To give up on buying a house?

[babybat]

We're FTB in London, and I'm seriously considering throwing in the towel. OH thinks I'm being too pessimistic, but I'm just not sure it's worth it anymore.

For the last 10 years we've been renting a lovely 2 bed flat in Elephant & Castle, and because we were planning to TTC next year had started to look for a place with a garden, probably around Lewisham/Catford. 2 bed terraces that were around 250-270k last year are now going for upwards of 300k, which is out of our reach. We're widening our search area further and further out, which is going to increase our travelling times and costs. I currently cycle to work, but I'm not sure I could keep doing that if we're out in zone 3/4, and suburban roads seem way too hostile for me to want to cycle with a baby seat. I'd be stuck in suburbia while on mat leave so location matters to me.

The other thing that's bothering me is most of the places we can afford are smaller and frankly less well suited to a new family than where we're currently living. OH is frustrated because he's recently switched jobs with a view to buying a house, and thinks we should be getting on the property ladder because it's 'what everyone does'. I'm thinking our rental place is secure, and buying now could mean we're more likely to lose our house if rates rise. But I know he's given up a job he enjoyed so we could do this, and now I'm changing my mind.

AIBU? Is this just commitment phobia because it's a big change?

Lovely 2 bed flat in Inchmerry Road for £253 on Rightmove. Second bedrooms not huge (10by 6) but big enough for one child. Reception and master bedroom nice and big.

Lovely looking road. Best in the conservation area according to the blurb

Laurie - we actually went to see that one last weekend! It was really nice, but OH is ruling out anything with communal gardens, because he wouldn't feel like he could relax there. Before we moved here we lived in a place with communal gardens, and one of the flats used to hold noisy bbqs all summer. I think that's another part of the problem - we've got different dealbreakers and we're not quite seeing eye to eye on it.

Brownhill road - £270, private garden?

I'm not answering your question though. I'm a fan of buying if possible and I can't see London market getting worse.

Why do you think your rental is 'secure'? How long is your tenancy? I know a couple who were given just 2 months' notice to quit because the landlord invoked the 'family reasons' clause in their contract.

This becomes even more important when you have dc's and moving involves changing nursery, schools.

I'm with your OH. You may well have to think in terms of a flat not a house and compromise about outdoor space, but the way prices are rising in London, you could well find yourself priced out of even the closer suburbs.

Thymeout - it's a housing association, we've been here 10 years so as long as we pay the rent, we're unlikely to be given notice. I'm just struggling a bit because I'd really wanted to buy, but the more things it looks like we'll have to compromise on, the less I see the point in doing it. Moving to somewhere smaller, in a less convenient location, that costs more, that doesn't have the outside space we want, looks like the only way we'll actually make it work, and I'm no longer sure that's what I want :-(

At least in the meantime while we're hunting we're able to keep building up our deposit!

See, if you are likely to not go back to work, or go back part time, then it makes sense to get a mortgage now based on both incomes, than find in 2 years time, even if you can afford exactly the same monthly repayments, you might not be able to borrow that much.

However, otherwise, stay put.

Another thought, if you are going to move right out of zone 1 to have a long commute across London in an area where you'll be starting again anyway, would you be better moving right out and being on a fast train line into the nearest overgrown station for your/Dh's work? I realised a lot of friends really have a very compromised standard of living to keep being able to say they live in London, whereas their commutes to work are about the same as ours out in Kent. (one is in zone 3 and being there only saves them 5 minutes commuting time each day compared to where we are outside M25).

If you are moving away from your friends and network, why not go whole hog?

for example - 3 beds, under budget, close to very good state school.

Tonbridge, further out but very nice.

over budget but might be able to knock a bit off

I think you should stay put.

Why borrow more than you can afford (certainly more than you could afford if you were on maternity leave/at home with the baby), in what is widely acknowledged as a property bubble, when the only direction for interest rates is upwards, to get a worse standard of living??

Ask your OH to hang on until prices reach a more affordable level. Which they will.

As for the advice about buying now in order to be able to borrow on the basis of two salaries, in the confident expectation that soon you will only have one...words fail me. How would you afford the mortgage when rates go up?

I think you should buy, OP. I have lived in Central London for many years now, weathered many bubbles (that never happened) and have never heard a single soul say "I'm so glad I didn't buy in London after all". All I ever hear are laments about missing the boat. Even when there are corrections, they are never for very long and given the stricter lending criteria today I think negative equity is much less likely. Seven years ago I bought a property near the top of the market. I was really quite concerned during the 2008/9 that we had made a mistake - but no, proves kept rising by 5% a quarter in that two year period alone. I wouldn't hang about - maybe compromise on flat instead of house but if you see yourselves staying in London for the next 5-10 years I'd do it now. You may not be able to afford to in six months' time, which sounds crazy, I know, but that is where London is headed.

I agree with LadyRabbit. If you are looking to stay somewhere for a number of years, you'll just be riding any housing market corrections-if house prices come down it doesn't matter to you if you aren't looking to move. Long term London has to be secure.

There's a 3 bed ex-LA with a garden on Wood Vale, Forest Hill/ East Dulwich borders for £250k or 2 bed on Cheltenham rd SE15 at £275k 2 mins from a beautiful park. Both cycling distance. I would go for it if I were you - you mightn't like E&C so much with a kid - the roads are too busy.

YANBU. We are in a v similar position and have made the same decision. Staying in rented for now and TTC while my ovaries still have some life left in them.

The London market is mental at the moment, even in the unglamorous Zone 4 location we were looking at. 50+ people at open days, sealed bids, 2%+Vat 'finders fees' and a general sense of hysteria. Prices are 20% higher than they were ago, and they were pretty buoyant then. The pre-credit crunch years had nothing on this.

We realised that we were potentially setting ourselves up for a perfect storm post 2015: rising interest rates on an over stretched mortgage, with a lowered income - and if the market were just to lose some froth (I.e. reverse 6 months' gains) we'd lose half our equity at a stroke and struggle to remortgage or move. Not worth the risk, for a house you don't even like (and we never found one we loved).

Some of my middle class friends seem to think having a baby in a rental is tantamount to giving birth in a skip but I'm honestly past caring. This way I can sleep at night and afford to take a longer mat leave. We'll see where we are and where we want to live in a few years. I feel more relaxed already.

Ever thought about moving out of London and commuting?

From a city that is about 50 mins commute to Kings Cross:-

200k 4 bed detached with good sized garden in very good area with very good schools:-
www.rightmove.co.uk/property-for-sale/property-39745286.html

175k 4 bed semi with small garden in same area:-
www.rightmove.co.uk/property-for-sale/property-41672254.html

175k 3 bed detached with garden in nice area:-
www.rightmove.co.uk/property-for-sale/property-44738060.html

150k 3 bed semi in nice area with garden:
www.rightmove.co.uk/property-for-sale/property-28501230.html

125k 3 bed semi ex-council in nice area with large garden:-
www.rightmove.co.uk/property-for-sale/property-43490834.html

110k 2 bed terrace nice area with a small garden, possibly ex-ha I think:-
www.rightmove.co.uk/property-for-sale/property-29016771.html

Moving away from London makes such a difference to prices.

If you ever want to buy, being in London I would say do it ASAP. I can't see prices ever 'correcting' in London, the demand is simply too high.

So I guess I think YAB slightly U. Although it sounds like you both may need to compromise on what are your deal breakers.

Thanks all - we had a good talk about it, and we're going to keep looking, but he's reassured me that if we can't find somewhere affordable, staying put wouldn't be the end of the world.

It's very much as DearJ17 described - crazy open days, prices up 20% and every time I call an agent about a property on the website it's already gone. Buying somewhere quickly is pretty much impossible - the market's just too crazy. Going to keep searching and saving, and if it doesn't happen, at least we're in a good place!

If you've got a HA house then don't leave it!

Without going on about it too much, the other thing I would say is that after 15 years of being a homeowner in London, because of house price rises, even when I take mortgage repayments into account, I have been living pretty much rent free. Actually, better than that - growth has more or less paid me to live in a home of my own in the capital. Worth bearing in mind, OP.

Personally I'd advise looking into renting but then buying a buy to let investment you can afford. That way you're on the housing ladder, can cash in at the top of the boom, bung money in the bank and look to use it to buy for yourself when the market drops again. It's a long term strategy but one that pays in the medium term if you can play the longer game.

Anybody who thinks that negative equity is unlikely is deluding themselves, I'm afraid. Be careful, OP. Some people who bought houses in London in the late 1980s got badly burned in the early 1990s.

I had friends who went into negative equity in the 90's in Maida Vale - their 2 bed flat was bought for 52k, it dropped in value to 40k, now worth 450k.

The London market is not dropping again by very much. If I could afford it I would move there.

We're buying we're just buying in Catford. I'm sure you'll get a flat for that. Just need to befriend all the estate agents.

Definitely think it's a good place to buy if you can.

Check with your HA if you have Right to Acquire, then you may be able to buy your HA property. Discount is only £16k max though compared to RTB discount of £100k in London, and not all HAs offer it. You could think about looking for a mutual exchange to a council tenancy though which would enable you to access the £100k discount, though it's hard to swap from a flat without garden to a property with a garden.

One option we seriously looked at was buying tiny coastal garden flat for weekends (and early retirement/ downshifting) and continuing to rent in London for a decade or two.

In the end we went shared ownership. Your 'social tenants' staus would give you priority for SO in most schemes.