Halifax house price index shows a 3.1% fall for April

[Emilie69]

I just posted this in Homes and DIY but it is probably better posted here, being a money matter:

I am ready and able to buy a property as a cash buyer, but I am terrified the market is going to suffer more severe falls in the not too distant future, especially since the Halifax house price index just reported a monthly fall of over 3% for April (which is prime property buying season). I have been looking online, but I don't want to get too tempted yet, since I think I may get more for my money later, or alternatively have cash left over to spend on the property.

There are so many siren voices in the media telling everyone there will be no crash, but they usually have a hidden agenda to support the market. Nobody ever seems to 'expect' the market to fall, just like nobody 'expected' the great financial crisis, but it happened all the same.

Does anyone else have a similar dilemma - whether to be patient, or go against your better judgment and risk making a big financial mistake?

[Bolokov]

You will never be 100% sure you are doing the right thing in your situation and can become paralysed by anxiety and indecision. You also have to consider what you might loose by not acting. If you are buying a house to live in or to hold for the long term, I would not hesitate. Yes, there are crashes periodically, but those losses are soon recovered because prices go up again. If you take a long view the general trend is that values go up.You mention the 2008 financial crisis, but the hit I took at the time as an investor in shares was ironed out by gains within 18 months and the investments have continued to grow. The value I lost from property took a bit longer to recover but both were short term losses which are now a distant memory.
Google a house price inflation graph for the last 25 years if you want a confidence boost. The house I live in has increased its value by 1000% since 1945. Good luck and I hope this helps.

[MessySurfaces]

You need somewhere to live- no point wasting rent to avoid losing equity.
Unless you plan to move on quite quickly, or are seeing it as your pension or something, it will be fine.

[PandaPacer]

We bought a house 13 years ago that we still own. For the first 3 years after we purchased, prices dropped. Although it didn't matter to us as we were not selling. 13 years on the house has tripled in value.

[Bamboozled7]

House price fear is a good bargaining tool for buyers. As above, you need to live somewhere and I'd rather be paying a mortgage that might take a dip over 30 years than rent that is never your own. Buy for the longer term, don't get a 1 bed house then have a sprog a few years later.

[SouthLondonDaddy]

Well, no one can forecast the future, but you can try to get a sense for what would happen under different scenarios.

Let’s say you have £500k burning a hole in your pocket, and which you can use to buy a property in cash, no mortgage (this is your situation, right?). Let’s say that renting a comparable property would cost you about £18k a year.

If you rent, after 3 years you’ll have spent £54k, and after 5 years you’ll have spent £90k – in both cases less whatever interest you get from investing the remaining cash.

Will properties be worth 10.8% less than now in 3 years (=54/500) or 18% less than now in 5 years (=90/500)? If yes, you are better off buying in 3/5 years than now. The decision to buy or not depends a lot on how you feel about these possibilities.

Note that I have excluded the cost of stamp duty and legal fees because I’m assuming you’ll buy later, in 3/5 years or whatever. If you buy later at lower prices, you’ll pay less stamp duty, obviously.

If you are a cash buyer with no mortgage, you can withstand temporary downturns in the housing market, because you don’t need to remortgage every x years; if you need a mortgage, you need to consider that, too, and of course the cost of the mortgage.

There are many “ifs” in this reasoning: if the rent stays the same, if the landlord doesn’t kick you out, if household bills are the same, etc. – but at least it’s a starting point to try to quantify things a bit.

There are also non-monetary aspects to consider: it is easier to customise a property you own, eg with bespoke furniture a 2-bed you own can have more storage than a 3-bed you rent. Some restrictions imposed by most landlords, however understandable, can be very annoying. If you own you are sure the landlord won’t kick you out for no reason (eg because they need the property), etc.

[jennyj123]

Month on month prices falling in the spring market is almost unheard of and thats with emergency rates.

If you need to buy soon, you could wait till winter, recent landlord tax bills to hit the mat in January and pre-Brexit could be messy. Haggle hard and keep offering until you find that motivated seller but keep your powder dry in case you see your dream home. Your first offer should be alwasy be slightly insulting.

If you are not really really excited about a house then you are paying too much or it is the wrong house.

[uplink]

I can't see a big move in house prices unless there is a major economic or political "event" , yes the global economy is a debt laden mess but it keeps stumbling along!

If your buying a home provided the purchase price is affordable and you can service any debt in a variety of economic circumstances i see no reason to delay, if its an investment you would have to call the market and waiting might be your business decision!

If you are "terrified" of price falls you are very risk averse and perhaps you need to look at spreading your investment over a greater number of asset classes to reduce the risk (smaller house + other investments etc.).

[Tit4TatandAllThat]

This was me 8 years ago. Terrified of buying (Not cash though!) but dh insisted as I was 8 months pregnant.

Have just sold for 70% more than we paid . It's absolutely crazy. But my NDN told me she bought 20 years ago for just under 1/4 what we originally paid