Should we cut our losses and move now?

[Bilbonaggins]

Hi all, long time lurker first time poster here! waves

Was hoping to get some advice re our property situation as I’m driving myself mad wondering what the best thing is to do.

Basically DP and I bought our first house in May last year. I am 25 and DP 28 and I think we may have made a mistake. We bought w recently completely refurbished two bed terrace for around £220K (south west town). Brand new kitchen, bathroom, doors, staircase, carpets, windows, boiler - the works. It is a gorgeous little house but just that - little. All the advise I was given from family was that we could stay there a couple of years and then use the equity we have built up to buy something bigger. We put a 10% deposit and so have a mortgage of £200k - 5 year fix but portable to a new property if needed.

However now all I see in the news is that house prices are falling, brexit etc and truth be told I am scared!!! Other houses in the area same type although admittedly most nowhere near as nice are on rightmove from anywhere between £205K and £225k

There are 3 beds in the area on rightmove from about £240K upwards, nice enough although most would need new kitchens/bathrooms at some point but not totally awful!

So my question is. Having lived there a almost a year and in the face of all the housing market uncertainty- do wise people think we should attempt to sell and move up the property ladder now before it all goes tits up? If there is a housing crash i feel like I would rather ride it out somewhere I can see myself staying for the next 5-10 years, have DC in etc. I am wondering whether to just cut our losses now when our house is still in pretty much perfect condition and prices haven’t dramatically fallen.

Would anybody consider this? Would you buy a house that was only sold last a year ago?

Sorry for the long post but am Really worrying a lot about this 🙁 thanks all.

If you think about it logically then say prices go down 10% then yes - your house will be worth 10% less but then so will the bigger house you eventually move to. So you lose 10% of £220k on yours = £22k but if you move the bigger house will be cheaper too and say that one is £250k now would be £25k less.

So actually you have not lost anything - your loss of £22k is offset by the loss on the bigger house of £25k.

The people who lose in a declining market are those who either leave the property market entirely or who are downsizing - because their losses are not offset.

If I were you - I would stay put and enjoy the home you have until you are ready to move up the chain. Build up your savings so that if you buy a doer-upper then you have the resources to do it the way you want.

Don't forget about the moving costs, Estate agents, solicitors fees, removal men, stamp duty - all of which would probably wipe out what little you've paid off on your mortgage.
Personally as long as the house still suits you I'd stay

If you're happy there at the moment I wouldn't move. House prices go up and down, but the general trend is up.

TBH it's great you've got a house that needs nothing done! Usually people move in and find all sorts of things that they weren't told about, or weren't expecting. My first house was a complete money pit. As pps have said you might be better staying and saving as moving costs £££ and the likelihood is you won't be quite so fortunate with the next place!

Does the house suit you now?

When were you looking at moving?

What do you hope to gain by moving now? Baring in mind that property prices can never be predicted and are always a gamble. Even professional analysts get predictiond wrong a lot of the time. And as someone else said, if hoise prices do drop, then the house you buy will be cheaper too.

You had a plan to move in a few years time. What is the worse that could happen if that turned out to not be possible?

dangermouse talks sense.

Its very rare to find a house that doesnt need at least some work doing to it even if it looks ok on the surface.
You have a house that is totally refurbished meaning you're not constantly having to save and pay out to replace worn out bits or fix issues.

You could move up the ladder now and find that you overstretch yourselves and cant then afford to do the work thats needed and wish you were in your freshly done house again.

Theres nothing wrong with small.

I have lived in big houses and tiny houses and for me as a couple, or even a couple with a child, i would rather have a smaller house as it is easier to keep warm, clean and tidy. I find that it feels more cosy and like a nest.

Personally I'd stay and ride it out, prices fluctuate and moving house is a massive expense anyway.

Frankly, you’re just stressing yourself out and the worries aren’t particularly rational. As PP explained, prices falling would work in your favour when moving up the ladder.

If you moved now with a very low deposit, you’d probably work yourself up over rising interest rates.

So try to relax and be sensible.

What would financially help for the future, would be to overpay your mortgage so you build in more equity. As it’s a 5 year fix with a low deposit, I imagine the interest is probably 2.5%+? So you’re much better off paying that down rather than putting money into savings unless you’re savvy about stocks and shares and able to invest the money better.

Thank you all, you’re right, I was just getting myself worked up. I’ve found the whole thing a lot more overwhelming than I expected but I just need to chill! And I hadn’t considered the fact that it prices fell so would the prices of the larger houses! Thanks all x

Just make sure you pay the mortgage down. If prices were to fall, it would cost less to move up the ladder but you'd need to be able to. If you owe 200k, and the house value drops to 190k, then you'd be in negative equity and not able to move.

But if your house is down to 190k, the bigger is 220k but you only owe, say, 165k, then you'd be able to sell and still have enough equity for a deposit on the next place.