Is this the wrong time to buy in London?

[silversixpence]

We have an offer on our house (not accepted yet) and have made an offer for a house in the exact area we want at an affordable price for us. There are only 3-4 streets with nicer housing than the road we currently live on and most of the houses are out of our budget and rarely come up for sale. This house needs a lot of work but will be perfect once finished.

However I'm a bit nervous as keep reading doom and gloom articles about the housing market and a new global financial crash. We don't need to move now - should we wait a few more years? Or would we risk missing our chance to live where we want if prices rise further? If we don't sell now we might be able to keep our current house and buy our next property using the rental to cover the mortgage (if house prices fall).

Mortgage is approx 2 times my husband's income, if we both work it would be 1.5x our joint incomes.

Their's not there's

it doesn't sound like the OP would be taking a particularly horrendous risk.

now's [IMO] a pretty scary time to really go 'balls deep' into London property, you know, mortgage up to the very hilt, buy a BTL with high LTV, whatever, but is it a bad time to sell up in order to upsize fairly modestly, taking on a fairly modest additional debt?? well i suppose it might be but this is far from certain & it sounds as if the OP is well positioned to absorb any minor financial knocks. if upsizing would bring about a reasonably significant improvement in living standards then it sounds like a decent idea to me.

The problem with that lot, appears to be that they take themselves far too seriously. Why on EARTH would they even bother to start a thread about a thread from another site. Clearly a slow day.... It's nice to see that someone bought a new car recently though. And a number of your members on another thread apparently simply can't afford to buy in London. Over here on MN we aren't pretending to know it all - simply using our own experience as examples.

Tssssk we're all Keyboard warriors at the end of the day. If you don't like the thread - don't visit it.

OP clearly there is more to all of our stories - mine included. However without going massively into quite personal detail regarding finances, most of us I would assume keep our answers brief. OP, only you know what your actual financial situation is, and whether or not it's worth whatever the risk potentially is. It's so far paid off for us so far. For us personally, even if house prices lower below what they are currently worth (post renovation), having spent a long time researching the area we live in now and the trends it appeared to follow, along with the plans for that area's developments, we're confident it's going to take A LOT to get it lower than what we bought it for + spent on the renos. This isn't a house we're planning on flipping. The only time it would find ourselves unstuck is if they fall down and we wanted to release equity to purchase another buy to let. No one knows what the future holds. We have 3 between us, each time we've bought, it's been different.

There ARE areas of London and just outside of it that will continue to increase in value. There are some where they wont. If you'd said a little 2 bed in East London was worth what it is currently marketed at 2 years ago, I'd have absolutely called you a liar and asked for some of whatever it is you'd taken. Then there will be a point in time where that rise hits the ceiling, and it won't move. And then it will fall. No one can 100% say they know the whats or the whens about it. And no one can spend their life waiting for something to happen. It's all down to you and your personal situation and what your likely plans are to be.

Just be careful and ensure you know your stuff. By all means look at other sites and see what information you can glean (loving Hairy 's comment re. tin foil hats though ROFLMAO) and I'm sure we all wish you luck.

I'd love to revisit this post in a couple years time and see where we all are and if we're all smiling or crying .

all a bit difficult to guess exactly what you mean but reading between the lines I think you're saying that your husband earns maybe about £80k a year, you want to borrow about £150k, and

Apologies, last post was accidental.

Where is the new house OP? I'm looking atm.

For clarity, if it's currently 30%, work out what your current apr is, and then extrapolate that out to include an interest rate of 6%, for example. Then add a percentage point and just put together a list of what your current mortgage would be at new interest rates. Then do the same for the new mortgage and see when it stops being affordable.

20% of net salary is a safe figure, imo. I have friends for which 80% of the husbands income (a 6 figure amount) is used for the mortgage, which I'd consider crazy.

Markets are always a gamble. The UBS chap refers to likely scenarios of 30% falls. If that happens, it could mean you would lose only what you borrowed. If you want the house enough to gamble that your income will continue to cover the loan, then the worst that could happen (if you wish or need to move) is that you sell up at the price of your current house (which would then be worth 30% less in the burst bubble scenario). Although your equity has eroded, it would have been eroded anyway by a similar amount if you had not moved.

Given that you need somewhere to live, it is not really a loss. Even if you did not need to borrow, and say lost £1m from a £3m purchase, provided you had to live in it, the £1m loss is irrelevant. You are where you want to be, and the quality of your life will be no different. It is a loss only if it is not your home or somewhere you are buying for your child, parents etc. The real question is affordability, and you are comfortable with that. Little different from buying a car or a shed, except a house lasts longer.

One last comment, re the HPC forum. Some of the stuff there is well thought out and researched. I wouldn't make the mistake of thinking they're all crazy, just a fair few of them. The long and the short of it is we have anaemic growth despite historically low interest rates and billions of Quantitative easing. Global growth has stopped, there are several trillions in derivative trades that don't seem to be right, you have almost a generation of people coming off their interest only mortgages common 20 years ago with no method of repayment and, once again, we're in a period of deflation.

Whilst I am not advocating building a shelter and hiding, it's folly to think things can carry on the way they have been.

Obviously, that's all just my opinion.

As an old gambling friend would say to me, only be prepared to stake what you're willing to lose.

I think what it needs to come down to in your situation, are you buying an investment or a home? If you are buying a home you will live in and get use out of, if the prices fall, will that matter to you? If you don't plan to leave it for 20+ years, then chances are, even if you have negative equity for a bit of that time, so what? If you can pay the mortgage, the value of your property will not matter until you come to sell.

Buy a house to be a home. Live in it. If this is a 'forever home' then once you've bought it, stop looking at rightmove or paying any attention to what house prices are doing in your area.

hairy, I don't write off the housepricecrashers as crazy, some of what they say makes sense. I think a lot are totally foolish though; in their waiting for their orgasmic moment of a house price crash, they've missed out on paying what - 10 years worth of a mortgage off? - how long has that site being going. They must be very glum over the recovery 2010+.

Perosnally, I don't think the interest only mortgages coming to an end will have much of an affect either. We've paid off over £100,000 of our capital on our interest only mortgage since interest rates reduced to such a low rate and expect to have paid it off when it expires in 2026. I think a) many others are doing the same b) even if theyre not, they (interest only mortgage households) are coming to an end every year in manageable numbers not to make any ripple on the market. They're either changing to repayment or selling, but the numbers aren't sufficient to affect the market.

OP-I think I'd move of you can still pay the mortgage in the event of a job loss.

@ThroughThickAndThin01 I think you'd be surprised at the amount of people on IO mortgages which are coming to their term within the next 4 years, most of which haven't been doing the prudent thing and paying it down.

It's one of the hose small events that when coupled turn into a large event. I actually don't think house prices will, on it's own, happen, but I do think a black swan event will cause an awful lot of markets to fail, which in turn will lead to a price correction.

Just the government discussing it in parliament, something they haven't done for many years, is enough for me to start thinking about them planning for it.

I really wouldnt take offence silversixpence

They really are as mad as a box of frogs on HPC, and the bitterness from so many of them at having sat on their hands for the past 5 years while the market pulled away from them is palpable.

They are not at all happy at the balanced and open discussion taking place on Mumsnet.

This inarticulate posting comes from someone calling themselves “Count of Nowhere”

"did those idiots miss the report that London prices were being skewed by fraud and money laundering?

that alone screams, AVOID.

I personally hope the loose it all."

This idiot really is quite special – he set up his own Facebook campaign to encourage buyers to offer no more than three times their salary for any and all house purchases on 1st October. A grand sum of 19 people signed up.

What a banana!

Oh dear. They do sound rather unhinged. Fanatic almost.

The truth is no one knows if and when a crash will happen. Do your own research, and take a gamble on what you think is best for your own situation.