To buy a house in the current economic climate

[Allinadaystwerk]

Would you buy or are you buying a house right now? Or do you think its sensible to wait until things settle down?

Assuming you are in a good position and you aren't looking to turn it around and sell it in the next few years, I can't see why you wouldn't.

She wants to sell in five years and needs to make a profit

Even if a house goes into negative equity surely you'll lose less than 5 years of rent payments?

I see someone asked me if I'm mad!!? No reasoning just asked me if I'm mad- strange

I could be wrong but I suspect the 'are you mad?' comment was related to the idea that you might make a profit on a property within five years of the start of the biggest depression seen in a lifetime.

I think the are you mad refers to the both the possible financial climate in 5 years and the cost of buying and selling. Although the costs vary in line with regional house price differences, it’s an expensive business to buy and sell due to stamp duty and selling fees. This could easily wipe out any equity gained in a short period. Never mind taking account of the other costs associated with ownership beyond a mortgage.

The trend is now for people to stay much longer in property rather than climbing rungs on a ladder.

DH and I have decided that we won't be buying for the next 2 years. We were going to start looking this year but with Covid it's just not the right time for us.

I'm not sure that houses will necessarily go down in the next say 6 months, but our worry is what does the world economy look like in 12 months time?

So many people think this is just a pause, that once everything reopens we'll be back to the old ways. There just is no possibility of that happening.

I think people who have to move will do it, but those that don't have to, just want to upsize etc should really hold off.

Just buying one for cash. Negotiated a decent discount from the original asking price. If it all goes through, the rent will give a return way over what the banks are paying.
The land will retain it's relative value despite what happens to inflation in the near future.

I was also on the fence but I've decided to go ahead if I can find something. Yes, prices could crash. On the other hand, I could wait 1-2 years, prices have dropped a bit but then all the people who have been putting off buying because of this uncertainty jump in, meaning it evens out. Meanwhile I've paid rent for another 2 years and my kids have been stuck in a small house for another years. Depends on your situation really.

Forgive me if this seems like a goady question, but why do you "need" to make a profit on this property in the next 5 years?

If you need to make your money work harder, there are much, much better ways of doing that. I'll get shouted down on here as usual, as bricks and mortar is often touted as the only "safe" investment, but as previous posters have intimated, the property market may not be a one-way bet in the next year or two depending on what happens with jobs etc.

It's just this slightly cringe thing that "all property must rise in value"... it creates so many of the structural problems we see in the UK.

Just sold my flat within three days for 15% over value. Properties are moving quickly and I suspect at prices higher than before lockdown so people can secure the property they want when there's not much else on the market. Glad I sold when I did but not sure it'll last. We're planning to sell DP's flat next and buy our forever home together but reluctant to get caught up in all the crazed buying and paying far more than a house is worth. We're keen to move soon so will keep an eye on the market, hopefully things balance out shortly as more comes to market. We're not so worried about negative equity as expect to have a big deposit and low LTV so any drop in prices shouldn't take us to that point and we intend to keep the house long term. Such a minefield and difficult to know what to do.

I now understand the zre you mad statement. An explanation behind the statement would have helped. So thanks for the comments they are helpful. Which is why I posted. On reflection I see that if I buy I need to no view it as an investment for profit in the short term but more as a long term home. That makes sense and will influence what I buy. My fear is because i am using most of my money as a deposit so I fear it will be lost and I will be tied in for longer than I want to be. Profit is not essential but I would like to break even. But like it has been said if I think long term home...
Ok thanks for the contributions.
Now what else would you invest in if you had a few grand?

I see you mention SM, will you be reliant on that to pay the mortgage?
My only concen would be given the current economic climate could this possibly end up being reduced or terminated if your ex loses his job?

You have mentioned your rent currently is significantly more than your mortgage payments would be. So I think it is a good idea to buy the house.
I am not good at investing- NS&I? You have a chance to win money?

Many analysts have said that there may be a drop in house prices when the furlough ends around October, due unfortunately to repossessions as unemployment rises. I’m looking to buy a flat in south London for my dc’s future and, although it seems mercenary, I’ll be waiting until then to see if there is a drop and if not, I’ll buy anyway.

We just had our sellers pull out yesterday as they've decided to stay put. So we're looking again and there are properties which were on the market when we were first looking but we never saw them as they were above our price range -and now have been reduced enough to just come into the top of our budget

I work in property and joined an industry panel discussion this morning which contained forecasts of both number of residential property transactions and house prices over coming years. Interestingly, neither are forecasted to dip below where we are now and they're anticipating the V shaped recovery everyone had been talking about, with growth taking things back to where they were pre-lockdown by December 21 and continued growth beyond that in to 2024. Hopefully this is what materialises.

Staying liquid is essential during tough economic times. By putting all your money in an asset like property will make it difficult to access, if needed. Buying selling a property within next 5 years is not likely to generate any profit either so keep your money and flexibility that comes with it. Hold onto your deposit money and buy later imo

Hang on a bit,there is no way prices are going to hold up in the coming months.

We have not seen the real financial disaster yet,this is only the beginning.Prices will fall and when they do they will fall dramatically.

@Chocolatebrownielove that's an interesting perspective. The comments have made me look again at what I might buy. I have considered long term home with opportunity to improve but liveable for now ifyswim. I will not invest all of my cash into one property. I will still have a decent ish amount left over for a 'rainy day' or to invest. I am sticking to what I can afford on my own steam even if ex stops paying which is unlikely as he is well off and only agreed to pay the minimum required by cs calculations. I think my own home will give me some much needed security and stability. Thanks for the education.. always looking for good advice on this issue.