Mad to buy right now?

[3ormorecharacters]

DH and I accepted an offer on our house from chain-free buyers not long after the market restarted following lockdown. However, we are really struggling to find somewhere that's right for us.

Luckily our buyers have been patient so far but we don't want to start annoying them, and obviously they will want to complete before the end of the Stamp Duty holiday at a minimum. We are also expecting our first baby in January so that's a time pressure for us too.

I'm starting to get a bit jittery about the whole idea of buying right now, given the Perfect Storm of Covid and Brexit on the horizon for 2021. I'm assuming that house prices will take a massive hit. Obviously we're hoping to stay in the new house for a loooong time so it shouldn't matter too much but you can never tell. DH's job seems pretty safe but my salary alone wouldn't cover the mortgage (and I'm going to be going on Mat Leave then hopefully part time anyway). We'll keep enough savings to cover 6 months but it's still a bit scary.

I guess the brave choice would be to take the money from our buyers, rent somewhere short term and wait for prices to crash. (Though I guess supply of houses will also crash so we could be waiting a long time.) I guess this has to be weighed with the inconvenience of moving twice, especially with a new baby.

Ugh. There are no crystal balls obviously but I'm curious as to what others think / would do?

No guarantees prices will crash. You do risk prices still climbing, and being priced out as you’ve cashed in your equity. We’ve weighed it up, and the stamp duty holiday is worth more to us than the risk of the house value dropping, but we plan to be in the next house long term also.

I get where you are coming from though. The buy/sell simultaneously is so stressful I almost wish we’d done the rental thing.

True! It's always a gamble. This just seems like such a bubble getting ready to burst. I think lots of people have priced in the SD holiday so house prices are even higher right now. (We accepted our offer before the SD holiday was announced, could probably get more now but we like our buyers and the fact that they're chain free is worth a lot in itself.)

I think your decision will be made for you if you find somewhere! DO you definitely need to move now? Moving stressful whenever you do it and your worst case scenario is that you get stuck in a rental and end up either struggling to find somewhere to buy (even if prices drop as you say although you would be in a good position having sold) or struggling to get a mortgage if you are not working. Renting with a baby is preferable to renting with a toddler though as you don't need as much room (they could be in with you), you don't need to worry about stairs/doors etc. etc. In your situation I would try and find somewhere now to buy...

Exactly the same here, our vendor accepted us before it was announced and has been a star so far. Our buyer is a whole different story; but we are persevering because of SD holiday and loving the house we’ve offered on so much!

@testingtesting101 we have found somewhere we like but we think it's over priced (even the estate agent agrees). It's been on the market for ages with no offers, apart from one we made and had rejected a couple of weeks ago. Tbh we could afford to go much closer to the asking price but I don't want us to end up paying over the odds for it. I'm worried that if we were unexpectedly required to sell sooner than expected, we would have the same problems in selling it at that kind of price and end up eating a big loss. I think basically I probably do too much catastrophising about the future!

We could just not move at all of course. Our house is fairly cramped as it is though (DH has a lot of 'stuff') and that will only get worse with baby paraphernalia incoming soon.

Similar boat here, but we’re waiting to hear back on an asking-price offer that’s probably top-heavy.

Doing it KNOWING prices are likely to fall short-term, but if it’s our 5-10 year house with growing room and a huge garden it won’t matter.

We have a baby too and the faff and stress of this is all already too much. I’d rather be in my nice new house in negative equity for a while, knowing prices will ALWAYS rise eventually.

I think prices are secondary to what you actually want/need actually. If you end up paying what you think now is fractionally too much, that probably isn't much (both financially and in terms of your happiness/stress levels) if you live there 10 years in the scheme of things (and avoid another move... rental fees... moving costs). We have no idea of knowing whether prices will go up or down, so maybe concentrate on looking for a home not an investment.

As others have said, if this is your medium to long term home then ultimately that’s what you need to view it as - the place you will live and which may fall in theoretical value in the short term but which will ultimately wash its face in the long run.

Don’t overstretch yourself and don’t let your decision be swayed by other people’s predictions. People have been predicting the top of the market and ensuing crash forever, nobody knows if or when it’s going to happen, and people mostly pontificate in it to justify their own action / lack of.

We are in a rental and have to move out for beginning of next year so have been looking to buy, despite the fact that we would really rather not move right now.

Even houses to rent are being snapped up quickly, we are having to be on the ball and within the first two or three people to view or everything is going so quickly.

Asking price offers are being made on stuff we think is overpriced. It's really stressful. But one of the estate agents did say that there were not that many houses coming onto the market, as people were not wanting to upsize and take on a bigger mortgage, while others were not wanting to downsize as previously planned and lose out on outdoor space. It's possible that the situation will continue that way into next year, although we had assumed the market would take a big hit next year.

Eventually we have made an offer under the asking price on a house, which has been accepted. We decided that if we found the right house for us (and we have to live somewhere) and - worst case - we had to sell in a year's time, so long as we didn't lose more than the money we would have put in renting plus the cost of a second removal, it was the right thing to do. It meant we had to rule out anything that seemed overpriced to us though.

To make matters worse, we ll also see regional disparity price wise with the new normal of remote working, emigration of EU citizens after Brexit, company relocations etc and a dozen of other things. I don’t see price rising with all the headwinds so would personally wait until same time new year, especially in London where prices are stratospheric.

Why are you looking to buy?
You need the additional space I’m assuming with the baby. Is the house you’re looking to buy going to work for you for the next 5 to 10 years (I.e. baby number 2? Primary school/general childcare etc).

You’re not buying a house to make a profit, you’re buying it to live in.

Consider how much a year’s worth of rent would be as this is “lost” money. Property market goes up and down however after 5 to 10 years it highly unlikely you would lose money or be in negative equity

I would rent if I were you. I think prices will reduce and I think there will be more on the market as people have to sell. I know its not ideal renting when you have a baby but it will give you time to find somewhere you really want. We are doing the same

Thanks all, good advice. We are not looking at it as an investment, we would hope to be there for probably 20 years all being well. But at the same time, life can be unpredictable (especially at the moment) and I just have a fear of needing to move unexpectedly in the short / medium term and facing a big loss.

But, I guess at least if prices do fall then wherever we end up buying next is likely to also cost less. We are fortunate that we have a good amount of equity we can put into the house so our LTV is good. It's all monopoly money really, the main thing is having the right home. I think we'll push ourselves a bit further on the house we like and hope for the best!

I would be careful with the concept of wasting money on rent, you won’t get the interest paid on the mortgage either and there is no reason to exclude them going up many folds given their current level. The difference between rent and principal repayment on your mortgage after a year might be a fraction of the amount you may save if prices go down by 5-10% percent. Again very location dependent.

@user1471538283 totally agree with you. I would wait at least by the end of this year if I were OP.
Once furlough & mortgage holiday is over by the end of October, We should see many forced sale houses/reprocessed property pump into market. Loads redundancy/pay cuts will reflect on house market eventually.
Even you buy your main residential house, still worth to wait just 3 months to see house price drops. Buying a property is the most expensive investment in our entire life, Saving 10% of price means you can pay off mortgage in 5 or 10 years with quality mortgage free life/early retire life. It's definitely worth to wait.
I know people would say lots prediction about house market crash in the past 10/20 years, but how many times we came across this pandemic situation in past 100 years?
We are still in the second wave of this pandemic combined with no deal Brexit, no chance house price will still be skyrocketed like nothing happened in 2020.

If you’re looking at 20+ year period in your next house, and you’ve already benefited from the last decade of HPI, and the stamp duty holiday, then the forthcoming predicted -16-20% reduction won’t matter so much over a longer period. In the result of a correction in the market however, banks lending criteria becomes more stricter, larger LTVs, and high rate products to offset the bank’s risk.

What’s far more relevant to you however is getting a 10 year fixed mortgage. They are being quietly withdrawn from the marketplace (although Barclays is still doing a 10 year 1.99% product - speak to an independent mortgage broker) Mortgage interest rates will never go negative (even though central banks might) so now is the cheapest at what you’ll be able to borrow.

The federal reserve announced last week that they would take an average approach to inflation rising while keeping interest rates low as long as they can. IR rates will rise to follow inflation in the forthcoming years however, so the era of low IR rate long term mortgages will disappear (which is why the banks are removing the products)