Is this a bad time to buy? (London)

[Orange80]

We're in a good position in that we've just sold our house for a great price and we're renting.

We've now seen somewhere we quite like, but it isn't a "forever" house, so we'd need to move again in three years (but it would be a good stop-gap).

But I'm a bit nervous about buying a stop gap place right now... Brexit - we don't know the implications yet, an election is coming up, lots of financial institutions moving away from london, etc etc.

I keep thinking prices are going to drop. Meaning maybe we'd be better to wait and buy later.

Obviously I have no crystal ball so no idea.

Would you buy a stop-gap place now? Or wait?

[TinyTear]

i wouldn't get a stop gap place now, no... we actually had a forever place accepted yesterday so fingers crossed we get to sell our flat quickly...

[Orange80]

tiny - that's my concern! A forever house wouldn't matter so much as prices fall and rise and if you're not planning to move and can afford the repayments, it doesn't matter so much. But a stop-gap place just scares me a little!

[TinyTear]

we had our flat valued last year and yesterday and the valuation went down quite a bit in a year... fortunately what we want to buy is similar, so we are going for it... but it's tough out there

[GreyCloudsToday]

It would seem risky to buy a stop-gap house at the top of the market. However 3 years rent could be quite a lot, and worth the risk. Tough choice, depends on whether the area you're buying in is likely to gentrify / keep gentrifying. I'd check the sales record for the stop gap neighbourhood. What has the price rise increase been in the last few years? Here, prices have almost doubled and I feel current asking prices are not competitive in some areas. Do you get the same sense with the stop-gap place you're looking at?

[cazzyc]

Absolutely buy! London will always be in demand.

[TurquoiseDress]

Hi OP

We're in a similar position to you- any property purchase we make right now will be as you describe a "stop-gap" for the next few years.

Yes a "forever home" would be amazing but we are a long, long way off from that!

There is lots of going on in terms of the economy, general election, Brexit etc

On balance, we are going to buy when we find the right place we can afford property.

We would rather buy now and get out of this god forsaken rental trap- get a mortgage and start saving a good few hundred or more pounds each month compared to what we shell out for rent right now.

It is a scary prospect, but you need to weigh things up carefully.

The key factor is our LO starting school next year- we would like to get our own place, rather than be at the mercy of a landlord giving us 2 months notice and having to find somewhere else to live, that's still in close proximity to the school etc.

[DecisionsDecisions33]

I would def buy now
We've been in this situ before recently with london housing market e.g. 2009-2011 when everyone was scared to buy but prices stealthily rose ..

[Orange80]

decision - I bought my first place in 2006, right before the crash. It did rise in value by the time I sold it, I bought it at the peak, but that peak picked up again four years later and I made a (smal) profit. (London.)

I think I'm trying to predict something impossible! Scary to think I'll be buying a temp place when the market is peaking when - in theory - I can wait for it to drop...

Wish I could afford to buy the "forever house" now!

Does anyone think london is going to have a drop?...

[Orange80]

turquoise - yes I totally know what you mean about the rental trap!
Not surprised that you're keen to buy soon with school stuff going on. Good luck!!

[Blankscreen]

Does it have to be such a stark choice between the two. Whilst it might not ne your forever house could you buy somewhere with extension potential that meant you can feasibly stay put if you need or want to.

Also your circumstances might not.change as much as you hope in a couple of years which might mean you are stuck anyway. Would you rather be renting if that happens?

[Orange80]

Blank - the place we've and like isn't extendable but perfectly nice. All we can afford is somewhere a little temporary (in our neighbourhood), but it's a good idea to find somewhere we can add value to!

[chickpeaburger]

I think it would be foolish to buy for such a short time. Have you worked out how much it costs to buy and sell etc. Renting can be a great freedom.

[EssentialHummus]

Don't forget the "hidden" cost of SDLT etc. In your shoes, I'd only buy now if I could feasibly stay there longer/add value/extend/bank on Crossrail 2 arriving or similar.

I'm on rightmove daily for my area (SE) - realistically priced things are selling, but overpriced (imo) stock which would have gone over asking in one weekend pre-Brexit isn't shifting.

[Bovneydazzlers]

I guess if you brought and if there was a price crash, if you were planning on upsizing in 3 years and you stayed in the same area, then theoretically you wouldn't lose out. Only if you were planning on downsizing or crazy amount of negative equity would it be a problem.

[SoulAccount]

Rents in London are sky high. How much will you pay over 3 years?

A house you could expand or add value to? If you do a lovely loft conversion and kitchen extension your council tax band stays the same, for any works done by you. If you move somewhere already extended you pay the higher tax Band.

Areas of London that have recently had big rises are staying Level, areas that have been less popular and have lower prices are now experiencing rises.

Yes, I would buy now, if I could add value in due course, or if it was in the next up and coming area.

[BabyNeedsHelp]

We are renting for a year to see what happens. We want to buy in a prime area and have seen quite a few reductions. We hope the picture will be clearer next year. We can't afford to move twice with stamp duty so high. Only time will tell. Meanwhile, the house we are renting is dingy & depressing so it's taking its toll but it's not as if we are letting dream houses slip through our fingers. Current housing stock is awful. Anything half decent has a ridiculous asking price & is taken off the market again.

[Trills]

Three years is a lot of rent to be paying.

Do the maths on your rent and say "is it likely that the house will lose enough value to make renting a better deal?"

It's also nicer to not be renting and to have more control over your house and your life.

[TurquoiseDress]

While it is true that "renting can be a great freedom", if you are paying a London rent (as we are) it is eye-wateringly expensive, plus landlords are looking to up the price all the time.

Are options are to continue renting as we are or just take the chance to buy soon- whichever one we pick, we need to get into the catchment of a decent school. We don't necessarily have the flexibility to pick an up and coming area; it depends on where the schools are located.

In any case, once decent schools have been established, you tend to find that property in the surrounding area is sky high in price.

If we could afford it, we would be buying a house, but realistically we can only afford a flat...the choices are pretty stark- either continue as we are renting or get on the ladder (so to speak) and buy a 2 bed flat.

Obviously won't be able to extend, only improve internally etc- it's a scary thought that in a few years time we might be "stuck" in a flat that no longer meets our needs, possibly with a 2nd child.

The flip side of that is continuing to rent for another year or so. What is going to change so considerably that we will then be able to afford what we cannot now?

My worry is that prices will continue to go up, albeit at a slower pace, but I would hate to be 18 months down the line and finding out that we cannot afford something that we could reasonably afford right now.

We've had the whole discussion about moving out of London, but we want to stay put as our jobs, families & lives are all here.

It's really hard to know what to do for the best!

[Kittykat1969]

I think you should buy as soon as you are financially able. Nothing happens in isolation, when house prices fall you tend to find that mortgage lenders are no longer as generous, therefore your purchasing power drops too. It's a very fine balancing act.

[HomityBabbityPie]

it's a scary thought that in a few years time we might be "stuck" in a flat that no longer meets our needs, possibly with a 2nd child

We bought exactly such a flat a year ago, we were planning on selling in 2019 but I've no idea how realistic that is now.

[Dishwashersaurous]

It's unlikely that prices in London in the next three years will drop significantly but shouldn't plan on them rising at past rates either.

So do the calculations.

Three years rent

Or

Stamp duty, legal fees buying and selling, estate agents fees. Factor in home ownership maintenance costs of a couple of thousand a year at least, boiler service, gutter cleaning etc

Then work out which makes more sense.
You also need to factor that it might take you a long time to sell, and you won't be in as good as a position to buy as someone in rented.

Also in the current market buyers are likely to be suspicious of someone selling within a three year window and worry that there's something wrong with the property.

I would say for buying should plan, subject to external events, five years minimum

[ocelot41]

I would deffo buy - prices are a bit lower than 'normal' because chains keep collapsing. That's stressful but if you can keep your head, you will get a bargain (in so far as London ever is a bargain). We had 3 chains collapse and have taken a much lower offer for the sake of a sane buyer and a reliable chain. Just don't try to gazunder someone - its a shitty thing to do and most people will tell you to go jump.

[sysysysref]

I'd buy now, I don't see a housing crash in london at all. Prices might stablise but I doubt they will drop. We thought our house was a stopgap but 10 years later there's no chance we could afford anything better, we couldn't afford this again, so we're extending to make it exactly what we want as we won't be able to afford to move