Waiting for the current housing boom to calm down

[stuckinaditch]

We were originally planning to buy a new (larger) property last year but decided to wait due to the current property boom fuelled by pent up demand, more WFH, v low interest rates and government policy. Things seem to be peaking now in many areas currently with many houses selling in a week at over asking price, bidding wars, etc

We have decided to monitor the market and wait as we are not in a huge hurry and don't want to get involved in what seems to be a frenzied market. Obviously there are risks to waiting but equally there are risks to buying now.
Has anyone else decided to do similar?

Totally understand, OP. This was exactly us. In the end we decided to move rather than risk being priced out, but can well imagine things may soon stabilize/decline (RM seems to be a little quieter in the last couple of weeks).

Such a tricky market to second-guess, I'm interested to see how it pans out.

Sounds like a good plan, though I would worry if you wait there may not be much on the market to choose from once everyone in the rush has got their move out of their systems

RM seems quiet in last week, probably the approaching STD deadline, more people decide to wait the more clear situation of house market.

At least now people won't hold the hope the STD will be further extended. Also furlough approach the end by the September, only 5 months to wait to see whether unemployed rate will restrict the house price keeping crazy like last year.

Me too. Makes sense to wait imo

Our move this year was decided on two years ago - my daughter wanted to change schools for sixth form and I was keen to move back to London. So we can't help the timing. But it looks like I'll miss the stamp duty deadline anyway as my seller still hadn't found a place after two and a half months looking and won't go in to rental despite a cash incentive. So on top of the stressful sixth form application process we now have a stressful move- I have told my buyers we will go but at the moment have no where to move to!

It’s a gamble, what is it you’re hoping will happen? Prices will decrease? If so are you ok with loosing and you get priced out?

It's a classic tulip market at the moment.

Think you are wise Alot of people are going to be stuck at the top for quite some time.

It’s hardly like tulip mania. 😂

It’s pent up demand, people have been holding off. It’s simply the escalation that would have occured over the last year that was held back

Don't agree Bluntness.

Its an artificially inflated market, supported by low interest rate mortgages, stamp duty holiday and working from home boom. Its opportunistic buying to capitalise on current market support.

Come autumn when furlough is removed and fire and re-hire continues, driving wages and income down then it will start to topple.

Its naive to assume it will continue on its current trajectory indefinitely.

So many people claim to be waiting for the bubble to burst and the. Get completely left behind by the market.
It’s a risky strategy OP

@lastqueenofscotland

So many people claim to be waiting for the bubble to burst and the. Get completely left behind by the market. It’s a risky strategy OP

I completely agree.

There is still a massive gulf between supply and demand in some areas. London / SE may be more affected if there is a dip, but it's unlikely to be a crash.

Many places may stagnate for a while, but unlikely to see a massive drop which will recover in a few years, as with every cycle before.

Let's meet back here next year and see who called it

Depends whether you're a contrarian investor or follow the herd I guess. I've always made money with the former approach myself. I've got property and I'm saving to buy another house but currently sitting on my hands because its just too overheated for my liking with too much artificial support.

We were going to go on the market last March. Didn’t, for obvious reasons and then held back due to work uncertainty etc... Just had house valued and it’s 70k higher than it was last March. Of course everything else is more expensive too. Like you, we have now decided to wait.

Who knows if it will play out well. I’m generally risk adverse and have been saying the bubble will burst for years!

At this point, I’d wait to see what happens after the stamp duty holiday ends as that’s (imo) crossed the threshold of what people save vs what they’re paying in a hot market.

Whether there’s a crash or not, I’d guess at least a small correction or less speculatively priced properties on the market. More committed buyers and potentially smaller chains. If you’re looking to upgrade, a reduction will benefit you and even if prices don’t reduce, I’d expect a bit of stagnation while people figure it all out which hopefully means you would be able to move before being priced out.

We intend to move to another part of the country entirely when DS finishes uni and cuts geographic ties to home. And while we could currently sell our house for silly money in hours, we couldn't find anywhere else to live.

There was a piece in last Saturday's property section of the Telegraph about exactly this sort of thing.

However, it was talking specifically about countryside homes so may not be directly relevant to your situation. Here are some extracts:-

Warning over countryside house price bubble

Urban exodus buyers may find they have vastly overpaid in the frenzy.

[...]

[An estate agent] said prices in rural areas within 90 minutes of London, such as the Cotswolds, south Oxfordshire and Hampshire, are up 20pc year on year.

[Another estate agent] said "A lot of people have bought houses in B-grade locations and have paid A plus prices. They are going to be told their properties are worth considerably less than they paid for it".

"A lot of buyers are shooting from the hip and making massive compromises. There are plenty of people who are buying now, making a medium term move, who could find it quite expensive when they come to sell".

[...]

Part of these soaring prices was due to a dearth of homes on the market. But now, supply is starting to rise. Savills estate agents said that newly vaccinated older downsizers, so called "second-jab sellers", are preparing to bring properties to market.

"I'm getting more calls from the older generation who weren't so keen to have people coming around in lockdown. Now they're feeling safer."

The next few months will be competitive for buyers, but these vaccinated downsizers will start to bring their homes to market just as demand starts to soften. The return to the office means many Londoners are pausing plans to move out to the country.

"We are already noticing buyers who have gone on hold. Country property is now very expensive, they're doing the calculations and they're thinking actually they can't afford it."

He added: "Others are questioning if they will be doing flexible working as much as they thought they would. Maybe they don't want to be the person in the office who has a two hour commute when the rest of the team is in the capital.

"People are thinking: hold on, do I really want to move out of London?"

But demand will continue to outweigh supply for the next 12 to 18 months and that will underpin prices.

[...]

Strutt & Parker's Ipswich office has already exceeded last year's total income in the first three months of 2021. Demand is also high in Norfolk, Dorset, Somerset, the Kent coast and the Cotswolds, he said.

The above is just some extracts from the longer article.

It's mostly talking about countryside property (naice little villages etc) so that may not be directly relevant.

However, one thing that I think will apply more generally, is older people feeling safer about putting their homes up for sale (regardless of where they live) as they will have had both vaccinations by now and so supply will start to increase.

But how long that will take is anybody's guess.

Its naive to assume it will continue on its current trajectory indefinitely.

Sigh, if we had a pound for every person forecasting a decline in the market over the last few years we’d all be loaded.

You missed something, because something doesn’t continue on its current trajectory doesn’t mean it will topple. Increases can slow, but still increase. This is the more likely outcome.

But none of us know. Not you. Not me. And it’s a risk. The internet is littered with people who waited and them never managed to buy.

And always remember you should only gamble what you can afford to loose

I'm pretty much the same. Ready to move if something amazing comes on but I'm seeing it softening. Lots coming back to market, lots now price reduced and sitting around and much more coming on. Great stuff with potential goes straight away but that's it.

we are waiting aswel. we have been looking for over a year and a crash is inevitable. the government have tried so hard to prop up the housing market but its got to crash with all the unemployment when furlough finishes.

This is a huge gamble considering London buyers are already flooding demand for properties across the UK. After the financial crisis large properties within 1-2 hours commute of London saw huge increases; this time with many Birmingham / London / Manchester jobs going remote we are seeing / will see properties 2-4 hours away being snapped up.

So there may not be huge savings to be made next year as fewer properties will have more buyers.

Holding off but for different reasons. We're waiting to see how much we need to be in the office. It's too soon to tell how it will pan out.

whilst I want to be out of London with more space where we go will be very different depending on if work goes back to a normal 4 days a week in the office, or more like 2, or maybe even, mostly at home but a day a fortnight in for key meetings. Also how international work travel picks up will define if I still need to be close to Heathrow.

I'm amazed so many People have enough confidence they'll be mostly at home to move a 2 hour commute away.

The problem in our local area (SW) is that with everything going up, 2 years ago you'd need to take your 50k equity and borrow 250k to move from a starter home to a 3 bed. 50k household income ok.

Now you'd have maybe 100k equity but the 3 bed is 400k. Larger houses with offices and gardens have increased by a larger %. You'd need to be earning around £63k.

I'm amazed so many People have enough confidence they'll be mostly at home to move a 2 hour commute away.

Agree! I know a few people whose workplaces were all for WFH who are now, 6 months on, rumbling about 2 days in, 3 days out.

@ThinkAboutItTomorrow

Holding off but for different reasons. We're waiting to see how much we need to be in the office. It's too soon to tell how it will pan out.

whilst I want to be out of London with more space where we go will be very different depending on if work goes back to a normal 4 days a week in the office, or more like 2, or maybe even, mostly at home but a day a fortnight in for key meetings. Also how international work travel picks up will define if I still need to be close to Heathrow.

I'm amazed so many People have enough confidence they'll be mostly at home to move a 2 hour commute away.

I always commuted 3 hours a day into central London. Most of that commute was (and still is post-move) the London bit.

I’ve been thinking this for over two years, Brexit crash, Covid, yada yada.

The crash hasn’t happened yet, if I’d advised FS two years ago to wait for a Brexit drop he would have been 40k worse off. DD is taking the risk and buying now, in her city, it’s not worth the risk.

I suspect prices up here in our sought after northern city will stabilise but not fall.