Are prices shooting up where you are?

[Focusanddetermination]

Just that really. I'm in a small Midlands town, have a high amount of activity and prices shooting up in the past few weeks even.

I thought people would be more hesitant with a looming recession, but it's almost the opposite.

@FurierTransform - but am not sure if the burbs are dead....personally if I could get a 80-100m2 flat in zone 1 on my budget I would....even having spent lockdown in zone1 it is preferable to being in the middle of nowhere for me....i.e. I love big cities, I love noise, big roads, lots of people etc....countryside is nice but quiet and scary. Am an extravert and need other humans .... not everyone wants to retreat to a small place. I want to be anonymous in the hustle and bustle of it all. Plus my family lives in London and my kid can walk the 5mins to his grandparents house and take the 15mins tube journey to see the other set.

There're a lot of people in London and some of them are here because of London and not despite it

Been reading this thread with interest. I, like many others have been considering putting our small zone 2 flat on market to get something bigger and near good schools in zone 3 or 4. We are very fortunate that we both have good jobs and have a decent chunk of liquid assets (approx 100k). We were planning to add to that 100k by selling our flat, pulling the equity out, and getting a home for at least the next 10 years if not more.

But this has all got me thinking.....would it make sense to wait until prices drop, hold on to our zone 2 flat and rent it out for the long term, and use our liquid assets to purchase a second home, taking advantage of the (predicted but not certain) price drop? Would we be mad to have two mortgages?!
Or should we cut our losses and move now? We need more space, a garden and good schools - the usual London story!

@Desiringonlychild my mortgage for a 2 bed flat in East Finchley is £1020. The rent for the same 2 bed flat tends to be between £1400-1500. Even with service charges, my mortgage is still cheaper.

The average 2 bed apartment price in East Finchley is around £550k. 10% deposit (standard FTB deposit), 1.7% interest rate and 25 years works out to to £2,026 per month. Same apartment on rent would be easily £500 cheaper per month, not including service charges, maintenance etc.

I'm going to assume your deposit was a lot higher than 10%?

are the 10-yr fixed mortgages easy/possible to get now? Lightscribe

Me too op
3 bed semis selling for £250k in 2/3 days!

@Marbles321 Unless I know more details on your income, affordability etc., I can't advise on if taking 2 mortgages at any point in time is a good idea; However, I'd stated this earlier, even if you have to sell, it will still be a financially profitable idea to wait till the prices drop. I know this sounds counter-intuitive but here's the example I worked out earlier:

Imagine you own a house valued today at £200k and you have 50% equity (100k). You want to buy a £400k house and you're going to use your £100k from the sale of your current house to get a 25% equity stake in the new house (mortgage amount = £300k).

If prices fell evenly across both properties by 10%, then your current house is now worth £180k (your equity = £80k) and the house you want to buy is worth £360k. You will now only be able to get a 22% stake (£80k equity) at this new valuation but your mortgage amount has now dropped to £280k reducing the amount you need to borrow by 7% reducing your monthly payment, the amount of interest you pay on your house etc.

@thequantofmontecarlo Thanks for that, makes sense. My one concern is that prices won't fall evenly - we currently live in a 2 bed flat with no garden (sought after Zone 2 area though), and I have a feeling those with no gardens will drop considerably more due to the "flight" to the suburbs where you can get a house with a garden. So yes while they will both drop, ours may drop a greater percentage than what we're trying to buy, if that makes sense?

[quote thequantofmontecarlo]@TheGuruishere

What a load of economically illiterate drivel! Do you think your Trumpian style of bllsht and bluster is going to work?

Stop throwing a hissy fit because you're unable to back up anything you're saying with facts. It's easy to play keyboard warrior but, I bet in reality your opinion on finance and the economy (and I'm willing to bet most other things) have zero credibility and you're just trying hard to be "heard" and seem like you know what you're talking about to a bunch of unsuspecting MN FTBs.

Hence the stamp duty removal, as a gift from Sunak, to make this process easier.
Are you thick? There's a reason the government is willing to forgo tax income and it's not because they wanted to "make your life easier"! It's to prop up a falling market.

Renting, is not a good idea, when it's often 50% higher than mortgages. Then you get evicted and the process which follows.
Absolute nonsense. If you think the mortgage on a 2 bed apartment in zone 2-3 London is lower than rent, you're a special kind of idiot. Also, guess what happens when you can't pay the mortgage - in your world, I'm guessing you think Rishi Sunak will pay your mortgage for you .

10 years of renting, is real lost money, wether a house fluctuates in price, around 10-30%, over that time, eventually the repayments will come to an end
You simply do not understand the financial concepts of opportunity cost and total cost of ownership. Your GCSE level understanding of finance unfortunately doesn't "scale" in the real world.

I'll warn you also, becareful because following 2008, many held out expecting the market to correct, it never did.... HTB was introduced and ever cheaper credit.
Such an outright lie! House prices fell 15% YoY in 2009 and after a short recovery in end of 2010, fell again in 2011 and 2012 till 2013 when HTB was introduced.

if interest rates go negative, those who have bought now, will be able to sell the house for much more. Those who hold out will have to pay much more
You have just outed yourself as one of the stupidest people on MN. If interest rates go negative, then you'll pay less over the lifetime of your loan than what you've borrowed you muppet.[/quote]
🤣🤣🤣, somebody write this gentleman a care plan, he clearly needs help.

Your logic is completely, flawed. Your arguing that mortgage repayments are just as costly as renting? Seriously, did you just embarrass youself, demonstrating how illogical your mind is. It's a wonder anyone ever purchases a house throughout the UK.

Ohhh, I thought Sunak would pay my mortgage, how silly of me... do you think it's just about propping up the market. It's about keeping cash moving, consolidating prices and rebalancing of finances and the market.

Yea house prices crashed 2008, recovered by 2010. However, there was little choice available in some areas, many people weathered the storm. Mortgages were very difficult to get hold of for FTBs...Your giving blanket advise, which for sombody from finance, is extremely unethical.

Are you aware of regional differences? I ask, as you keep referring to overall uk house prices. You know within each country, England, Wales... there split into regions and within these, there are different areas, with different housing stock and driving factors...

Now the 2012 games clearly drove up local house prices, prices were clearly rising before 2013 in London, however this didn't show clearly until later on... this was due to low interest rates, not so much HTB...

Your reference to my last statement, I see how illogical you are, hmm you state you work in finance.. if interest rates go negative, what happens you moron??? Think about it... have a sit down, first.

Ohhh, did the penny drop, access to easier credit, more purchasing power = HPI...

I'll explain for you, because you seem somewhat challenged.

When you take out a mortgage with 0% interest, you only pay back what you've borrowed. 100k in and out.

When rates go negative you take out 100k and pay back less, let's say 90k... the buyer being aware, of this takes a bigger loan.

Now your betting, that we wont go negative on rates, but what if your bet is wrong??? You seem to think, that the goverment will shaft it's own voters and recent cohort of HTB millenials. Highly unlikely.

There are various central banks with negative rates currently. Some countries, have banks offering negative rate mortgages.

If rates, can't go lower, what happens. They'll introduce a form of relief, such as mortgage tax relief.

@thequantofmontecarlo

I think @Desiringonlychild once said their 2 bedroom apartment in East Finchley was in the £400k region. Sounds like a good buy if they're £550k now.

Prices around me (medium size city, fairly central houses) are going to sealed bids, the estate agents say it’s a massive increase since the start of the year

[quote Marbles321]@thequantofmontecarlo Thanks for that, makes sense. My one concern is that prices won't fall evenly - we currently live in a 2 bed flat with no garden (sought after Zone 2 area though), and I have a feeling those with no gardens will drop considerably more due to the "flight" to the suburbs where you can get a house with a garden. So yes while they will both drop, ours may drop a greater percentage than what we're trying to buy, if that makes sense?[/quote]
Which is why you should not take his advice and assess your own situation.

He has no crystal ball and seems to believe house prices, are purely speculative asset investments.

He does not know what the future holds. If you can manage payments and you have job security, then the choice should be around what benefits you and your family. Not trying to time the percent time to buy and then not being able to...

Residential property is not just an investment, it's a home. Is quality of life really going to be higher for a family which, say, doesn't have enough space, no outdoor space, and means the kids end up starting school in a crappy catchment - but the mortgage is (to use your example) 7% lower?

Nail -> head.

It's interesting to see how people define 'quality of life'. My quality of life improved drastically as soon as I purchased my own place, which for me finally meant having a 'home'.

I no longer have to move from rental to rental, in a house-share with 3-4 others, paying £££ towards rent, with my money just sat idle in a savings account, whilst I "wait it out".

I'd sooner be an unemployed homeowner than the other way around. But then again, I didn't plough all of my savings into my property, choosing to keep a significant amount back for reno works, as well as enough for an 18-24 month buffer should shit hit the fan. And this is despite me having a 60% LTV.

I'm quite content with the decisions I've made

@CatAndHisKit - yes - we got quoted one yesterday.

@thequantofmontecarlo - there are currently plenty of people who live in two-bed flats in East Finchley at 550k with quite a bit of equity.

There are also multiple conversations going on here - people who are on the property ladder should wait - prices falling works out best for everyone - that's is undisputed. Unless you are trying to massively jump areas etc where cheap areas might drop more than expensive ones or not (e.g. Central London is currently dropping quite a lot if you want a two-bed).

For a FTB with 10% deposit - and no commitments - waiting is also good.

But if you are not on the ladder, have commitments, have a large deposit - and a pressing need to move - am with @StatisticallyChallenged.

@TheGuruishere- most of what you are saying makes absolutely no sense. You also seem to have an incredible amount of faith in the Tory government.
Do you seriously think that, even if the rates go negative, banks will be paying people to take out mortgages, ie losing money themselves? That makes no sense whatsoever. Banks are a business and a business that wants to make lots of money for themselves. What you suggest isn't going to happen.
The Tory government are interested in their super rich, property owning donors and contacts plus most of them are exceedingly wealthy on a personal level and no doubt own property amongst their other investments. They also value 'the grey vote'. They are really not very interested in FTB (how on earth has the reduction in stamp duty helped FTB?) and millennials. The stamp duty reduction is an attempt to prop up the market and give it a (temporary) boost as we enter recession. I wonder if it may be extended but even that seems highly unlikely to save house prices as we enter a depression. The government don't have unlimited 'tricks up their sleeve' even though I agree that the desperately want to keep prices high. Add Brexit to this and the possibility of a no deal....
Surely on a personal level, many people on here have suffered or have friends/ acquaintances who have been made or at risk of redundancy and self employed people whose businesses are struggling. There are many, many people in these situations across the country. Even from my perspective, as a non Economist, the outlook looks bleak.

I agree with several posters that the choice of whether or not to buy will be based on a number of factors as are most things in life. Those, like @thequantofmontecarlo who are in extremely well paid work, very well qualified, without any dependents, etc may well make a different decision to those with much lower incomes, older age group, children to take into account, immediate need for schools, space, etc. I think the most important thing is to be informed and make an informed choice. Without wanting to describe our exact circumstances, we are choosing to wait.

@thequantofmontecarlo
If you think the mortgage on a 2 bed apartment in zone 2-3 London is lower than rent, you're a special kind of idiot.

It's equally as silly to make this assumption, unless you're presuming all homeowners only put down a 10% deposit...?

The mortgage repayment on my zone 2-3, 1 bed flat (in a gated development), is £650 a month. I defy you find me a cheaper rental option. In fact, I doubt you'd be able to find one for lower than £1200 a month.

[quote Marbles321]@thequantofmontecarlo Thanks for that, makes sense. My one concern is that prices won't fall evenly - we currently live in a 2 bed flat with no garden (sought after Zone 2 area though), and I have a feeling those with no gardens will drop considerably more due to the "flight" to the suburbs where you can get a house with a garden. So yes while they will both drop, ours may drop a greater percentage than what we're trying to buy, if that makes sense?[/quote]
Prices will definitely not fall evenly. My example was to demonstrate, counter to hearsay or financially illiterate advice, that falling prices don’t necessarily mean a bad thing when you’re selling. It will definitely depend on your specific instance. For example, a 15% drop in your property vs 10% drop in what you’re buying as per my earlier example still works out in your favour.

@Smallgoon * I no longer have to move from rental to rental, in a house-share with 3-4 others, paying £££ towards rent, with my money just sat idle in a savings account, whilst I "wait it out".

I'd sooner be an unemployed homeowner than the other way around.*

Money idle in your savings account and you’d rather be an unemployed homeowner than rent? Sigh. I guess that MD was right. I’m sorry I even tried.

@Smallgoon It's equally as silly to make this assumption, unless you're presuming all homeowners only put down a 10% deposit...?

My assumption is based on what a lot of FTBs put down as a deposit as we were initially comparing if it’s a good idea to buy now vs rent.

Different topic but if you’re “defying me to find a cheaper rental option” when you’ve ploughed a ton of money into a property, you don’t really understand what opportunity cost or diversification really is and therefore showing you how that might not have been the best idea is a waste of my time.

It does sound as if @Smallgoon was in a very unusual situation for a FTB (your posts imply this, sorry if incorrect). Not many FTB in London have 60% LTV plus 18-24 months savings. It is simply impossible for most people to save that amount of money. I think many young people buying in London are given large gifts by their parents but, even then, 60% seems unusual. Anyway, this would make a huge difference to your mortgage repayments and is something that skews your argument or rent v mortgage. If someone had a much lower deposit, I would imagine renting is often cheaper compared to buying at current prices.

@yellowymellowy I’d ignore people like @TheGuruishere. There’s no point explaining this any further really as it’s quite obvious people like him/her aren’t educated enough to fully appreciate what we’re saying. The level of stupidity spewed by this one individual in a single thread is breathtaking but, selfishly, quite entertaining as well 🤣 I’ve been taking screenshots of his/her posts and posting it up on my work Slack account for a few colleagues to see and it’s been a hoot 😂😂😂

@thequantofmontecarlo Try reading the whole post, rather than cherry picking the parts that suit your agenda. Or did you miss the part where I mentioned I still have significant savings (*albeit sat idly in a bank account)?

You've made lots of valid points in this thread but you fail to accept that people have differing circumstances and needs.

As @Greenhats10 put it:

There are also multiple conversations going on here - people who are on the property ladder should wait - prices falling works out best for everyone - that's is undisputed. Unless you are trying to massively jump areas etc where cheap areas might drop more than expensive ones or not (e.g. Central London is currently dropping quite a lot if you want a two-bed).

For a FTB with 10% deposit - and no commitments - waiting is also good.

But if you are not on the ladder, have commitments, have a large deposit - and a pressing need to move - am with @StatisticallyChallenged.

Interestingly your observations are not consistent with the data. I don’t think the gov have just cut stamp duty for fun.

www.google.co.uk/amp/s/moneyweek.com/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next%3famp

The world is about to enter its biggest recession ever. The property market cannot boom in those conditions.

@HogDogKetchup - agreed but they are currently not falling in vast areas of London. Ok am pissed off for being outbid six times in the last few weeks of my property search - but what this means is that people are buying and paying way over the asking price - like 40k over the asking price on an already expensive two-bed flat without a garden.

No one is saying that the property market will do great - but arguably whether some people have made a decision to buy now despite a looming recession and why. I'd hazard a guess that in the sort of areas that am trying to buy - people outbidding me are not thick or ignorant, most likely work in the city (cos why would you pay 700k plus for a two-bed if you don't) and are probably financially literate or at least able to calculate risk

Different topic but if you’re “defying me to find a cheaper rental option” when you’ve ploughed a ton of money into a property, you don’t really understand what opportunity cost or diversification really is and therefore showing you how that might not have been the best idea is a waste of my time.

Wait till you hear that I've been overpaying on my mortgage too!!!