FTB, Good time to buy?

[Muncher]

williamp said:

Not sure, but the fact is that there is still far too few houses to satisfy demand. So as soon as lots of people can access a mortgage, they will push house prices up.

I don't think that's correct at all.

[maser_spyder]

williamp said:

Not sure, but the fact is that there is still far too few houses to satisfy demand. So as soon as lots of people can access a mortgage, they will push house prices up.

Agreed. There will be less property per capita in the next couple of years as there are no new large developments happening at the moment.

Rising population and stagnant volume of property means we'll never see the crash that could happen in the US.

[loafer123]

williamp said:

Not sure, but the fact is that there is still far too few houses to satisfy demand. So as soon as lots of people can access a mortgage, they will push house prices up.

Rubbish.

[ianash]

Somewhatfoolish said:

There is, of course, a huge difference between a fall in house prices in nominal terms and a fall in house prices in real terms. Houses could arguably be a great (but not as good as commodities) hedge against the 25% inflation we'll be having in a couple of years time...

Edited by Somewhatfoolish on Tuesday 24th March 13:35

A point well made. There is little doubt that this deflation will be short lived. An awful lot of our spending is non-discretionary, council tax, train fares and the like. These prices are not going down. I understand old Bob Crowe of the Tube workers is planning a strike for higher pay and no redundancies. The next ones in the queue will be public sector followed by power workers. You will then have claims for maintaining differentials -oh what fun we're all going to have. There must come a time when the actual cost of building a new house + land value is going to put a floor on house price falls. The problem with continually putting off buying, is that it can put your life on hold and if you can get 4% odd fixed for 5 years and that means payments considerably below rent for an equivalent property, it starts to make buying quite compelling. If you are smart enough to call the bottom of the market, you should be making spread bets to back your opinion. If not don’t expect a man with a bell to come, when we hit the bottom.

[NoelWatson]

ianash said:

Somewhatfoolish said:

There is, of course, a huge difference between a fall in house prices in nominal terms and a fall in house prices in real terms. Houses could arguably be a great (but not as good as commodities) hedge against the 25% inflation we'll be having in a couple of years time...

Edited by Somewhatfoolish on Tuesday 24th March 13:35

A point well made. There is little doubt that this deflation will be short lived. An awful lot of our spending is non-discretionary, council tax, train fares and the like. These prices are not going down. I understand old Bob Crowe of the Tube workers is planning a strike for higher pay and no redundancies. The next ones in the queue will be public sector followed by power workers. You will then have claims for maintaining differentials -oh what fun we're all going to have. There must come a time when the actual cost of building a new house + land value is going to put a floor on house price falls. The problem with continually putting off buying, is that it can put your life on hold and if you can get 4% odd fixed for 5 years and that means payments considerably below rent for an equivalent property, it starts to make buying quite compelling. If you are smart enough to call the bottom of the market, you should be making spread bets to back your opinion. If not don’t expect a man with a bell to come, when we hit the bottom.

ianash said:

There must come a time when the actual cost of building a new house + land value is going to put a floor on house price falls.

What is the floor on land prices? Is there reason why they can't fall 90% from present levels?

ianash said:

If you are smart enough to call the bottom of the market, you should be making spread bets to back your opinion.

Market is already pricing in a further 25-30%, so you would have to be more bearish than that to make money

[loafer123]

ianash said:

Somewhatfoolish said:

There is, of course, a huge difference between a fall in house prices in nominal terms and a fall in house prices in real terms. Houses could arguably be a great (but not as good as commodities) hedge against the 25% inflation we'll be having in a couple of years time...

Edited by Somewhatfoolish on Tuesday 24th March 13:35

A point well made. There is little doubt that this deflation will be short lived. An awful lot of our spending is non-discretionary, council tax, train fares and the like. These prices are not going down. I understand old Bob Crowe of the Tube workers is planning a strike for higher pay and no redundancies. The next ones in the queue will be public sector followed by power workers. You will then have claims for maintaining differentials -oh what fun we're all going to have. There must come a time when the actual cost of building a new house + land value is going to put a floor on house price falls. The problem with continually putting off buying, is that it can put your life on hold and if you can get 4% odd fixed for 5 years and that means payments considerably below rent for an equivalent property, it starts to make buying quite compelling. If you are smart enough to call the bottom of the market, you should be making spread bets to back your opinion. If not don’t expect a man with a bell to come, when we hit the bottom.

We can't afford the public sector as it stands now, let alone with higher wages.

[ianash]

ianash said:

There must come a time when the actual cost of building a new house + land value is going to put a floor on house price falls.

What is the floor on land prices? Is there reason why they can't fall 90% from present levels?

ianash said:

If you are smart enough to call the bottom of the market, you should be making spread bets to back your opinion.

Market is already pricing in a further 25-30%, so you would have to be more bearish than that to make money

We have a growing population and so far no predictions that there will be a mass exodus from these shores, despite the economic outlook. In places people want to live there is strict planning controls (it is of course possible this will change). Most people will still be employed, I hope, so the coming inflation will be reflected in their pay, albeit in devalued pounds. Investing in the stock market for most lay people is a bit of a gamble and you can't live in your share portfolio. I can't argue with you re: the spread bets which predict a still massive fall, but for most people when inflation hits and with the current quantative easing, we could well see hyper-inflation, a house represents a sound place for your money over a 5-10 year + horizon. I don't pretend to know when the right time is to buy, but with interest rates on their arse and residential rents not yet reflecting this, renting isn't a one way bet.

Edited by ianash on Tuesday 24th March 15:08

[ewenm]

Only you can really decide if now is a good time to buy or not. Anecdotally, my girlfriend's flat went onto the market last week. It's a classic FTB property (modern 2 bed with off-street parking, in Bath) and she's getting a lot of viewings from proceedable people (so FTB or investors I guess). Whether any of those become a sale we'll have to wait and see, but there are definitely people out there looking to buy at the moment.

[ianash]

[/quote]

We can't afford the public sector as it stands now, let alone with higher wages.


[/quote]

When did that ever stop public sector workers demanding extra pay? Fish rot from the head, look at the example of our MP's whose gravy train doesn't appear to have been derailed by the economic mess we're in. They make the rest of the public sector seem like angels.

[NoelWatson]

ianash said:

We have a growing population and so far no predictions that there will be a mass exodus from these shores, despite the economic outlook. In places people want to live there is strict planning controls (it is of course possible this will change). Most people will still be employed, I hope, so the coming inflation will be reflected in their pay, albeit in devalued pounds. Investing in the stock market for most lay people is a bit of a gamble and you can't live in your share portfolio. I can't argue with you re: the spread bets which predict a still massive fall, but for most people when inflation hits and with the current quantative easing, we could well see hyper-inflation, a house represents a sound place for your money over a 5-10 year + horizon. I don't pretend to know when the right time is to buy, but with interest rates on their arse and residential rents not yet reflecting this, renting isn't a one way bet.

ianash said:

We have a growing population

By less than 10% since 1970 as far as I can make out (55.9 mill in 1971)

ianash said:

Most people will still be employed, I hope, so the coming inflation will be reflected in their pay, albeit in devalued pounds.

I'm not convinced that wage growth is going to be that great. Last weeks 1.8% was the lowest since 1967.

ianash said:

Investing in the stock market for most lay people is a bit of a gamble

A failing of the Government (one of many)

ianash said:

we could well see hyper-inflation, a house represents a sound place for your money over a 5-10 year + horizon

If we get big inflation matched by big wage increases then I agree, in ten years house prices will most likely be higher than they are currently. But you will need to keep interest rates low to service the unprecented debt levels.

ianash said:

and residential rents not yet reflecting this

Rents are, on average, falling at a fair rate.

[bracken78]

I'm in the process of buying a house. I'm buying something I didn't think I could afford until recently as prices have dropped and also around where I'm looking there are not many house on the market and one houses that are for sale sell very fast (gone within a couple of weeks).

I you can afford a house and are happy with what your paying then why not buy. I've been renting for a while now (3 years) and have been in the position to buy for a while. It's got to a point where I want to just get on with my life and not rent. It's all very well people saying rent don't buy but I want my own place which I can work on and know that it's mine.

Basically, if you like the house and you can afford (quite comfortable) it then go for it.

[selmahoos]

If anyone with a serious property investment believed prices were going to drop substantially they would sell up before they do drop. Of course there are 100 reasons why they don't and won't.

In reality there will be really serious drops in a few areas, some drop in many, and no drop at all in a few. Certain individual properties will actually gain, not least those that have already been sold too far below market value which their buyers are now selling back at MV, and, as usual, those that have been improved as well.

On one of the threads there is a fun graph analysing the stage characteristics of a bubble. Where do you think it goes next?

Oh and....YES! Brilliant time to buy, particularly if you can catch a pessimist in a panic......

Edited by selmahoos on Tuesday 24th March 15:55

[M3333]

If it feels right and you can afford it then go for it.

As long as the bank are giving you a mortgage in principal and you can move quickly then now is a good time to take full advantage of a struggling market.

I have sat on the fence for years really wanting my own home, but I could never justify the silly silly prices that property was demanding.

Have you looked at buying repossession or visiting an auction house?

Last month I finally got onto the property ladder and bought repossession. Its a 2 bed semi detached, built in the 1930's, has lovely double fronted bay windows and sits on a large piece of land. I have a driveway and a garage. The house I based in Darlington, County Durham so does not reflect prices in the south. The area is good for access, town, schools etc and the rear over looks the local park.

At the peak it was sold for £140k. Current prices for similar houses within 1/2 mile are £100k-£139k.

My house had already been purchased when I enquired about it, but the guy who bought it was struggling to get finance.

I stepped in and offered £7k less than him but guaranteed I could complete in 14-28 days.

I did and got it for £73k and placed a £20k deposit on it. The only regret I have so far is fixing my mortgage for 2 years rather than 5. Its currently at 3.5%, im hoping inflation doesn’t get too high before 2010!

It just needs decor and some time and love. The previous occupants have installed a brand new GSH system and double glazed it right through. It took a lot of searching and one hell of an emotional roller coaster before I finally found this one - the competition at this end of the market is HUGE.

Good luck.

[Muncher]

selmahoos said:

If anyone with a serious property investment believed prices were going to drop substantially they would sell up before they do drop. Of course there are 100 reasons why they don't and won't.

I'm not sure what point you are trying to make there?

[Jasandjules]

Do you aim to live there for years or just use it as an investment?

Remember that if property prices do drop by 25% in 10 years then you have paid off nearly half of your mortage AND the more expensive properties that you would consider trading up into have also dropped by 25%...

[Buzz word]

Jasandjules said:

Do you aim to live there for years or just use it as an investment?

Live there for years I think. I just want to get the most for my money. I guess its always the way but looking a few K outside your budget there is always something nicer and your left thinking, what if that came down just a bit more?

[sone]

As was said if you can afford it go for it. Nobody knows what's going to happen with the economy so their all guessing it's only a gut feeling that can move you forward.
We are by nature a pessimistic nation.

[Jasandjules]

Buzz word said:

Jasandjules said:

Do you aim to live there for years or just use it as an investment?

Live there for years I think. I just want to get the most for my money. I guess its always the way but looking a few K outside your budget there is always something nicer and your left thinking, what if that came down just a bit more?

Well, in a falling market offering 10% or so below the asking price is not unknown......... So then if you get a place you love and will stay in for years, and you already get the price reduction you expect it to fall in 5 years, then what have you got to lose? (as a FTB you could also ask for more money off because you will complete etc..)

[spikeyhead]

M3333 said:

If it feels right and you can afford it then go for it.

As long as the bank are giving you a mortgage in principal and you can move quickly then now is a good time to take full advantage of a struggling market.

I have sat on the fence for years really wanting my own home, but I could never justify the silly silly prices that property was demanding.

Have you looked at buying repossession or visiting an auction house?

Last month I finally got onto the property ladder and bought repossession. Its a 2 bed semi detached, built in the 1930's, has lovely double fronted bay windows and sits on a large piece of land. I have a driveway and a garage. The house I based in Darlington, County Durham so does not reflect prices in the south. The area is good for access, town, schools etc and the rear over looks the local park.

At the peak it was sold for £140k. Current prices for similar houses within 1/2 mile are £100k-£139k.

My house had already been purchased when I enquired about it, but the guy who bought it was struggling to get finance.

I stepped in and offered £7k less than him but guaranteed I could complete in 14-28 days.

I did and got it for £73k and placed a £20k deposit on it. The only regret I have so far is fixing my mortgage for 2 years rather than 5. Its currently at 3.5%, im hoping inflation doesn’t get too high before 2010!

It just needs decor and some time and love. The previous occupants have installed a brand new GSH system and double glazed it right through. It took a lot of searching and one hell of an emotional roller coaster before I finally found this one - the competition at this end of the market is HUGE.

Good luck.

Sounds like you've got a great deal there. I'd advise the OP to take a similar line.

[selmahoos]

spikeyhead said:

M3333 said:

If it feels right and you can afford it then go for it.

As long as the bank are giving you a mortgage in principal and you can move quickly then now is a good time to take full advantage of a struggling market.

I have sat on the fence for years really wanting my own home, but I could never justify the silly silly prices that property was demanding.

Have you looked at buying repossession or visiting an auction house?

Last month I finally got onto the property ladder and bought repossession. Its a 2 bed semi detached, built in the 1930's, has lovely double fronted bay windows and sits on a large piece of land. I have a driveway and a garage. The house I based in Darlington, County Durham so does not reflect prices in the south. The area is good for access, town, schools etc and the rear over looks the local park.

At the peak it was sold for £140k. Current prices for similar houses within 1/2 mile are £100k-£139k.

My house had already been purchased when I enquired about it, but the guy who bought it was struggling to get finance.

I stepped in and offered £7k less than him but guaranteed I could complete in 14-28 days.

I did and got it for £73k and placed a £20k deposit on it. The only regret I have so far is fixing my mortgage for 2 years rather than 5. Its currently at 3.5%, im hoping inflation doesn’t get too high before 2010!

It just needs decor and some time and love. The previous occupants have installed a brand new GSH system and double glazed it right through. It took a lot of searching and one hell of an emotional roller coaster before I finally found this one - the competition at this end of the market is HUGE.

Good luck.

Sounds like you've got a great deal there. I'd advise the OP to take a similar line.

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