To buy or wait - Brexit

[millibug]

Potential first time buyer here, looking for a bit of advice about everyone’s favourite topic of Brexit.

I guess the first thing to note is that we’ll be looking for a low LTV mortgage, probably around 10%, and therefore will have a relatively large sum of debt on any house that we buy. This is where our (well, my husband's!) concern lies…

Both Rightmove and this tracker (www.yopa.co.uk/homeowners-hub/brexit-house-prices/ ) are already saying that Brexit is already pushing down house prices, so if we buy a property tomorrow am we going to be setting myself up for a life of negative equity? I’m just curious to see whether you all think it’s worth holding off for 2 years until we can see the full impact of the UK leaving the EU?

I’d obviously prefer to buy now, but my husband is much more cautious and wants to wait to see how things pan out!

TLDR; first time buyer, will have large debt on any house we buy – is buying a property now a bad idea?

The Yopa site you linked to is suggesting a 1.2% increase in house prices in 2017 (most of the pundits quoted are suggesting modest increases in 2017, with one suggesting a 4% fall).

You also need to factor in the cost of rent if you decide to wait a year or two, plus the potential for interest rates to rise, meaning that you may not get such a good mortgage deal.

Somebody once told me that there is no such thing as 'The Property Market'. There are millions of individual dwellings but no amorphous blob called 'the market'. Every property will have a different price which depends on a host of criteria such as location, condition, the seller, the buyer, etc. The more unique the house (i.e. not one of hundreds of identical new-builds being sold at the same time by the developer)), the more susceptible the price.
So what I am saying is that there are no guarantees. You could buy (or sell) at a good (or bad) price irrespective of what 'the market' is doing.

A huge factor will be how long you intend to stay in your house. Buy in a sought-after area, stay long enough, maintain your property and will go up in value, even if it does go down at some interim stage. 'Long enough' could be 15 years or more, though.

I sort-of agree with pp's point about comparing money wasted on rent with money lost on house price drop, but don't forget that there isn't just the house price to consider. Buying a house is an expensive business: there are all sorts of transaction costs like solicitor, removals, stamp duty, decoration. And then solicitors, estate agents and removals if you have to sell. You will never get that money back so don't rush into a bad decision.

There is one argument for holding off: if your money is in Help To Buy ISAs or Lifetime ISAs (MSE) then the longer you leave it, the more the Government puts into your pot. This is a comment, not financial advice.

It's all a bit "how long is a piece of string?"
Define your priorities, keep looking, keep a cool head, don't be rushed into doing anything.

Buy a house.
Preferably mine.

I think you need to consider more than just prices.

We bought our (totally ordinary semi) house at the absolute top of the market, literally a couple of weeks before the 2008 financial crash. It instantly lost value by a few tens of thousands of pounds, so we were in negative equity even though we had a fairly hefty deposit. Sounds terrible, right?

However, what had also happened was that mortgages were being offered at a fraction of a percentage above the Bank of England base rate. We had one of these. As interest rates fell through the floor, so did our mortgage repayments. We have been paying less than 1% in interest since we bought the house, which has allowed us to make a lot of overpayments, but also to have flexibility. It meant I could leave a job I hated to do something I loved, and that we could afford for me not to work at all while I was ill, which was a godsend.

The house eventually recovered and then gained value too, so the negative equity was cancelled out by this. I'm no expert, but the supply/demand problem with housing makes it seem more likely we'll see a plateau in value than a huge crash - I honestly can't see values in the south east falling hugely.

The main reason not to move is if you're not settled in a place and you want to relocate elsewhere in the country, or if you're looking at it as an investment to make a pile of cash. If you just want a place to live, and you don't mind staying a while, I would go for it now.

I would it also depends on where you live - like a PP said , the South East generally is a good bet. Everywhere else is probably ok if you are planning to stay there for a while . Also don't forget that interest rates can only really go upwards from where they are now

Prices will always go up, it depends on how much of a rush you are in. I expect house prices will go down on Brexit but will then climb over time. I guess it depends on how far you would go to save £20k

negative equity only matters if you want to sell. the house we've bought we intend to stay in forever so we are not so worried about that kind of thing.

We exchanged on our first flat two weeks after the Brexit vote. It was a scary old time!!

Reasons we decided not to pull out:

• No plans to move for at least 5 years (still over 4 years from it at current plan)
• When we do move we will be leaving London for a cheaper area of the country, so even if prices go down I'm hoping the differential will still be decent
• Our flat was a do-er upper. Current market value is about £50k more than we paid for it and we spent £20k on the do-up. As a result we've upped the equity and our mortgage (which was 90% LTV) is probably now about £100k less than the value of the flat, insulating us against negative equity.
• Decent interest rates - considering we were buying with a 10% deposit, we wanted to be sure we could get the good rate our mortgage was offering - didn't want to let the offer lapse in case we couldn't get such a good one.

House prices have clocked up a tiny bit in our area (SE London) since the vote, although I'm expecting some stagnation over the next couple of years. Hopefully though, when we're looking at moving on around 2021, things will have righted themselves

May not be helpful to you OP but that was our logic, anyway!

Oh - and mortgage repayments are 2/3s of what we were paying for rent, so we didn't really have the ability to save any more.

If you want to be in your new place for a longish period , I'd buy now.

There is no point putting your life on hold, for problems which may or may not happen. In general, we are on a crowded island with finite land, which has had a housing shortage. I can't see how things could get disastrous. Who knows though. We all need that crystal ball.

Can you afford to buy a house that you like, in an area you want to live in, that's big enough for your family for several years? If so I would buy now. If you think you want to buy something and move up the ladder in a couple of years I wouldn't bother.
The value of your house is only important when you buy and sell it. I couldn't tell you to the nearest ten thousand pounds what my house is worth today (I know it's not a lot!!) because we've lived here 7 years and the market has gone up and down. We are happy here and we can afford the mortgage, so it's irrelevant to me.

House prices in my area are going up and up and don't see any stopping it atm it's crazy. I'd buy now