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Original poster

Is it madness to buy now?

42 replies

PopsicleBopsicle · 02/07/2017 08:36

We are in the conveyancying for what we hope will be our forever house, however I'm starting to have jitters about buying at the peak of a declining market.

It's outer London, E4 postcode with good schools nearby and ok transport links and a much larger than usual house.
The house is at the top of our budget and 50-70k more than anything else on the road, however it has a naturally larger square footage and has been extended to the rear and loft which would have cost us 100k to do anyway.

Basically, I've g

OP posts:

Original poster

PopsicleBopsicle · 02/07/2017 08:38

Whoops! Basically I've got the jitters about the market crashing as we are paying slightly more than we wanted to and it still needs a little work. My head tells me we will be ok as we can fix a low rate for 5-10 years and I can't see why we would need to move... I'm a natural worrier though!

OP posts:

Boredboredboredboredbored · 02/07/2017 08:39

Why not leave it 12 months and see what happens? Why buy now if you feel the market is declining?

Original poster

PopsicleBopsicle · 02/07/2017 08:42

We hate the area we currently live in and are keen to get out- the other thing I forgot to say was that we have sold our current house at a really good price and don't want to lose the sale. For the new house we would be adding another £60k to the mortgage but it would still be affordable.

OP posts:

MakingMerry · 02/07/2017 08:42

Can you afford it if interest rates go up, and do you have sufficient savings to cover the mortgage if one of you loses your jobs and it takes a few months for insurance to kick in?

I think house prices are going to drop, but if you're planning to stay there for the next 40 yrs, being in negative equity for a while is less of an issue.

SuperBeagle · 02/07/2017 08:43

The current market is a seller's market, not a buyer's, so I'd say yes.

The market will crash. It's inevitable.

TheCrowFromBelow · 02/07/2017 08:43

Are you buying a house because you want a home, or are you buying primarily as an investment?
Houses are not guaranteed to keep their value, but are usually a better return than rent.
If you plan to be there long term it should be ok but if you don't need to move and it will worry you then stay out for a bit.

helterskelter99 · 02/07/2017 08:45

Your forever home ? Why does the price matter presumably you will not sell it for years and years by which point any over paying will be evened out?

Boredboredboredboredbored · 02/07/2017 08:46

Its all relative though is'nt it? You've got more for your house and would not if the market was in decline, in fact you would most likely struggle to sell. It took us around 6 months to sell in 2009 and we had to take 50k off our asking price, the house we bought also dropped 50k so there was no loss at all.

Bovneydazzlers · 02/07/2017 08:46

If it's your forever house, then it doesn't really matter what the market does as long as you can comfortably afford the mortgage.

And just £60k additional mortgage vs your current mortgage? Doesn't sound that big a jump.

I'd go for it :)

millifiori · 02/07/2017 08:50

If the profit you'll make on the hous eyou're selling will allow you to keep the mortgage manageable so that you are unlikely to get into negative equity, then I'd buy the house you really want and do it up over the years.

If not, sell and go into cheap rented accommodation for a year to see how the market shapes up. But that could be risky. You may well lose the house you want and if it's unlike anything else locally you'll be less likely to find a replacement for it.

Original poster

PopsicleBopsicle · 02/07/2017 08:50

Yes I know it doesn't really matter if it is our forever house, but this is our first move and rather a lot of money so it's making me anxious. If we had got the house for the price we wanted (£15k) less I would have felt it was a good deal, which I know is a relatively small amount in comparison to the total cost, however I feel we are paying slightly more than it's worth although we were prepared to go up to what they wanted as it's the only place that ticks all the boxes.

OP posts:

Oliversmumsarmy · 02/07/2017 08:54

Is the market declining? I have seen reports of it about to surge.

I am trying to buy and the ones I am going for are being sold before I get to view.

I think summer things do quite down, everyone on holiday or planning holidays but autumn will be the test.

My only concern would be when the interest rate is raised can you afford it.

If it is your forever home then whether the price goes up or down is of no concern

FramptonRose · 02/07/2017 08:54

I work in conveyancing plus I know that area really well.
As long as you are planning to stay in this new house and fix a good rate on your mortgage, I would go for it.
You have said you are getting a good amount for current house, if the market drops, you would get less for the house you are selling anyway plus as PP has said you will probably struggle to sell it.

A good thing to remember is areas like that, although they will drop in the crash, they pick up fairly quickly once things are on the up as they are desirable areas.
If the market crashes ( no one rally knows for sure) it won't be as bad as 2008, the problem then was that the irresponsible lenders were busy giving people 125% mortgages, so people were in negative equity straight away. Things are so different now so I the market will probably slump as opposed to crash, in any event as you are planning on this being your forever home, I really wouldn't worry x

Buckinghambae · 02/07/2017 09:20

Agree with Framptonrose, we were really undecided when we bought ours 2 months ago. But like you, it was a forever place.
We threw everything we had at the deposit to get LTV as low as possible, fixed for 5 at 2.1 and then went for it. The only alternative was to leave £100k+ in the bank (proceeds from our house sale) and rent, which didn't seem to make any sense either.

I wouldn't buy a 'stepping-stone' house at the moment but for long term purchases, go for it.

Toriali · 02/07/2017 14:12

If you feel you're paying 15k too much I'd ask for a reduction in this wobbly market. We're trying to sell in zone 1 (20% reduced and are still getting lower offers).

Once we've sold (soon I hope) we'll go into rented for a couple of years. All signs point to a market fall so better to buy your forever home at a lower price? Personally I couldn't live with negative equity, even if it doesn't matter...I couldn't live in peace.

I think it's dangerous to fall so much in love with a house, OP?

jasmyn · 02/07/2017 14:23

I think London house prices will fall, maybe not a crash but things are definitely falling already in my area. I think it could be sensible to buy a forever house and for something that you could manage to cover in the event of a big income drop (e.g. one of you getting redundant or needing maternity leave). Also you might not have any plans to move but often people have to, to be close to ill relatives for example. It's not always a choice. Personally I am not concerned about the prices falling in London as we have no plans to move (and live close to all our relatives), and we have overpaid so no chance of being in negative equity. It sounds like you're stretching yourselves a bit and I would just go for a more modest house, maybe something that hasn't been extended, as you can always choose to do that work if you're financially comfortable but otherwise just put up with a smaller house until you can afford it.

oldtrees · 13/07/2017 08:50

If you don't go ahead you risk being priced out of what you want. Prices will crash yes, but we don't know when. The houses you want may rise out of your reach before then.

Compared to the risk of being in negative equity for a few years - which doesn't really matter in the long term if you don't plan to sell - I know what I'd do.

My parents bought a house in London at the height of a boom and then were in negative equity for a while.

Do they regret it?

Not one bit, they bought it for £15k and sold it for £1.2million 40 years later.

Go for it I say!

Lottie991 · 13/07/2017 08:55

I would buy it in your position especially if you got such a good price for your house, Its all relative isn't it.

Changebagsandgladrags · 13/07/2017 09:20

If it's your forever home, you love it, it ticks all the boxes and you can afford an potential increase in interest rates then go for it.

If the market crashes, so what, you will be living in the house you love.

If you wait for a crash then someone else will buy it.

MyCalmX · 13/07/2017 10:09

For me it would depend on the price now - if it's a million pounds, then no I wouldn't buy now but if it was £500 then I would.

But then I don't intend to spend forever in one house, the thought that I'd have to actually depresses me! I like the fact we can sell and move (regardless of a crash) anytime.

And oldtress scenario is so not relevant it's a bit . NEVER again will you be able to buy a house that cheap and sell for that much.

People don't have unlimited funds. 3 bed houses going for a million in London have a limited market.

rizlett · 13/07/2017 10:18

Well no one can see into the future op - if you continue to worry - prices might go up - if you continue to worry - prices might go down. You can only make your house decision today in the light of the information available to you now.

Whatever happens in the future will be manageable somehow.

How about choosing to feel excited about moving to your dream home?

PaintingOwls · 13/07/2017 10:24

I think as it's your forever home in an area you like, go for it. If you were just stepping up the ladder I'd urge more caution.

Isobelcormel · 13/07/2017 14:08

So prices are already going down in London... I'd like to see one person in London saying the opposite.

Prices will crash yes, but we don't know when.

A lot of sign pointing to prices going down in the next 2-3 years... slowing economy, Brexit, interest rate hike...by 2020 you won't recognise the property market anymore. Things are pointing that way and the only thing against this is the limited number of houses available...but families are leaving London, bankers are leaving London, EU citizens are about to head off...not sure but I don't see that much competition for houses in the medium term.

I wouldn't catch a falling knife. And we all know there's always bound to be another house...So, yes, you'd be a bit mad to buy just after the market reached its peak. I'd definitely not overpay, even if it's by 15k in the current market...

HipsterHunter · 13/07/2017 15:10

If we had got the house for the price we wanted (£15k) less I would have felt it was a good deal,

Mate, £15k on a £1m house (i'm guessing for a house in E4) is nothing.

If that is all it would take to make you feel like you 'got a good deal' I'm going to suggest you are not looking at this rationally.

You said its the only place you've seen that ticks all the boxes.

If you love the house and the location, go for it. Who cares on paper what the value is? As long as you can serve the mortgage the 'value' doesn't actually matter.

ImAFurchester · 13/07/2017 15:17

Jeez this thread is scaring the life out of me - we bought our "stepping stone" 2 bed small flat in London in March 2016...dear god, the thought of being in stuck here and in negative equity is too much to bear :(

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