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Original poster

Mark Carney Brexit house price warning

205 replies

BlueKittens · 14/09/2018 09:43

Is now a really bad time to sell/buy a house?

We’ve recently put our house on the market to move to a larger house in the same area. Basically because I’m unexpectedly pregnant with our second child. We could hang on in our current home but we’d be a bit squashed because DH works from home. We have seen a great property nearby which we’d need to take out a slightly bigger mortgage to buy (but we have good LTV). We live in one of the fastest moving housing markets in the country (comparatively- it feels quite slow recently!). House prices are high. House has been on over a week and have had 9 viewings. No offers yet but have second viewings booked in.

Thoughts please! I don’t mind if the comments are directly related to our situation or just general chit chat around Brexit and house prices.

OP posts:
AnalyticalChick · 15/09/2018 21:07

@ChiaraRimini I agree. People should buy houses to live in, not as investments. Any price falls or negative equity, if they occur, are just part of taking the rough with the smooth, and should be included in the costs of ownership. They do not really matter if someone doesn't ever think about prices, which is the healthiest way of looking at owning a home

Racecardriver · 15/09/2018 21:15

The British housing market is an MLM. All it takes is for enough people to loose confidence and prices cone crashing down to a reasonable level (where the cost reflects the practical value of the house). This is fine if you are buying in cash or can afford a rise in interest rates and therefore can ride out and price corrections but if you will be unable to make mortgage payment if interest rates rise then you are screwed when you buy at the peak. There is wisdom in saying you should treat buying a house as an investment. It's a shit investment but the same rule apply. You buy when prices start to rise after a major drop and you sell when prices start to drop after a prolonged period of increases. So nous is the ideal time to sell but not the time to buy.

AnalyticalChick · 15/09/2018 21:26

@Racecardriver I see what you are saying, but if people do decide to go ahead and buy now, they need to accept they may go into negative equity. Many buyers do not mind if they go into negative equity, since their overriding priority is to buy today, however high prices are, and whatever the risks.

MrsDunstable · 15/09/2018 21:35

Plus, with a fall of 35% who will be wanting to sell? People like me will stay put in the hope of riding a blip in the market out

What about the home owners who cannot afford the mortgage anymore...they can’t ride the blip out?

As a ftb I would not buy now, but wait for the reductions, especially in London.

MrsDunstable · 15/09/2018 21:47

@Maricoco I can only speak for the London market, and if you don’t mind a reality check, but it would be foolish to buy here now. Prices are going down down down in London.

How have prices been in your area?

AnalyticalChick · 15/09/2018 22:28

If prices fall by 35%, the Bank of England's stress tests show that the banks will be ok, so will still be around to lend money.

Cottipus · 15/09/2018 22:46

@lifechangesforever- the question of whether to move or improve is so tricky isn’t it? We moved 6 years ago working on the basis of the house being suitable for 10+ years. It’s not perfect but there’s still a lot I love about it. Seems that having a baby has highlighted some of its impracticalities that hadn’t been such a big deal before. (Plus being on mat leave and spending more time at home put my critical eye on)

Bellatrix257 · 16/09/2018 09:41

Argh this has got me so stressed out. I’d been so sure we didn’t care if house prices went down as we want to stay there for a long time. But is it going to ruin us financially?

Also none of my friends are buying- they are using any savings they have to go travelling etc. And properly experiencing the world which I’ve never done! Maybe I should be doing that while I’m young but am instead making a bad finincial decision? But then again they all have family to fall back on that they can go and live with when they come back from their travels. We don’t have such a safety net so want to make our own by owning a home. Then by the time we have children we’ll be settled.

I wouldn’t buy in London because of the massive gains in recent years, but although the area I’m buying in has had some gains recently due to some ongoing regeneration of the area, it’s still very good value for money in my opinion, we’re getting a beautiful period 3 bed terrace with potential to extend in loft on a tree lined street and a lovely area where lots of families live. (There’s no garden but a yard and not far from a park) in the £200-300000 price range. Am I right in thinking period homes are less likely to lose value as there’s a limited supply?

Also annoyed because we’ve gone to our max in our DIP but didn’t realise we couldn’t lend that amount with all lenders as our mortgage broker didn’t explain. So one lender at 2.49% 5 year fix can’t lend quite the amount we now need, so we have to go with 2.89% 5 year fix which works out as an extra £42 a month :( i wish we’d been told that our max was less cause I just feel like that’s money completely wasted. DP says it doesn’t matter as it’s nothing in the scheme of things but I’m just annoyed .

10degreestostarboard · 16/09/2018 09:46

Analytical

Banks are commercial profit making businesses. They lend to make money and that lending has its basis in risk

They would survive a 35% crash but they would be extremely selective on who they lent to post a crash

10degreestostarboard · 16/09/2018 09:48

Bellatrix

Your travelling friends are setting themselves up for a non house owning, non pension owning future...

Priority has to be roof over head

10degreestostarboard · 16/09/2018 09:50

Mrs dunstable

The trouble with waiting for reductions is you can never guarantee you have to nd the low point - so you just keep waiting... and waiting....

And then prices rise again!

LittleBLUEsmurfHouse · 16/09/2018 10:25

The other thing is it's area dependant. Where I am prices are still rising fast and strongly across all parts of town, Inc first time buyer areas. However it's a comparatively cheap area of the country to live in and employment opportunities are growing here. I highly doubt we'd see much of a crash here even if the south east experienced on off the charts crash.

I also think the banks will keep interest rates low, as previous experience shows raising them when the economy goes to shit only causes more problems and keeping them low helped the last credit crunch.

Alexalee · 16/09/2018 10:26

Bellatrix I agree with 10degrees.
I genuinely to feel now that if you don't save from a young age for a house and a pension you will probably be a lifetime renter.
Travelling is great but I think it would be wiser these days to wait until you retire... sad but these days I think you have to prioritise saving when you are young

AnalyticalChick · 16/09/2018 10:45

@10degreestostarboard I would have thought it is a good thing if banks are extremely selective over to whom they lend huge amounts of money. If they are not selective it eventually leads to financial crises. The great financial crisis was caused by banks not being selective.

another20 · 16/09/2018 11:18

What happens if you rent all your life? Does the benefit system pay once you stop working and retire?

beibermylove · 16/09/2018 11:31

@another

Yes, it will cost the government a fortune in housing benefit...which often doesn't cover the rent anyway in more expensive areas.

AnalyticalChick · 16/09/2018 11:33

@another20 That all depends on a person's retirement income and savings.

another20 · 16/09/2018 11:49

Does that mean savings and pension would reduce any housing benefit payments? maybe PP travelling friends have the right idea then - spend and enjoy whilst young as your rent will be paid anyway?

AnalyticalChick · 16/09/2018 12:01

@another20 Ultimately, if a person's income is below a certain level and they have saved nothing, they will be entitled to all manner of benefits. I suppose your friend is still taking a gamble that those benefits still exist by the time she retires. And by the way the retirement age is being raised, she may not have too many retirement years.

LittleBLUEsmurfHouse · 16/09/2018 12:50

It is impossible to rent anything for what housing benefit gives you, unless you manage to get into a housing trust property. Short falls of £200pm between full housing benefit rate and actual rental prices in a very small property, in a rough area are common place. I feel extremely sorry for any OAP in that situation.

Also the age of retirement is rising and rising to the point that my generation will probably have to work until we die (unless we survive to a 100 or something ridiculous like that), unless we have savings available to fund our retirement. My dad already feels it's gone too late and has retired a few years early, thankfully he saved earlier in life.

another20 · 16/09/2018 13:15

So what are pensioners doing now about the shortfall if they have no savings or their state pension doesn’t cover it?

glintandglide · 16/09/2018 13:16

Housing benefit

beibermylove · 16/09/2018 13:22

@glin

There's a shortfall between housing benefit and rents thats the whole point

AnalyticalChick · 16/09/2018 13:33

@beibermylove So choosing not to save during a lifetime, is not a pain free or wise course of action.

glintandglide · 16/09/2018 13:36

We’re talking about pensioners now. They are not a high risk group for being unable to afford rents with HB currently.