Buying now with potential house price crash (BoE)

[BoEbrexit]

I'm reposting this from the Brexit forum, because I just got answers there about prices falling by 90%, or denials that anything will change at all. I hope this is ok. (I don't know all the etiquette here).

Anyway, I'm a FTB and just saw the BoE stuff about being prepared for property price drop by up to 33% and massive interest rate rises. (I've searched and searched, and I can't actually find any proper projections of what effect No Deal would have no house prices.)

I already knew that now is not the best time to buy, but I'm moving to a new area, and I might not be able to get a mortgage in a year or two due to work situation. I may move after four years or so, and was prepared for the fact I might sell at the same price, or even up to 10% less...but one third less would be pretty destroying ! I'm unlikely to go into negative equity proper because of my large deposit, but I don't want to lose all of that when I sell.

My parents don't seen phased, saying I could just rent out and move into rented if prices go down, like they did in the nineties. Because my job means moving around a lot, it maybe some years before I permanently settle somewhere and want to buy forever home.

I think I'd wait, but I have this issue with potentially not being about to get a mortgage later. (I have a fixed term contract on top of my normal work starting soon, and my normal work isn't enough to get a mortgage.)

But still, is it crazy to buy now?

@sophie

If I really really wanted to buy somewhere else I could stand to lose 20K as it would still be less than what I would have paid in rent, and I'd still have a chunk of my deposit plus some equity for the next place.

If I lost any more than that I'd rent it out and wait, because I wouldn't want to lose my entire deposit/ savings.

wowfudge It is more complicated than you imagine. What I build will most probably be worth less than what I spend on it, but I don't really mind about that. What I do mind about is spending so much on the plot that I can only afford to build something that I would not want to build.

The thing is, as far as I can tell, any massive crash is likely to also have massive interest rate rises - so FTBers might not be paying much less on their mortgage than people are now.

Those who will profit the most are well-off cash buyers like @Sophie

As I say, I'm all for stagnation to make stuff more affordable, just not for a massive drop. Very few people will gain I think.

BoEbrexit
You lock in your purchase price permanently. A mortgage interest rate is only temporary. If I was going to choose one of those to be high, I'd choose the temporary one.

I am in the South and in my
area house prices have dropped around 15k since January.

If I was a buyer I would hold off

I do believe the government want more people to own,even if it is to try and lower the ever increasing housing benefit bill.The trouble is prices are too high.Now that the market is turning around buyers are holding off unless necessary to move,because of falls and buyers are thinking they will wait till prices go up again.So little is moving.

That’s why house building is being prioritised. The only way to ensure supply is to build new

local market appears to be made up of overpriced dross and dregs.

Totally agree with this comment I'm struggling to find anything worth buying and now the interest rate rise has happened it's kinda made me nervous for what impact this will have on house buying.

So I can totally understand your concern and everyone is talking about Brexit having an impact. I've already been looking for a long time so wondering if should hold off til after March next year... what's a few months ? If they are right.

And that's where it becomes a self fulfilling prophecy. Many people do need to move, for jobs, whatever, and they want to buy, they don't want to rent, but as less people put their homes on the market, then demand starts to outstrip supply, thus driving prices back up.

The reality is if property prices decrease, owners ride it out if they can. It's simply not the case you can snap up property cheap, as where possible everyone stays put. They'll rent it out before they sell it and take a hit, Hence why it always reverts back.

Sophie that is a weird way to look at things - if you are in it for the long term it doesn't matter because house prices have always risen over the longer term. Most people buy their house to live in. Having a more affordable mortgage is sensible.

Where I am prices are dropping (SW London) prices probably peaked 2015. There’s actually quite a bit on sale but the only property shifting is the ones that are competively priced, some are still stupidly priced.

Plughole3
That's exactly when the peaked in Fulham. And 3 years later, they are still falling. I don't know at what level they will stabilise, but it's definitely spreading to more and more places away from London.

Lilmisskittykat

Local market appears to be made up of overpriced dross and dregs

I think this is why I have such a reluctance to buy property right now. It is such terrible value for money. A fortune to buy dross an dregs. No wonder Generation Z is up in arms.

@FabulousSophie that it what makes it so hard, you save hard to be in a good position but I have no real need to hand over my deposit for some rubbish overpriced neglected house

Death, divorce and debt seem to be making up the housing market at the moment and even they are driven by greed

@lil

That's a good point actually - everything I've seen apart from one place (out of 7) is either former OAP or former BTL! (Lots selling up where I'm looking due to article 4 restrictions and the new landlord rules - but at least thats allowing low income families like me to move in and actually make the houses look half decent).

I’ve said this on many a thread but a fair few of my neighbours/friends have good budgets due to good jobs & equity but they have moved to other cities as they just don’t want to pay 1m for a terrace with no
off street parking & teeny garden.

The uncertainty over Brexit is a major factor why people aren't putting their houses on the market. It's also become much more difficult for foreign investors to hide their ill-gotten gains in the UK housing market.