House buyers remorse - have we overpaid?

[BeanieBops]

North of England. FTB and we finally had an offer accepted on a (very) small 3 bed terraced house with a small yard for £198k. It needs some modernising but there is no way to extend.
This is originally not what we wanted to go for, we wanted a bigger house (semi/garden/driveway) in a not as nice area. But at some point in the covid buying madness (and after being outbid on many properties) we decided we wanted a nice area over a bigger house and garden. This house is in a really well respected neighborhood, great amenities and schools and close to our family and friends.

We are in our 20s, married but no children so right now it's perfect size wise. But I know that realistically we are going to outgrow this house in the next few years.

I am very much in a panic that we are overpaying for the house (paying top end). Others have sold in the nearby streets over the past 12 months for around the same price (190k-210k), but before then (2018) they were selling for more like 175-185k. I just feel anxious about it long-term that we will find it hard to sell or that it will not rise in value so we will end up stuck there.

I know this sounds so spoilt, and truly we are not buying to make a profit but for a home, yet unfortunately the way the 'ladder' seems to work now is that unless your house multiplies in price you can end up stuck.

I guess I'm just feeling very overwhelmed and I need reassuring that you can pay the going price for an area without ending up trapped. It just feels like house prices have gone so mad that it's hard to know what's normal anymore.

Prices always go up eventually. It sounds like you bought slap bang in the middle of the market.

You are at the very early stages and you have room to improve the property and make it a home.

Wherever you buy it will need work, you can’t change an area, but don’t stop looking!

You have weeks before things begin to cost money and maybe keep an eye out?

There was always threads on here about people buying in less than lovely areas to get a bigger house and then despising these areas once the actually move in due to anti-social behaviour, neighbour problems and other issues. It sounds like you're doing it the right way around.
Enjoy your new home.

Also, it’s likely your partner are still young and will likely progress in your careers, as well as building equity in the house, so may be more able to take on a bigger mortgage later to get your next home. Don’t they always say location is key!

The prices in 2018 are a moot point - pretty much every house in every location was selling for a lot less back then!

It's much better to be in a good location for your first home rather than a big home in a worse area (particularly if you don't have children yet). You can do work to the house gradually, overpay on the mortgage if you can and you'll likely find you'll have a nice amount of equity when it's time to move on.

Despite what many (ie my parents and inlaws) say, it's not always necessary to try and buy your 'forever home' as your first purchase. You never know where life will take you and it takes the pressure off a bit to know that it's not the be all and end all, but t's the right house for you for now.

I paid at the top of the market for my favourite house and then went into negative equity. But I had no plans to move soon if at all. When I sold 15 years later I still made money.

But the point is that there is an assumption that you always make money with property and sometimes you dont but you would have to pay to live somewhere.

You are still very young and everything is recoverable then. If you like the house I would stay with your choice. If you dont and if you can withdraw now.

Always choose area over size if you've a choice

You did really well

The saying goes buy the worst house in the best location.

Don’t worry about the 2018 prices. My previous house sold for 162k in 2018 and our buyers have just resold it for £200k without touching it. Prices are high but it’s all relative when it’s time to move on.

I wouldn’t get fixated on previous prices in relation to if you’ve over paid. If your house is comparative with other houses selling in the area right now then you’ve most likely not over paid.

When i sold my first house it went for 15k more than I paid 2 years later and I’d done no work to it at all!

it only matters when you want to move . Otherwise ignore it . If we could all predict house prices we would be millionaires .

We went into negative equity for a few years and then luckily came out and still managed to make a profit .

plus a house is only worth what someone wants to pay at the time .

It sounds like you are in a good area so enjoy your house and don't worry about house prices until you come to move.

Are you able to pull out still? Not saying you should but it trick me you’ve said you’ll outgrow it in a couple of years and house prices do seem to be particularly high right now.

Honestly don’t worry - we paid £13k over the asking price on our first house (also NW) due to a bidding war and I was terrified we’d overpaid!

We sold it 3 years later for £17k more and it’s now valued at about £40k more than we originally paid.

So my advice is don’t worry - the market is crazy and it only actually matters when you come to sell!

And, if house prices drop by 10%, as long as you’ve got savings, your bigger house will be 10% cheaper as well (which will be a bigger drop).

Stick with it. Sounds like you’ve chosen the area well. A three bed house will still accommodate a few children for several years so you don’t need to be in a hurry to move on. Sit on it and wait.

You're not committed to buy until you exchange contracts.

Thank you all for your replies . It has made me feel so much better about our situation. I think I just felt a bit wobbly as the sale is moving faster than I anticipated and buying in the market at the moment feels like a minefield. Reading the replies have put everything into context and being in a nice area is definitely more important than having a bigger house somewhere that we don't really want to be. With this house we can walk locally to nice parks and restaurants and be near to family and friends. I'm going to just try and focus on the now and as PP suggested worry about prices if and when we sell.

Your talking quite small differences in price - I really don't think it will matter long term.
The only way you'll get trapped is if you've bought in a 'bad' area that doesn't increase inline with everywhere else, but it sound like you haven;t done that.
If your overall aim is to eventually upgrade/upsize, flat lined/falling prices actually benefit you as the 'jump' up in value to the bigger house will be less. I cringe when I hear people sound pleased that they've bought a house & the market has since jumped up 20% - that means their next house upgrade is further away.

If prices fall a bit that could be good for you, the cost of the next home up will drop as well so be more affordable. You can live in a three bedroom house with 2 or 3 children, especially if you have nice parks and amenities and family nearby. Even if you have one baby per year for the next 3 years the house should last you 5-6 years.

You don't sound spoilt at all! Perfectly reasonable question and concerns. Congrats on getting on thr property ladder! Honestly it sounds like you've made a good decision, and location is so important. We are paying 20k over asking price and I have the occasional wobble but I do think it was the right decision and will turn out to be a good investment.

It is scary that's all !

Speaking from painful experience. Location is definitely more important then size! We made the other choice and it was the worst mistake ever!