Is this a really stupid idea?

[ohnoohnoo]

This is just an idea that we've been mulling over but haven't put any serious thought in to it yet. We don't follow much of what is going on financially in the news so we want are looking for opinions from people who may have a better idea than us!
We live in a small two bedroom home (me, DH, DD 5 and DS 3). Little ones have to share a room. Really small garden area. We built up some debt a few years ago due to husbands job situation and are now on a repayment plan with stepchange. We are desperate to move to a 3 bedroom house but just wouldn't be able to get a mortgage at the moment until we have cleared our debt.
Obviously the last two years the housing market has been increasing massively, we haven't had a valuation on our house for a few years but are hopeful that it will have gone up. If our guesses are correct we could be looking at potentially having about £68-£70 tied up in the house.

I've heard things about house prices heading for a crash because of the way the economy suddenly is. We obviously don't want to lose that money as that is the best chance of us being able to afford a bigger house. So would it be a completely stupid idea to sell up now whilst the prices are high, use a small chunk of that money to clear our debt and then rent until house prices come down? By which time our deposit should go even further? We can afford to rent on our wages without having to dig in to the money from the house.

You're essentially gambling on the market falling - if you sell and it continues to rise you could find yourself priced out because you'll no longer have a property accruing equity. No one can say definitively which way the market is going to go.

I'm a cautious person so in your shoes I would probably sit tight and wait until the debt was cleared before deciding what to do, and take the risk of the market falling. Once your debt is cleared you will have more options.

No I wouldn't sell in your position. You risk never getting on the ladder again (not just because of the market but because your own circumstances could change).

I am with pp's it is possible you will be priced out of the market. It's a hell of a gamble

I agree with pp that you should sit tight for now for same reasons plus additional ones. First, if house prices do fall the larger properties tend to fall the most in price and I think that would be exacerbated in the current situation by the energy crisis as people selling will be more likely to be downsizing into smaller, cheaper to run homes than upsizing into big homes that require more to heat and run. So your house may fall a bit, but a larger house will fall more and you’ll get a bargain. Secondly, the cost of rent is spiralling upwards and many landlords are selling up because of government plans to abolish section 21 no fault evictions landlords exiting the private rental business is going to go on for the next year which will push rents up even more as demand exceeds the supply of homes. Right now there are 3 households looking to rent for each 1 property on the market. It is very competitive out there right now and I would not want to be a private tenant if I could avoid it.

No. It’s a big risk.

I also agree with previous posters, what you are talking about is a gamble. No I would not do that.

You'd be better off renting your house out and renting elsewhere if you're absolutely desperate for space but otherwise I'd stay put.

Short answer, yes, really stupid. There has been talk of a housing market crash for at least 5 or 6 years and still yet to materialise. Not to say it won't. But if you sell your house and there isn't a crash you might not be able to get back in the housing market. If there is a crash, the value of your house would go down, but so would what you are looking to buy. So really you would be no worse off.

Everyone keeps talking about the market falling and prices falling. They have done since 2008.

I haven't seen it at all.

I've seen the market slow and price increases slow down. But no fall.

If people can stay put in their house they will.

Our house (bought at height of market) fell about £50,000/£60,000into negative equity in 2008.

We're still here and now probably have £120,000 equity.

But it doesn't really mean anything until you want to buy or sell or remortgage.

I like having a good LTV

In your case could you look at remortgaging? Get a good, long termish fixed rate now you have a better LTV?

Don't increase your mortgage borrowing. Over pay the mortgage.

Thank you for the comments. I see now that it would be a silly gamble, just worrying about all the talk in the papers about a big crash coming. However I suppose if we did rent and there was a crash the rent would probably go up and be more than we could afford. Thank you for the advice

No. Stay put as you are. Over the last 40 years uk house prices have, over that time, increased. Uk property has consistently been in the top 5 (most increasing in value) in Europe. Since 2000 we’ve been in the top 3 countries with the greatest increase in property value. Granted we do have dips, but in the grand scheme of things, they are few, short lived and minor.

I agree with everyone else, also to add that you may have problems with the credit check for a rental, and with competition so high for them you may not be able to find one

I agree with all those saying it would be a major gamble. Remember, the same news outlets gleefully publishing ‘MASSIVE drop in house prices predicted’ headlines are the same ones who ran ‘House prices predicted to SOAR’ headlines not long ago. The extreme claims are all about selling papers (or rather generating clicks these days).

The growth we’re currently seeing can’t continue as, quite simply, properties can only sell if people can afford to buy them. But a massive downturn in the market? I don’t see it. It’s simple supply and demand - this is a small island with finite space, and having somewhere to live will never go out of fashion.

Yeah I seem to be very gullible when it comes to newspaper headlines! Things I read always get my anxiety high!

You’re at the lower end of the market. If prices crash, the houses you want to buy will come down in price too, and usually by a greater proportion.

Sit tight. Pay off your debts. You’ve a few years before your children need a bigger house. Make a plan and try your best to stick to it. You don’t want to be renting with children heading into school if you can help it. Private landlords can give notice, rents only go up not down.

I'm a private tenant. Absolutely do not rent. Rents are ridiculous and I can't see that they'll return to pre-covid prices. The house we rent we only got because we offered 25% over the asking price and it's a bedroom too small for us (family of 5 in a 2 bed). There's very little security in rent and I honestly think the prices are just going to keep rising as landlords use rental income to help them deal with the cost of living. We can't afford to save a deposit because our rent is so high- you could burn through whatever you get from your house sale and be no closer to buying a 3 bed especially if interest rates carry on rising.

Is there a way you can use your existing space differently? A loft extension? Moving the bathroom downstairs? Splitting the biggest bedroom in half? Moving a bedroom downstairs (if you have a dining room?).