Renting vs buying in 2017

funkey_monkey · 24 February 2017 at 11:10PM

Hi,

I've been looking at purchasing a property a number of times, but due to fear and then job security woes (which ended with being made redundant) I have never yet bought.

I'm now thankfully back in work but just renting a room with a friend whilst I get back on my feet again.

I'm now looking to move onwards into my own place. I've been looking to rent somewhere in Belfast (I work in the city centre) but I've found that the rental prices make a mortgage a cheaper option for me. (got ~£120k set aside for a place).

I'm just wondering with Trump, Brexit, folk on the hill, etc where is our property market going - especially in Belfast.

Am I best to go and rent for 6 - 12 months (costing approx £4,800 in rent - assuming £800pcm for a decent city centre apartment rented for 6 months - although it will more likely be a 12month contract which relieve me of £9,600) or should I start now looking for a property to purchase?

I'm a single person. I would be looking in S/SE Belfast - as being an ex uni student its the only area I know in the city where I'd be comfortable enough to drop anchor and >£150,000.

What is currently happening on our local market - are they going above/below asking? Staying on long? Bidding wars?

I've read that a shortage of supply is maintaining high prices. However, with the uncertainity of Brexit looming in the distance is there any scope for a downturn? I'm aware though that the BoE gov has recently upgraded his outlook on Brexit effects.

So should I rent or buy?

motorguy · 25 February 2017 at 8:56AM

OK, my tuppenceworth...

There is currently a slight upward trend on house prices. This has been happening for several years consistently.

Brexit is 2 years away. I dont think we'll see a property price crash because of Brexit anyway. IMHO.

By renting for a year, you would be taking a £9,600 gamble that the upward trend is peak, stop and then drop inside that year, but that it is going to drop by 10% (to make your £9,600 gamble worthwhile and give you a £5,000 return based on a £15,000 drop on a £150,000 purchase)

Personally - if all other factors are equal, ie, you're ready to buy now, you want to put down roots, you dont intend to move / sell again in the short term - then personally IMHO i'd be looking around now and buying now as you are ready to do so.

Dont forget, you are buying a HOME, not an investment. If your £150K home is worth £250K in 10 years time, then other properties are incredibly likely to have risen pro-rata anyway, likewise if its worth £50K in 10 years time, other properties are likely to have dropped pro rata anyway, AND if you were to rent for those 10 years, you'd be £96,000 lighter anyway.

No doubt the serial renters will be along to tell you want its best to rent rent rent.....

Stuart788 · 25 February 2017 at 10:15AM

Nobody really knows what's going to happen to property prices. It's a gamble.

It all boils down to how much you prioritise having a home and not renting somebody's house?

However, with the deepest respect are you sure you can get a mortgage if you only recently started working again, usually you need at least two years of employment before applying?

bellaboo86 · 25 February 2017 at 10:22AM

Not all lenders require you to have two years of employment. I got a mortgage after only 2 months of working in a new job. In fact, I was told that just having a permanent teaching contract would be enough to get a mortgage with some lenders.

qwert_yuiop · 25 February 2017 at 10:44AM

bellaboo86 wrote: »

Not all lenders require you to have two years of employment. I got a mortgage after only 2 months of working in a new job. In fact, I was told that just having a permanent teaching contract would be enough to get a mortgage with some lenders.

That is a very special case. Compared to most other employment, you're very unlikely to be made redundant, and it's very unusual for a teacher to get fired.

qwert_yuiop · 25 February 2017 at 10:59AM

Stuart788 wrote: »

Nobody really knows what's going to happen to property prices. It's a gamble.

It all boils down to how much you prioritise having a home and not renting somebody's house?

Very true. It may not be relevant of course but the London asking prices have reduced since last year and Dublin has slowed a little. All you can say is prices don't seem extreme at present, so you probably are unlikely to go as badly wrong as previously. Also, interest rates can only go up, so now is the time to overpay if possible. Therefore my feeling is, if you want to buy a house, do it.

ballyblack · 25 February 2017 at 5:13PM

Renting V Buying?

This is a choice between beholding to the owner of the house (who can ask you to move on at ant time) or being independent

an easy decision for me!

qwert_yuiop · 25 February 2017 at 7:41PM

ballyblack wrote: »

Renting V Buying?

This is a choice between beholding to the owner of the house (who can ask you to move on at ant time) or being independent

an easy decision for me!

Well, yes, but..

I was over in London last week, visited a couple of friends living in a 2 bed flat above a pizza shop in Fulham. Their rent is £1800 a month. Seems extreme? The flat, which is only on a 70 year lease, is up for sale at £650,000, which means the annual rent is only 3% of purchase. Where the rent is so small compared to cost, and when the flat has had a lot of viewings in several months, but no offers, it suggests the market is not rising. I'd keep renting.

funkey_monkey · 25 February 2017 at 11:56PM

Thanks for the replies so far. In terms of finances, I think that I'll be okay for a mortgage as I've got >£100k set aside so I should need little in terms of LTV if I decide to now purchase.

I'm now at an age where shared living is just too much for me an I need my own space. I've been looking at places and I'm still undecided as to whether to concentrate on houses or apartments. For a single person with my lifestyle, an apartment seems like the better option as there is minimal upkeep and in terms of security it is less noticeable when the property is unoccupied.

However, to get something in an apartment which is not a big development full of young renters means from what I've been looking at that the price is around the £170k - 190k mark, although I stand to be corrected if that is an incorrect statement. Hence once maint fees are paid a house would make better financial sense. Is this opinion correct?

If I thoguht there was any choppy waters ahead I would rent, but I'm just not sure and if there is, the risk is whether it would involves a ~£10k drop in prices and if the thought of dropping £800 out into the abyss every month would be a thought to live with when it could be put to paying down a mortgage.

I just don't want to be like those in 2006 who went into a purchase...

Ticked · 26 February 2017 at 11:41AM

As I've said before, I'm so glad I bought instead of renting. Now on a pension which, after usual outgoings, is all mine to enjoy. No £500 or £600 a month going out to pay a landlord. And I've got something to leave for the family. Buying is a winner, provided it's in a good area and you keep the property well maintained, not a hassle as it's yours so the incentive is there.

qwert_yuiop · 26 February 2017 at 1:14PM

Ticked wrote: »

As I've said before, I'm so glad I bought instead of renting. Now on a pension which, after usual outgoings, is all mine to enjoy. No £500 or £600 a month going out to pay a landlord. And I've got something to leave for the family. Buying is a winner, provided it's in a good area and you keep the property well maintained, not a hassle as it's yours so the incentive is there.

That all makes perfect sense as long as you didn't buy in 2006. All you can say about buying today (or any other time) compared to during the bubble is that it's a better time than then, and much less likely to end in regret. There's certainly no bubble feel (here) now.

Renting vs buying in 2017

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