.

With regard to any investment, property included, the old maxim, 'don't catch a falling sword' is relevant. Yes you might make a huge killing if you guess where the bottom of the market is, on the other hand you might get it wrong. The initial poster is in a good cash position, Banks are gagging for money so he should get a good interest rate. If I were him I would wait until the market starts to turn, after Browns credit bubble has burst, and settles down a bit. It would be the prudent thing to do..

nelly_2

I bought one 2 weeks ago knowing fully and hopeing fully prices will drop.

But a very rare oportunity arrived and we went for it, and ive been smashing it to pieces ever since

great fun indeed

red_bertie

If it were me, I was a FTB and found something that fit the bill and I could afford it I would definitely buy.

Unless you are hard-nosed and looking to make money, you will be buying a home not a house.

Homes are usually bought with heart ruling over head.

If you are happy with the purchase and prepared to stay in it for up to 10 years, you will be emotionally committed to the property and yes, it could be cheaper next year, or not, but at least you will own your own home.

RB

red_bertie

nelly wrote: »

I bought one 2 weeks ago knowing fully and hopeing fully prices will drop.

But a very rare oportunity arrived and we went for it, and ive been smashing it to pieces ever since

great fun indeed

Why hoping for a drop?

RB

FaTB

I'm a potential FTB.

But definately won't be looking to buy for at least another year.

I want to see not only what way house prices are heading, but which way the economy in general is heading.

If we go into recession with the US, I may have a big deposit but no job !