House Prices - When to buy???
Discussion
popov123 said:
Are we sitting on the brink of a housing market crash?
My guess - and it is only a guess - is that we are sitting on the brink of a fairly long period in the doldrums.
Prices may slide a bit in the Sarf. They may go up a bit Up North. But for the next few years I suspect that they will remain fairly static.
If interest rates went up much (which ought not to happen) or if unemployment rose significantly (which may well happen) then prices could take a bit of a hit.
Property has historically been an excellent long term investment, but you aren't likely to double your money in four years like some lucky ones have.
Whether you buy might be determined by why you are thinking of buying.
If it is for you to live in, then get on with it, cos it beats renting.
If it is as an investment vehicle then it will probably be safe if you are looking at ten years plus. If you want a greater return in the shorter term, then my guess is that you will do rather better elsewhere.
And if anyone out there has any sparkling ideas about where to invest a lump of cash for the next three years, then let me know.
I suppose I ought to say that if you are looking for financial advice, rather than the opinions of some pissed amateurs in an internet pub, then go and see a financial advisor...
Cheers
Pat
PatHeald said:
Property has historically been an excellent long term investment, but you aren't likely to double your money in four years like some lucky ones have.
That's me then.
It doesn't do you any good though, unless you sell and live in a caravan. >> Edited by groucho on Sunday 13th November 09:15
popov123 said:
Everyone has their opinion on this with the market as it is at the moment, so whats your view?
1) Will the market remain stable?
2) Is the price of a house likely to continue rising?
3) Are we sitting on the brink of a housing market crash?
Dom
The government will never allow mortgage rates to spiral upwards or house prices to catastrophically fall as they remember how this mortally wounded the Tories. The effect of this is to have low interest rates but high house prices.
My first house was for sale a few months ago. In 14 years it's tripled in value. However mortgage rates have halved and average pay has gone up by half so the end result is the same monthly hit in your wallet. As long as a lender will give you a bigger multiple than 3x no FTB should find a house any less affordable than I did 14 years ago. So why are they moaning? Perhaps they are less prone to regard houses as an investment and ownership thereof as being a big goal in life.
Houses will rise for as long as demand keeps up. Just inflation on its own will give 2 or 3% per year. So remember that when the headlines say house prices are still rising by figures like this what is really happening is that the rise has stopped with regards to the economy as a whole.
The two big drivers for house prices are-
The disire to live there
The ability to pay for it
Hence we get-
high house prices in London, high desire (though I wouldn't want to!) to live there and higher salaries so more ability to pay.
Low house rices in sink estates in the North East. No desire to live there and no ability to pay locally results in streets of abandoned houses and estate agents reduced to selling 3 for a grand job lots over a pint in a pub.
The answer to your questions are-
1) Fairly stable +-10% but not +-50% over the short term.
2) Yes if the ability to pay and the desire to live there keep up. No otherwise. Do a reality check on the area. Is it going up or down?
3) See 1 and 2 which will vary a lot over the country as a whole as pointed out above
popov123 said:I would say this will happen but don’t expect house prices to drop through the floor, more likely to show very low or no growth.
3) Are we sitting on the brink of a housing market crash?
In truth the UK till has an expanding population, this rate of expansion coupled with insufficient supply will keep house prices rising in the long term. In the case that house prices do start to fall hold off on buying until it starts to rise again IMO, I know it’s a conservative approach but it’s better to buy a little to late (i.e. after house prices start to rise again) than to early and see money trick through your fingers as it continues to fall. Most people prefer to deal with a known quantity.
Remember that the type of house is important as well, I’m guessing here but I don’t suppose houses with a lower value will take nearly as much of a plunge as those with a larger value due to those selling larger houses having to downscale.
I can never understand people looking to buy a 'normal' value house waiting for a drop. Its never going to crash like the last time and unless you're looking to buy something over £1M then any drop will be small potatoes.
Around our way houses around the 250k point seem to be selling well.
So let say you wait 6 months to 1 year to buy. Meanwhile, unless you're living at home you'll be paying rent at say £1000 a month for a reasonable 3 bed semi worth around 250k. This means you're spending 6-12k on rent - of course after waiting 9 months you then decide to find/buy a place which takes 4-6 months (because you think you're being careful, finding the right place because you're a no-chain buyer etc.). = more like 15-16k on rent. Doesn't add up IMO.
If we're talking a 500k house - say a nice 4 bed detached. Would be around £2k a month to rent. = 12-24k a year in rent.
I believe if you want to buy, that once you've found your ideal new home for sale you should just get in there.
(BTW, during the last big crash I know people who were making twice todays rent on their properties so again, you might not have been paying a 10% mortgage but you'd have been paying rent through the nose too).
Around our way houses around the 250k point seem to be selling well.
So let say you wait 6 months to 1 year to buy. Meanwhile, unless you're living at home you'll be paying rent at say £1000 a month for a reasonable 3 bed semi worth around 250k. This means you're spending 6-12k on rent - of course after waiting 9 months you then decide to find/buy a place which takes 4-6 months (because you think you're being careful, finding the right place because you're a no-chain buyer etc.). = more like 15-16k on rent. Doesn't add up IMO.
If we're talking a 500k house - say a nice 4 bed detached. Would be around £2k a month to rent. = 12-24k a year in rent.
I believe if you want to buy, that once you've found your ideal new home for sale you should just get in there.
(BTW, during the last big crash I know people who were making twice todays rent on their properties so again, you might not have been paying a 10% mortgage but you'd have been paying rent through the nose too).
My view is that house prices are directly proportional to interest rates, for that controls how much money people can borrow to pay the mortgage.
If, for example, you could borrow £1M for just £100pcm, prices would soar tenfold and more because the determining factor is not really the 'ticket price' but the repayments.
So, perhaps the question is: are interest rates likely to change much? I don't think so. As the UK econmomy has slowed, interest rates have been cut to try to keep things going. Raising them by any extent will screw the economy for sure. Hence I think 'static/doldrums' is probably the way for the forseeable future, excluding local variations such as the Olympic site.
If, for example, you could borrow £1M for just £100pcm, prices would soar tenfold and more because the determining factor is not really the 'ticket price' but the repayments.
So, perhaps the question is: are interest rates likely to change much? I don't think so. As the UK econmomy has slowed, interest rates have been cut to try to keep things going. Raising them by any extent will screw the economy for sure. Hence I think 'static/doldrums' is probably the way for the forseeable future, excluding local variations such as the Olympic site.
PatHeald said:
if you are looking for financial advice, rather than the opinions of some pissed amateurs in an internet pub, then go and see a financial advisor...
On paper yes, but if I'd backed my hunches over the last 5 years I'd be a lot better off than if I'd listened to the financial muppet whose advice I foolishly valued too highly.
Just spent £125K on one today - well handed a cheque for the deposit over anyway.
Purchased purely on the basis that its cheaper than renting and has a garage. Would I buy property as a short term sub 5 year investment at the moment, no. I would however buy if it left me another £100 for beer each month
Matt
>> Edited by matt_fp on Sunday 13th November 12:21
Purchased purely on the basis that its cheaper than renting and has a garage. Would I buy property as a short term sub 5 year investment at the moment, no. I would however buy if it left me another £100 for beer each month
Matt
>> Edited by matt_fp on Sunday 13th November 12:21
how can you lose? even if the market goes belly up you still have use of the house. the way i look at it inmy simplistic way is that the property market is like any other..supply and demand.any property will sell,just a quetion of how much. as long as the mortgage is affordable and you have factored in a bit of room for safety in case of higher intest rates,go for it.
popov123 said:That depends.
Am I setting myself up to lose lots of money?
You are only in the shit if your property falls in value and you are forced to sell.
So make sure that your job is secure and that you could still afford the mortgage even if the interest rate moves upwards a few points.
In the longer term, your property will probably appreciate and earn you some free equity. And if it doesn't then don't worry, cos everyone else's property will be following the same broad cycle.
You will always need somewhere to live, so the value of your house is pretty academic unless you jump completely out of the market, which is only really likely to happen when your grandchildren wheel you into the nursing home.
If you are young free and single, then bear in mind that you might meet the perfect partner who also owns property and one of you might want to sell.
Or maybe you decide to leave these shores for a better life abroad?
But these eventualities aside, if you intend to remain a homeowner then I would just get on with it.
You might want to get a fixed mortgage to add a safety net, unless you expect to come into a lot of money that might allow you to redeem early, in which case keep an eye on the redemption penalties.
Cheers
Pat
PatHeald said:
So make sure that your job is secure and that you could still afford the mortgage even if the interest rate moves upwards a few points.
Pat
Well......heres another twist to my ever increasing plot.
I could very well get redundancy very shortly - Im not worried especially as I have a few years service under my belt and a potential payout £30k+ which should tide me over. Im also running my own small business which should (with any luck) provide enough to pay for normal living expenses when in a house.
Read an article the other day (scaremongering about Bird Flu). The Government is estimating 50-750K people *under 65* will die in the next flu pandemic. One of the side effects of number towards the larger end of the scale is that it's reckoned it will have a significat impact on house prices as all the extra property gets released on to the market.
Not being an expert, but my impression is that one and two bed flats will stay high in value or continue to rise. One beds because they are always in demand from people not wanting to share or rent and two beds because that's what a lot of couples like to have for the extra space, and single people so they can rent the spare room out. Larger family houses seem to have dropped slightly or stagnated because the prices are higher and people are less able to make the jump from a flat to a house. Just my thoughts. 
silversun said:
Not being an expert, but my impression is that one and two bed flats will stay high in value or continue to rise. One beds because they are always in demand from people not wanting to share or rent and two beds because that's what a lot of couples like to have for the extra space, and single people so they can rent the spare room out. Larger family houses seem to have dropped slightly or stagnated because the prices are higher and people are less able to make the jump from a flat to a house. Just my thoughts.
HMM stop a moment and think about what you are saying...
There is a limit on prices of one and 2 bed flats in any area. The estate agents on here will tell you that. Particular property type prices will fluctuate within their local limits and small overlaps will remain, but prices dont tend to rise in isolation.
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