Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Property/DIY

Join our Property forum for renovation, DIY, and house selling advice.

Am I catastrophising about the market right now?

39 replies

Gentleness · 10/08/2022 18:06

We really need to move but are in paralysis because everything looks like doom. I keep thinking we could just manage to stay put, no mortgage so very secure, but nowhere near enough space.

Basically, I'm in a bit of a panic and feeling stupid that we didn't just get on with during lockdowns because of the craziness over stamp duty. I thought it would all settle down... Stupid, stupid, stupid.

OP posts:
Yazoop · 13/08/2022 12:17

I think the key things in an uncertain market are:

  1. Don’t overstretch and ensure you consider different scenarios of rate rises.
  2. Look for somewhere that you think you can live longer term, and can adapt to your needs as your life moves on.
Essentially this boils down to being equipped to ride out any bumps in the economy - which you have no control over other than taking a careful approach to what you buy - and so really looking at the best options for an affordable (for you) long term home.
oiltrader · 13/08/2022 12:27

sst1234 · 13/08/2022 12:02

That’s a lot of words to basically give bad advice. Maybe you weren’t around in 2008. As far as housing market goes, that was nothing short of catastrophic. Yet people who bought in 2007, made a good decisions.

Seriously, advice like this is so bad. People who hold off buying because of the ‘imminent’ crash, mostly live to regret it.

The primary law or pricing is supply and demand. Unless this poster knows a secret about 2 million homes about to be built in the UK, they used up a load of words to say tosh.

the only supply and demand is credit. no credit demand no house demand.
credit is drying up. rates going up. this is not 2008! this is 2022 with rates going to be 4% and mortgage rates 6-7%

sst1234 · 13/08/2022 12:54

oiltrader · 13/08/2022 12:27

the only supply and demand is credit. no credit demand no house demand.
credit is drying up. rates going up. this is not 2008! this is 2022 with rates going to be 4% and mortgage rates 6-7%

So when credit dries up, people move into tents? No, they rent. That is demand for housing.

By the way, the period after 2008 was called, wait for it…. ‘credit crunch’. What happened to house prices in the subsequent years. They are higher than the ever.

There lack of understanding and simple of knowledge about the housing market is staggeringly bad sometimes, followed by worse advice.

rainingsnoring · 13/08/2022 12:56

sst1234 · 13/08/2022 11:57

OP, it’s never a bad time to buy. Because, in the long term, property prices only go one way - up. That has been true since the dawn of time.

That's not true. House prices rose roughly in line with inflation for most of the period for which we have data. No idea where you have acquired the data for 'since the dawn of time'. The huge rise in house prices took off from mid-late 1990s when lending criteria changed and then with zero/ negative interest rates.
In any case, even if you are right, it does not follow that what has happened in the past will necessarily continue to happen forever. That is a fallacy.

'The primary law or pricing is supply and demand. Unless this poster knows a secret about 2 million homes about to be built in the UK, they used up a load of words to say tosh.'

I'm sorry but this is nonsense. Demand is created by the cost of borrowing. Money has been cheap because of what I have already explained above. It has now become less cheap so 'demand' is already falling, regardless of how many house are or are not being built.

@Hobele - you would make a much greater 'loss' if the value of your home were to plunge and you were in negative equity that if you were renting.

oiltrader · 13/08/2022 13:03

sst1234 · 13/08/2022 12:54

So when credit dries up, people move into tents? No, they rent. That is demand for housing.

By the way, the period after 2008 was called, wait for it…. ‘credit crunch’. What happened to house prices in the subsequent years. They are higher than the ever.

There lack of understanding and simple of knowledge about the housing market is staggeringly bad sometimes, followed by worse advice.

there is a demand but if there is no credit the "demand" can't be fulfilled. credit is what allows houses to be bought. not a desire to buy one. pretty basic stuff

sst1234 · 13/08/2022 13:04

rainingsnoring · 13/08/2022 12:56

That's not true. House prices rose roughly in line with inflation for most of the period for which we have data. No idea where you have acquired the data for 'since the dawn of time'. The huge rise in house prices took off from mid-late 1990s when lending criteria changed and then with zero/ negative interest rates.
In any case, even if you are right, it does not follow that what has happened in the past will necessarily continue to happen forever. That is a fallacy.

'The primary law or pricing is supply and demand. Unless this poster knows a secret about 2 million homes about to be built in the UK, they used up a load of words to say tosh.'

I'm sorry but this is nonsense. Demand is created by the cost of borrowing. Money has been cheap because of what I have already explained above. It has now become less cheap so 'demand' is already falling, regardless of how many house are or are not being built.

@Hobele - you would make a much greater 'loss' if the value of your home were to plunge and you were in negative equity that if you were renting.

Demand is created by people needing to live somewhere. You are talking about tenure, not occupancy.

This kind of bad advice was given after 2008, when the Brexit vote happened, when the UK left the EU in 2019, when Covid happened. Anyone taking this advice is regretting it now.

rainingsnoring · 13/08/2022 13:13

sst1234 · 13/08/2022 13:04

Demand is created by people needing to live somewhere. You are talking about tenure, not occupancy.

This kind of bad advice was given after 2008, when the Brexit vote happened, when the UK left the EU in 2019, when Covid happened. Anyone taking this advice is regretting it now.

We are talking about house prices and the current market not whether people need places to live.
In any case, people make adjustments if they cannot afford to buy. They already have been as house prices have meant that young people often can't buy at 25 as they could in the past. People live with parents or even several generations together, they live with house mates longer, they postpone having families or have smaller families. These trends are clear now. People adjust.

I don't know why you keep citing 2008 as proof of what you are saying. The only reason things didn't collapse completely is because banks/ government stepped in with QE and ZIRP. That has had the effect of inflating asset prices. It won't work now. It just bought a bit of time.

TakeYourFinalPosition · 13/08/2022 13:23

Experts have been predicting an imminent house crash since I was born. I was advised not to get a mortgage at 20 as it was about to happen. Not to get one just before I got my flat because it was about to happen. Not to get one last year… you see the pattern.

if you constantly predict something, you’ll be right at some point - a bit like a broken clock still being right twice a day. But I’m mighty glad I didn’t put off buying based on that advice. There’s been no meaningful crash and if I hadn’t bought my flat, I’d never have been able to afford my house.

flashbac · 13/08/2022 13:40

You've waited this long OP so why not wait a little longer, at least until March 23?
The winter is going to be 'interesting' in terms of the economy. Wait it out.

Lindy2 · 13/08/2022 18:37

Do you have the option to extend if it's more space you need? You could build and pay in installments to control costs.

If moving is your only option you are protected quite a bit by already being on the ladder. If prices are at a peak you will benefit from getting a higher value for your property. Even if they fall afterwards the price you got for yours should cushion you.

It's those that are new onto the property ladder that feel market falls more, at least on a short term basis. In the end though, long term values rise and property should always be regarded as being a long term commitment.

AntlerRose · 13/08/2022 19:00

Your current home is very secure but it will also lose value. it's only the difference in loss between the two properties that is worrying you if that make sense. Eg. If your 100k flat goes down to 75k you lost 25k but if your 150k house you lose 37k so a 12k difference in loss - which is only an issue if that takes you into negative equity or you cant afford higher payments. Also its often the bottom end of the market that loses more as a %.

So my advice would depend what size mortgage you were thinking off compared to the current value of the next property, plus ensuring you had tested you could afford the payments at much, much higher interest rates. If you still had 50% equity and can afford payments up to 12% interest its less of a risk than 10% equity and you cant afford an interest rate over 4%.

Hobele · 14/08/2022 06:53

@rainingsnoring
Only if you needed to sell in that time, if you stay put, prices will catch up.

Labraradabrador · 14/08/2022 09:49

A home isn’t just an investment, it’s a place to live. If you could be happy and comfortable here you are for the next 5-10 years, stay put. If you can’t stay, or the thought makes you miserable, what are you waiting for?

Unless you anticipate moving again in 5 years, I wouldn’t agonise about timing - a good time to buy is a bad time to sell and vice versa. Just make sure you stress test all of the finances, and give yourself plenty of wiggle room - a good strategy for any economic context.

rainingsnoring · 14/08/2022 12:29

Hobele · 14/08/2022 06:53

@rainingsnoring
Only if you needed to sell in that time, if you stay put, prices will catch up.

They may or may not. It's possible that prices will dip down significantly and only grow relative to salaries once the dip stabilises.

New posts on this thread. Refresh page
Swipe left for the next trending thread