To buy a house or wait?

[Purple1181]

After a little advice as I feel I’ve messed up, but regrets won’t get me anywhere.

Myself and my partner live in work-based accommodation, paying very little rent. We move a lot, so buying a ‘forever home’ just never seemed feasible. Instead, we have been saving for a few years, with our cash sat in high interest accounts.

The plan was to save, and then buy in about 8 years time when work-based accomodation is no longer available to us. But looking at the way house prices have risen in the past 10 years, we’re starting to think we’re being naive. Prices seem to rise 10-20% every year, if this continues, we’re unlikely to be able to afford anything nice in 8 years time.

Is now a good time to buy? We’d need a big mortgage (£200k+), and leaving the bubble of our low-cost accommodation to stay in one place and pay real bills is a huge leap for us, but we’re wondering if getting on the housing ladder now will give us the benefit of increased equity further down the line. I regret not buying 5 years ago, but regrets won’t help so I think we just need to re-look at our plans.

What would you do?

I'm not going to advise you what to do - no-one knows the future for sure, or what's best for you. However, two things to think about:

Firstly house prices do not rise by 10-20% every year. In 2004 the average price was about £135,000. Today it is £282,000 (according to Land Registry). That is about a 4% a year increase on average. Over the last 10 years it was more like 5% a year. Of course within that there are some big rises and big falls in individual years, but that's a long way different to 10-20% a year.

Secondly, if you are saving up for a long period - eg 8 years - is being all in cash the right way to do that, or would other things such as shares be worth considering for some of it? Share prices are volatile and can go down but over a long period would be expected to return more.