Will the bubble pop or am I mad to not buy?

[User112]

Houses around here are coming up for silly prices compared to what similar properties sold for last summer.

Should we just suck up and buy now ?

I’m in te same situation as you. Estate agent on a off the record conversation suggested waiting 18 months or so as the market isn’t sustainable.

However, if you need a home and would rather not rent, given that, at best advice/views on the market would require the ability to see the future, I’d go with what you want and what your needs are. The risk of waiting is that the market doesn’t pop - it never did after Brexit - we waited as family advised us it’s too risky to buy - we then had a change in circumstances and have priced ourselves out of where we want to live. Waiting did us didn’t work.

There’s such a shortage of housing, I can’t see any collapse of house buying happening.
In 18 months time you can have either paid someone else’s mortgage, or your own. I know which I’d rather do.

It’s so hard but I think in your shoes I would buy sooner rather than later. I bought (and really stretched the affordability) in 2006 and lots of people thought that was a bad time to buy and prices were about to drop. I then sold it 3 years later and the price had risen by about 50%.

If you can afford to buy now then I would. No one can ever predict what the housing market will do so you may as well just go on the situation you're in now. I also think prices may jump if anything given (hopefully) we are at the end of the pandemic.

Well, only buy if you are there long term say, 10+ years. If you are moving in a couple of years be wary.

I’d buy. People have been saying the bubble will burst for years and it hasn’t yet, prices just keep going up. We bought in a supposed bubble year and we’re worried about it, but our house has gone up a lot since then.

I think they’ll keep going up. Maybe growth will slow but they won’t drop, demand is too high. Many first time buyers over the last five years now have a healthy amount of equity in order to move up the ladder. There’s motivation for people to keep moving on. The only thing that might worry some people is inflation and higher bills but personally it wouldn’t put me off, only potentially make me more conservative budget wise.

All markets are cyclical however be wary about people setting a timeframe for a correction and indeed what form that correction might take. House prices adjusted for inflation over the very long term (think centuries) is largely flat. So today's high could reduce due to nominal falls aka 1990s crash or as per the 1970s you could see inflation take off (the more likely option in my view) and house prices remaining stagnant.

The bubble will pop but who knows when? All you can do is do what suits you at the time. Try to future proof as much as possible, buy a home that will see you through the next 5 years if you need to and try to build up equity.

Only if you have sufficient headroom if interest rates and cost of living rises. I think we are in for a sustained rise in both. House prices will drop if buyers at the bottom of the chain can't get on the ladder and inflation, tax rises and interest rate increases will have a huge impact. It also depends on the banks risk appetite on how much it will lend for a property. House prices are governed by availability of credit not by supply and demand.

I remember debating whether to delay buying in 2015. So glad we didn't. Bought a place for £210k, sold for £260k. Then bought a place for £310k, now valued at £360k and got a really good five year fix as a result (I'm worried about interest rates so would absolutely go for a five year fix in your shoes unless you can deal with rocketing rates).

I read a lot of property blogs, a few weeks ago, most were saying prices are going to rise at least 5-6% throughout 2022.

A lot have now been updated, re-written predicting the market will be much the same until April/May when prices are predicted to level off, now expected is a 2% increase. So a much more conservative outlook predicted.

The truth is no one knows for certain, but they’re so many economically challenging situations, such as rise in fuel, inflation, interest rate rises. 2022 will be interesting year.

My advice would be to hold off, if you can, but if you need to buy now do it, as long as you a planning to purchase a long term home.

DS bought in 2019, he started looking in 2018 and had heard then prices would fall. Never happened.

I would bite the bullet, most people aren’t into home ownership for the short term.

It's so hard to time things with the market. If you're happy with the affordability of the mortgage and you can find a place you can live for the long term if necessary then there's no reason not to go for it now. Especially if you're paying rent now, waiting for the market to hit rock bottom could cost you a fortune and there's no guarantee that you'll time it right then either.

The affordability is key. I remember doing a complicated bit of maths when I bought in 2096 about how much prices would have to fall and for how long to make it a bad deal overall. Given my rent at the time was £900 a month and the mortgage was £400 it would have to have been absolute carnage for years to make the move a bad financial call.

2006! I didn’t buy in the future

We started looking in summer 2020, livid that there was what seemed to be a lockdown price spike.

We offered for £360k in October 2020, moved in Feb 21. House is now worth £438k according to Zoopla.

I’ve kept a slightly obsessive log of how the prices just keep going up.

I’d move now if you can afford it. The risk is too high of being priced our further. Even if there’s a slight correction, property will always be worth it long term.

I'd buy. We were looking to buy before Brexit happened. We were unsure if we should buy or not as we were worried the prices might go down. Well we went for our house and moved in just as the first lockdown was starting. Here we are nearly 2 years later and our house has gone up in value by about £50k. Brexit has happened and the housing market is still crazy! So I would go for it. But hard to predict!

If it's a long term move then buy.

I do think there will be some stagnation as the tax hikes haven't hit & inflation not helping. I think it will be a tight year.

I asked a similar question when we were looking to buy and the advice given was, the future is unknown so go ahead with what you want right now.

Regarding a housing market crash you might find this interesting
www.thisismoney.co.uk/money/mortgageshome/article-9601221/amp/The-18-year-property-cycle-tips-house-price-boom-crash-2026.html

I'm hoping to move this year, house prices are probably slightly crazier where I live compared to where I want to move to, although some properties are up for some insane prices.

I can't see it, especially with these new 50yr mortgages with 7 times your salary. This seems to me like they expect house prices to rise.

I'd really not rely on Zoopla estimates...

OP, I've heard for years the market would crash because of Brexit, pandemic, prices being too high already, whatever else. It didn't happen. In fact, I think what will likely happen now is an increase in wages alongside a significant increase in the cost of living. Properties will become more expensive to build, this will drive competition not only in respect of new houses, but all houses so the demand will not decrease, quite the opposite. I can't see any of this leading to any price decreases any time soon.

I can't see it, especially with these new 50yr mortgages with 7 times your salary. T

😱 Surely this will just cause more stagnation. It's getting more & more difficult for people to move up the ladder as ever increasing prices don't help this. The stamp duty pause helped get things going in my area.

Make sure you can afford a rise in mortgage or do a 5 years fix. In the long term house prises just keep on going up. Even if the market stagnates you will still be paying down your mortgage. Even if market nosedived, worst scenario you would be in negative equity temporary until market picked up again. Bottom line is if you are buying for long term it does not matter. Only matters if you need to sell in short term.