House Prices - is buying now a good idea?

[Bungalowblues]

We sold our house and moved into a rented property for a while whilst we cleared some debts. We are now starting to think about when we will look to buy again. When I moved in I was adamant that we wouldn't be long in rented and wanted to get back on the ladder asap. But I'm starting to change my mind. House prices seem to edging downwards, so it seems to me it would be better to wait and see where the bottom is.

Is anyone else in the same position? Do you think it will be a gradual move downwards or is there going to be a slide? can you see it bottoming out soon - if so why?

No one will ever know when the best time to buy is, so we just bit the bullet and did it. We have friends who insisted on waiting a ges more months (to early this year) as they were confident we were about to see a drop and got priced out of what they wanted in the area they wanted. Now we are sitting in a 3 bed semi and they had to settle for a 2 bed flat with only 10k difference in price. Personally I think things will stagnate, which isn't bad for either owners or buyer. But if things do slide or crash we can just wait it out

Wow typos
*few more months

Depends where you are. London and the South East, definitely going down, though who knows how long for. Most other places edging up albeit slowly

I was in the same position but as I was paying £1000 pm in rent I figured house prices were not going down by that much. In fact the market is relatively stable in my area so I decided to buy. You could wait for the brexit effect though if your rent is low.

Are you going to live in the house for the next 5 - 10 years? Or are you looking for a quick flip and sell on?
Is it cheaper to have a mortgage than to rent?
If you're going to be there a while, fluctuations make less difference as you're paying your mortgage off and building equity.

I thought that 6 years ago, prices then increased a further 50% in the area we wanted to live in and we were massively priced out .

You just can't tell. We finally bought 3 years ago in a different area when brexit had just been announced. Again seemed like a bad time, but our place has been conservatively valued at 11% more than we bought it for. (I think it's more like 15% looking at what has sold recently) this is despite a poor market.

We couldn't afford to buy our house now, at the time I was worried we'd overpaid!

From what people are saying I think it's more likely to stagnate rather than drop. But who knows what affect the ridiculous number of new houses being built will have.

I'd rather pay slightly too much and have a home that I'm happy with, than wait and risk being priced out again.

I would give it a couple of years if I was in your position. Nobody knows what is going to happen next in politics and Brexit could have a massive effect on house prices.

I think now is a good time to buy. This could be the bottom of the market, pre Brexit. You need to do the opposite to what the masses are doing.

It's not brexit that I am thinking about really. There are some big events looming on the horizon.

Interest rates will need to go up at some point to avoid the Japanese issue. I don't think that we will see a repeat of the 90s situation but given the debt level any increase will lead to current borrowing being unaffordable for some.

The continual squeeze on buy to let property owners isnt going to stop. The government have found a less than popular group they can squeeze for revenue with no political consequences. I read that HMRC made 3bn last FY from capital gains tax on landlords selling up to avoid tax hikes.

Also the buy to let market and removal of the help to buy scheme. HTB has effectively been propping up the building industry for years inflating the price of new builds artificially. Once it is gone and it runs out in 2023, then its going to make it extremely hard to sell new builds. The price drop to get stock sold may ripple out to the rest of the market.

I live in the SE and the rental property we are in has lost 30k in value since the owner bought it last year! the property we sold has gone down 10k since we left.

The UK continues to be the fastest growing economy in europe so I'm not overly worried about brexit. I think the market (FTSE and BOE) has factored in economic shift. I do think the housing market has been artificially inflated by the factors above for a long time so a recorrection especially in thr SE is inevitable. Just my musings really.

If you buy a house now and it drops by say, £30K in 3 years you will still have rented for those 3 years and 'wasted' the rent money which will probably be the same equivalent. At least by buying, you are in a place of your own, that you can decorate etc how you like. Also interest rates will have to rise soon so borrowing will become more expensive. If you buy now, you can fix for a longer term at today's lower rates.

“I live in the SE and the rental property we are in has lost 30k in value since the owner bought it last year! the property we sold has gone down 10k since we left. “

And how much have you shelled out in rent during that time?

Family houses are selling well in our area of London, prices having plateaued.

We bought 2/3 years ago and prices have gone down a bit, however given we would have been paying 1,500 a month in rent. So it’s sort of equalled itself out.

What I have noticed though is that there seems to be a lot more on the market now than then.

I get the rent equals dead money argument but it doesn't bother me tbh. We are investing our money and it is making much more than we pay on rent per month so the longer we sit tight the bigger the pot gets.

Tbh part of me is tempted to sit out for 5 years and maybe buy for cash at that point but it is a risk. If the market does do a U turn and goes up then it gets more expensive to buy.

I guess if we knew what would happen in the future we'd all be extremely wealthy

So many new houses are being built. The supply and demand rule would indicate that houses price probably will fall. By how much is anyone's guess though.

Ooh, where are you investing your money, OP?

If you so good at investing your money that the deposit is getting bigger by amounts greater than the rent paid, then it wouldn’t make any sense to wait to buy outright. You’d get a mortgage (they’re very low cost at the minute) and keep your capital in your high-return investments.
You do need to be careful with those investments, though, as they sound like they’re doing fantastic for you now but are high risk and could swiftly go down in value.

I’d also add that Property price changes really do depend on the area: in London some areas have gone down by 10% whilst others up by 5%+ in the last year (can’t comment on elsewhere as I only follow the London market prices).

jojo that is something I have thought of. Put the absolute minimum deposit down and use the rest of the capital to pay the mortgage off quicker by making it generate income. That was the plan if we were to buy sooner rather than later tbh. Never again would I put all my savings into a house with nothing to invest. Otherwise you end up a slave to a mortgage. Been there done that!

But the investor in me still thinks there is a way to go before we get to the market bottoming out with some pretty bumpy stuff ahead. I'm in the SE so its starting to see drops.

I make money on investments going down as well as up not going into more detail as it would be very outing.

In exactly the same position here..we’ve been renting for 6 months and thought we’d have bought a new home by now. But the time has flown and I feel we’re still getting to know the area and we both feel the same that we’re just not ready to buy yet. I think if something had come up that we loved then maybe we would, but nothing has, everything seems ridiculously expensive for what it is and houses are just sitting there way over priced.
We’re also in a very fast moving area in general, so when something nice and reasonably priced comes on the market, it’s gone in a week.
We’re just going to wait, we’ll probably still be renting into next year tbh.

Those are very interesting points bungalow about factors affecting future house prices.

I also sometimes wonder about the effect of interest only mortgages coming to an end of their 25 yr terms and the owners having to sell to redeem the mortgage (only where they haven't made other arrangements of course!); and the fact that sooner or later demography will mean larger (ie more than 2 bed) properties increasingly come onto the market as owners downsize or more into care homes. But as you and other pp have said none of us can predict what will happen!

We had exactly the same problem when we bought two years ago, but two years on prices have one down slightly in our area but not by much. In that time though, we've paid off another £30K of our loan while we'd probably be able to sell for £5K less.

So probably worth it for us, as we can now get a much cheaper 90% mortgage and put more money into paying it all back more quickly.

You could also hedge your bets by getting a fixer upper - you'd add a fair bit of value through refurb and prices would need to really plummet for you to be out of pocket.

Also, is it a purely financial decision for you? Nothing emotional about wanting a home etc?

It's purely financial with me tbh. I've owned property before and thought I'd be excited about decorating etc but the reality is I just found it constant hard work when I'd rather be out doing other things. This is why I think a fixer upper probably wouldn't suit me either.

I think we will hold off for a while and see how the market pans out Suspect it will go down further for a while yet.

I think it depends where you are. By me house prices are definitely rising. We bought our house 2 1/2 years ago. If we were looking to buy today we couldn’t afford it.

London and the south east have in the most part been falling or stagnant for 3 years... 5 in prime central London... people cant afford to move up the rings anymore as they are too far apart.. ie 300k 2 bed flat 450k 3 bed house... too far a leap
Only way in see the stagnation ending is if the banks relax lending criteria or the government pump help to buy in the 2nd hand market... I can see a scenario where prices are the same as today 10 years from now... but if you take into account dead money rent that isnt a bad deal
Honestly cant see prices falling more than 25% from their peaks and a lot of the areas around me in south east London have fallen by 10-15% already
I would buy if i saw something perfect and thought it a good deal... wouldnt rush in though

supply and demand
as long as there is a shortage of houses their value will increase albeit with some short term fluctuations
There is probably a bit of pent up demand behind Brexit at the top end of the market with people not prepared to move unless they have to
Until the local Nimbys agree to more houses being built everywhere and create an over supply demand will stay