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Is now really a good time to buy?

(43 Posts)
castlesintheair Wed 01-Jul-09 14:46:16

A house has just come on the market over the road which would be ideal for us. I'm sick of renting/moving (have done so since DS was born 8 years ago) and we have some equity which is earning 0% interest. DH says interests rates are going to go up and current market 'recovery' is temporary.

Apologies if this has been done recently but would really like to hear what your opinion is?

saramoon Wed 01-Jul-09 17:28:58

We are in a similar position - although we have no equity or deposit. Fed up of living in other people's houses. Have always rented and moved about - in the UK and abroad and have been renting back here for about 5 years. We are planning to buy next year but have been looking around this area. Anything that comes onto the market- which isn't much - that is vaguely in our price bracket is getting snapped up straight away by cash buyers.
I guess interest rates will have to go up at some point but it seems to be the view that prices will continue to go down in the autumn/winter.

Fimbo Wed 01-Jul-09 17:32:27

Houses near me are being snapped up right, left and centre. Some are even selling the same day they come on the market. In January they were all stuck - not now.

goldenpeach Wed 01-Jul-09 17:49:02

I have been trying to buy for 10 months now in different places. The problem is the stock of houses up for sale, there are lots of awful houses at exorbitant prices. We are looking for three/four beds and there are few up for sale that meet even the lowest of our standards (we don't mind if they need work). However, there are plenty of smaller properties, so it depends what you are after. There are bargains to be had in certain parts of London and the Midlands, but not where we are looking (Oxford/Cambridge). My DP is on rightmove every day. Fed up of renting, too!

JimmyMcNulty Wed 01-Jul-09 18:12:06

Agree with your dh. One big issue at the moment is that many vendors have been holding off selling 'till things pick up' and so currently some (esp cash) buyers are getting impatient and leaping back in in the belief that things are back to boom time. A suckers' rally happens in every crash (that's why there's a phrase for it!), and then reality hits home again and prices lurch down. Supply won't stay artificially low for much longer - nobody likes hanging around when they really want to move and the belief that the recovery is here will tempt plenty onto the market... at which point momentum begins again. Fundamentals of the economy are not back to normal, or even close to it. Upsurges in confidence do produce rises, but they're temporary when not based on anything.

On a website I recently came across some newspaper headlines from the last crash, when green shoots and recovery were declared years before prices rose steadily again.

On the other hand if this house really is 'ideal' for you, none of this means it's a bad time to buy, as long as you don't stretch yourself. And as long as you keep away from house price indexes over the next few years. Also it depends where you are. In most places, though, if you have rented for 8 years I suspect you will end up feeling hard done by if you blow your wad now.

ABetaDad Wed 01-Jul-09 18:58:55

I agree with JimmyMcNulty.

The economy is in a dire state. Unemploment is rising, people are having wages and pensions slashed. Money market interest rates are rising. Mortgage availability is still collapsing. There are sellers holding off, especilly older sellers who need to retire/downsize. Banks are holding off putting repossessed houses on the market.

This is a suckers rally. When the Tories get in at the next election public spending will have to be slashed and many public sector workers will be made redundant. Public sector pay and pensions will also be cut. The country cnnot afford to have a public sector as big as we have and that cutting back ('fiscal tightening') will drive the economy into a second and deeper recessionary dip - possibly a depression.

See Japan for details of the last 20 years. House prices in the UK could easily halve from the 2007 peak to the trough but it will take many years to play out.

We have hardly started yet.

happywomble Wed 01-Jul-09 19:54:18

What I don't understand is why has there been a rally in the housing market at all if the economy is in such a bad state?

How have the banks managed to start paying bonuses already?

It all seems very odd.

I know of lots of people who have lost their jobs yet some people some where still have money to spend it would appear.

Elibean Wed 01-Jul-09 20:57:48

<waves wildly> hello Castles smile

If a house near us was ideal, and within our budget, I'd go for it and sod the market - personally. Its not just about investments, after all.

That said, I agree with JimmyMcN and ABetaDad, and even our EA (the one we're selling through) agrees: this is almost certainly a temporary rise in prices, with more falls to come - EA explains it as seasonal, with a rush of buyers wanting houses before the holidays/new school year so they can get their kids into local schools. Near us, the pool of cash buyers is drying up (again, according to the EA) except in the really really expensive (2m+) bracket, and she expects business to slow down over the summer, surge a teeny bit in September, then drop.

dh, who is usually quite good at economic predictions, agrees with all the above - but again, if he saw a dream house and it was within budget, he would be prepared to go for it.

Good luck deciding, sounds exciting!

jeanjeannie Thu 02-Jul-09 11:02:31

Agree with the abetadad and jimmyMcNulty although I think if you see a property you like, that you can afford and get a mortgage that's not crippling you then fine.

However I'd be very cautious about leaping in and buying now as it seems a nightmare; sealed bids, coy EA, properties going for more than the asking price (in this climate?!) and lots of games being played by both buyers and sellers. Personally, I wouldn't want to join in unless I HAD to.

castlesintheair Thu 02-Jul-09 13:07:58

Thanks for your responses. Most people say "you are pouring money down the drain by renting" so it is interesting to hear from others who agree with DH (who I know is right wink). He thinks I should invest in term deposits, so I'm off to explore.

noddyholder Thu 02-Jul-09 13:31:04

Your dh is right.there are further falls to come and when rates rise which they have to prices will really fall.A housing crash usually takes 5 yrs minimum to fully complete so no rush.I think if you have to buy this year wait til xmas prime time for a bargain otherwise 2011-12

goldenpeach Thu 02-Jul-09 13:46:55

Happyw, there are quite a few people who are climbing up the ladder, wanting good 3 and 4 bed houses but supply is low so they get crazy and offer lots of money. I am desperate to move but not crazy so I have been gazumped twice already and in one case it was a chained couple that was so desperate they offered 20+K over the asking price.

I don't understand how these people can afford it because if I had to pay those inflated prices on properties that need updating (nearly all properties we saw were not in good conditions) I would be left with no money to do any work to it and would have to live in a dingy house for a long time.

It's a pity I haven't got 1mK to spend because there are plenty of houses for sale in that bracket. That tells me that there are heaps of downsizers who want to cash in before doomsday. They want to retire on plush financial cushion and they won't take less than asking price, plus their properties have old boilers, horrid suites and heaps of wallpaper.

GRRRR. Even in good times you could get a discount for 'wrecks', but not now!

whereeverIlaymyhat Thu 02-Jul-09 13:50:53

Peach we started looking outside the box at 2 beds with room/land to extend, bungalows you could go into the roof with.
People are learning wrecks aren't for the DIY shy too and are money pits, give it 2/3 years and only builders & professions will be buying projects which is how it always was and should be IMO.

happywomble Thu 02-Jul-09 15:04:52

golden peach - we would like to climb the ladder from 3 bed to 4 bed but this will involve taking out an additional mortgage of £200k round here. Even if we could afford the monthly repayments for that we wouldn't risk taking out a mortgage this big given the current jobs situation. We will sit it out for a bit longer and hope prices do go down again.

I wonder if people are rushing to buy because they are in safe sector jobs and want to take advantage of the low interest rates. It would appear some bankers are getting their bonuses too.

Could anyone explain why interest rates will have to rise? What scenarios will cause this?

goldenpeach Thu 02-Jul-09 15:52:08

DP says it would take the slightest glimpse or recovery or problems in selling UK debt, if the latter happens, it would be aroudn autumn

HerHonesty Thu 02-Jul-09 16:32:44

i dont think you can apply a broad brush to the property market. it all depends on location and the type of house i am afraid.

ABetaDad Thu 02-Jul-09 17:24:00

happywomble - interest rates will rise under the following scenarios.

Variable rate mortgages - will go up if building societies/banks suddenly cannot access the London interbank money markets if there is a panic about another bank failure - as happened when Northern Rock, Lehman Brothers, etc went bust.

Fixed rate mortgages - will go up if the international bond markets suddenly refuse to buy UK Govenment or Corporate bonds because they fear a mass corporate or (God forbid) UK Goverment default. If that happens the IMF will be in and we can say goodbye to the UK economy.

<four blokes in cloaks may be arriving shortly on horseback>

happywomble Thu 02-Jul-09 17:45:05

gosh - are either of these scenarios likely?

I thought the government debt was the worst problem this country faced

DaddyJ Thu 02-Jul-09 17:59:27

Good responses here. Well, in the sense that I agree with them!

I don't know whether it's a good time to buy.
Probably not as the market seems utterly buggered.

ABetaDad Thu 02-Jul-09 18:16:19

happywomble - they are fairly low probability at the moment but the risk is rising rapidly of another large bank default in Europe due to problems in Eastern European countries and the global bond markets already are less than happy to own UK bonds. Only the Bank of England is really happy to buy UK Govt debt at the moment.

As I say, low probability of happening, but if either event occured the severity of the outcome if they happen will be catastrophic.

AlderTree Thu 02-Jul-09 18:27:50

Looking at this with interest as we are between a rock and a hard place with extending/moving.

I'm interested in where people are trying to buy and what the prices and availability seems to be. We have an estate agent desperate to put our house on the market but like others on here not really sure whether to do it or not.

Here on the Surrey/Hants border houses are selling that are sensibly priced, lots are dropping prices but were overpriced to start with most of the dealing in the 3/4 bed market from what we can work out. The EA's saying they have buyers queuing up.

AlderTree Fri 03-Jul-09 12:58:13

I know two people trying to move at present, both are having a nightmare with getting the chains moving - problems with first time buyers getting mortgages after renting and everything seems to be so slow. Interesting observation is that those moving want a lot out of their future properties and with lots of conditions attached which is affecting moving dates.

Indith Fri 03-Jul-09 13:10:29

Hello Castles

Well we are buying at the moment (so long as questions about underpinning are resolved soon grumble grumble). It is tricky at the moment, there are some fantastic mortgage deals to be had (Natwest do a very good 5 year fix) if you have a decent deposit but it can be hard ot find somewhere. We have certainly found that a lot of the houses for sale are ones that have been on the market for ages and are still there because they have a few issues or are really over priced and the sellers won't listen to reason. New stuff is coming on but seems to get snapped up right away as others have said.

But, also as others said if you see something that is right for you then go for it, it is a home over and above being an investment. If you get a good mortgage it can work out well, on the one we are buying our repayments will be well below what we pay in rent and it is great ot know for certain that they will remain like that for the next 5 years and that ds won't end up living in yet another rental (when we move it will be house number 5 poor boy)

JimmyMcNulty Sat 04-Jul-09 11:03:58

Re interest rates - article in the FT today notes that 5-year fixed mortgages have just gone up this week to an average of 6%, and 2 year fixes also rose sharply. Seems mortgage lenders' plans are pretty divorced from whatever happens to the BofE rates.

whereeverIlaymyhat Sat 04-Jul-09 12:28:19

Well exactly, all these bank charges claims, mortgage defaults, personal bankruptsy etc etc it all has to be paid for and it won't be coming out of the banks profits thats for sure.
It'll be interesting to see though if the standard variable rates go up to 6/7% there will be thousands of defaults, if the government steps in to stop people loosing their homes.

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