Would you rush to buy as a first time buyer right now?

[spuddy56]

We have finally saved a deposit and are looking to buy. If house prices were like they were 2 years ago we would have had a comfortable budget of 300k. Unfortunately to get something we would consider staying in long term (I.e. not 45/50 sqm with no garden or parking) we would now need to spend about 375k. Our joint incomes are 83k and we have 45,000 saved. We've got no help available from family to boost that so have been caught out by downvaluations on a 15% deposit twice recently. No cars on finance, no debts or loans etc. Would it be wise to go beyond the budget we are comfortable with right now or just continue renting?

I can’t see house prices dropping. I’ve heard many times over the years that we’re heading for a crash and it’s not happened.

We are buying but are first time buyers at 47. Time is not on our side so we are just going for it 🤷🏼‍♀️

Second guessing the market is a fool's game. Prices are likely to increase faster than your salaries (unless in line soon for a good promotion) so I'd get on the ladder now. So often I've bought a place and within two years I wouldn't have been able to as it's value had increased so much.
Do your research though - look at the area's historic sale prices and see how it's trending.

I think it’s likely prices will at least stabilise and probably go down. We’ve had low interest rates for a long long time, it will be a shock to many in their 20s and even 30s that mortgage interest rates of more than 4% (++) are more normal historically.

However, I wouldn’t put it off on the basis of potential price falls. People who bought at the peak of 2007 are now 15 years into paying off their mortgages and sitting on a fair amount of equity. They could have waited and then still missed the boat when prices jumped again after.

I’d be more concerned about what is affordable to you, budgeting for high inflation and high interest rates.

I also would advise buying now, get the best rate you can and fix for 5 years. Prices will probably just slow rather than fall and you will have a stable home and know what you will be paying for the next 5 years.

I'm buying as a first time buyer at the moment, I've got a fixed rate mortgage for 5 years, to avoid any potential rises in interest amount. If I kept waiting, I'd probably never get on the ladder. No one can predict how the housing market will react and prices could get even higher. There's no guarantee.

I would neither rush nor delay buying. Just keep looking and it will all work out. You will find the right house at the right price. Many sellers are asking too much right now as they are banking on finding a cash buyer, so the banks devaluations are really a good sign that the protective measures put in place after the 2007 crash are working. The housing market tends to calm down in the autumn months so just keep looking.

I think you need to consider that interest rates are also rising, so if you wait and prices don't drop massively you may then be stuck on a higher rate than needed.
If you buy no and fix a rate for 5 years you may be better off than waiting.
If you are currently renting I would say buying is always a better option.

• That should say "if you buy NOW"

They’re not going to crash. Plateau probably. Dip, possibly. Our house (second step, similar budget to you) has gone up about 17% in the last year since we bought it. We could never afford it now.

We were told that we were fools for buying our first house because Brexit meant that prices would crash and we'd be in negative equity. If we just waited we'd get a bargain

We didn't listen to others thankfully because they were talking absolute bollocks and we would have just been priced out. We'd already spent several years chasing the market trying to get a deposit together

Is it our perfect property? No, but now we have 5 years of mortgage payments (and overpayments) instead of rent payment and have developed a nice chunk of equity (without even considering the likely value change)

I wouldn't rush into anything. But I would certainly think through the different possibilities and decide on what is best for you

I can’t tell you what to do but as one of the idiots that jumped into buying just before the crash in 2008 and ended up with a badly built apartment that is in serious negative equity meaning we still can’t sell and we have to rent out as we’ve since had children I’d say just be very sure. Am in Ireland and I know a few people who’ve been told two wait two year as there has to be a crash but nobody knows for sure. Best of luck!

I'd buy now, and fix for at least 5 years. Otherwise you will be paying someone else's mortgage for the foreseeable; it might as well be yours!

Our joint income is less than yours and we are days away from exchanging on a house for £375k. Similar situation to you - absolutely no family help whatsoever so it's taken us a long time to get here. It's 65sqm, no parking, tiny courtyard garden but location is excellent.

We're fixing for 5 years and have a decent interest rate. Ideally we want to sell at that point but as it's a 3 bed house (we have 2 DC's) we can stay here long term if we need to. I'd be more reluctant to carry on if we were buying a 2 bed as I hated sharing a room as a teenager.

We're also about to turn 40 so can't really delay any longer and our rent is way below market rate, if our landlord kicks us out we'd need to find another £300 a month for rent which i'd rather pay into a mortgage.

House prices would need to fall by around 30% for us to be in negative equity in 5 years time and whilst I assume we will have to pay a higher interest rate at that point, I'm not convinced prices would crash by that much - and I said, providing we have jobs etc (I have a career that tends to be busy in a recession) we can stay here long term.

We are waiting to see what happens with end of s21 evictions. I’d guess a lot of small and accidental landlords are going to sell up because it isn’t worth the hassle. We have the luxury of waiting thought because we live in accommodation provided for a peppercorn rent by my husbands employer.

It wasn’t your fault. It was just bad luck. You’re not an idiot. But really proof that crashes in house values do happen. I hope you can hang on to it long enough for the value to recover. Many people I know have been forced to sell at significant loss due to unemployment, divorce, bereavement or disability and are now struggling as older renters.

We were in exactly your position...we just kept our eyes peeled and saw something which was actually slightly under budget but with tiny garden. We viewed it and just went for it, bar the garden it's perfect for us and I really think it's down to pure luck.

My parents were saying now is not a good time to buy but at the end of the day who knows what's going to happen.

Discovereads
thanks so much x We tried to sell but he bank wouldn’t let us take a loan for the loss and said they’d take us to court if we tried to. We are chipping away at the mortgage and aim is to have it sold by age 50 (am 42) or win the lottery and give it to are lovely tenant!!!!

Our

Regarding negative equity, in the past it has been a real issue where it’s a studio or a one bed flat, that you’re then stuck with as you outgrow. Really sorry for the poster up thread stuck in a poorly built flat since 2008.

I knew people stuck in studios after the late 80s crash, and a couple stuck in a one bed flat with an accidental pregnancy that was twins after the 2008 crash. The latter they only had up wait a couple of years until prices shot up again

if you can afford somewhere now that would be ok if you couldn’t move in the future then you can ride out any market dips. Also if you fix for 5 years you won’t be having to remortgage when you’ve barely made a dent in the debt.

What is the difference between the rental and mortgage costs?

How much would you pay off in equity in the next two years?

It's a tough choice. You may overpay but if you get a decent mortgage rate fixed for five years it may not actually make a difference in terms of what you actually pay each month. You also have to consider that lending requirements may toughen and reduce what you can buy.

If you can jump a rung you also save on moving and stamp duty.

Basically, don't buy for a short term gain as you are unlikely to see it but will probably do okay over 10 years plus

I'd be looking for something that isn't pristine. Not a full renovation job as costs are high but something that needs a bit of updating that can be done over time.

I agree with this. I’ve seen some houses priced reasonably fairly and others which are just silly. The fair ones are selling, but the overpriced ones aren’t.

I don’t see a big crash happening (as would-be sellers will just sit tight unless they have to sell, thus restricting supply) but nor do I see prices rising much in the current economic climate.

Thanks for the perspectives all. We currently have viewings for really small, 'financially safe but could end up stuck" houses and tempted to book a viewing for something that we could start a family in and stay for the long term. It probably wouldn't be livable to most people but we don't have high standards (or can't afford them haha!). Partner is terrified at the thought of something more expensive but I'm seeing that a lot of posters here have a point about buying something to stay in. The more expensive house would be about £100 more than our rent plus probably about £150/200 extra in commuting costs a month. At the moment we are saving alongside renting. So it's definitely not unaffordable.

We bought in 2008, and house value only really recovered a couple years ago. Fortunately we sold a similarly priced property at the same time so overall it made no difference to us. So it is entirely possible that house prices will fall in the short term and take a while to recover!

But, inflation at 10% ... house prices are not going to be increasing at that rate for a while!

But theninflation will erode the real value of your savings (Id guess your interest in savings is much less than this!).

In your shoes, I’d still look but not move unless it was perfect for you, with a view to wait-and-see. And I’d look for something you can afford now but easily tolerate longer term if at all possible as that’ll give you scope to ride out any market changes.

My uncle said to me “rent is the maximum you’ll have to find to keep the roof over your head. A mortgage is the minimum you’ll need to find”.