Just about to sell. What now?

pmat

Hi all.

Our house is just going through it's sale at the moment. The price we got was pretty good and the buyers have got a lot of house for their money.

Anyway, with the market looking like it may take a bit of a dive, we aren't really 100% certain what to do. We were looking to spend around £300,000 on a new house but are now looking to rent for the next 12 months or so. Firstly to see if house prices continue to drop and secondly, to see what is going to happen with interest rates/mortgage deals, etc. The thing now is that apart from having to find rental accomodation sharpish, will the cost of rental be offset by the potential house cost savings?? I know it's not a question anyone can answer with authority but give me your thoughts please.:o

P

hostman

It depends if you're going to be sitting on a relatively large pot of cash while renting?

The interest on your house fund could pay your rent, for example.

If you buy now, spend £300k, but house prices drop 15% in total before they bottom out, you have lost £45k. Ultimately double that, as you'll be paying the mortgage over the long term with interest. House prices may increase in the future, but they may only increase by small amounts, rather than the rediculous 10-15% growth a year over the past ten years. So it may take many years before your house is back up to the price you paid for it. It may then be even longer before you see any "profit" from your house if you wanted to move. Therefore, if you wanted to move in the future, to upsize, you may not be able to or only if you pay in more of your own savings.

Of course, no one really knows what is going to happen. It is very difficult to predict. They SHOULD fall, as they are overpriced. When you compare average earnings to average house prices, house prices are 30-40% overvalued. They have only risen this past ten years due to the increasing availability of debt. It is amazing high house prices and our economy have lasted this long, but its all fueled by unsustainable debt. £8,000 for every household in the UK to be exact ...

zzzLazyDaisy

hostman wrote: »

If you buy now, spend £300k, but house prices drop 15% in total before they bottom out, you have lost £45k. ...

Actually, that is only true if you want/need to sell again in the next few years. Otherwise, over the longer term prices will come back up, and in the meantime you have a secure HOME, instead of constantly looking over your shoulder incase your landlord gives you two months notice. Renting in the short-term while you look around is, in my view, a good idea - but as a longer term strategy, other considerations come into play, like security, putting down roots and so on.

You pays your money and takes your choice...

hostman

zzzLazyDaisy wrote: »

Actually, that is only true if you want/need to sell again in the next few years.

Well of course.

We need a bit more info from the OP and his or her intentions in order to make a useful suggestion. If its a "I'll die in this home" purchase, then buy whenever you want. If its "we might need to upsize or move elsewhere at some point within the next six years", then don't buy now but rent instead, let prices continue their downward trend and pick up a bargain in twelve months.

pmat

hostman wrote: »

If its "we might need to upsize or move elsewhere at some point within the next six years", then don't buy now but rent instead, let prices continue their downward trend and pick up a bargain in twelve months.

I think this may be more of the case. Thanks BTW.:beer: