Anyone have experience buying property 07/08? Throwing a wobbly!

[jellywobble22]

Hi all

Made an offer on a property back in July, won against 3 other really strong offers so was estatic when I found out, property ticks a lot of boxes, and must have viewed over a dozen before finding 'the one', could see myself living there happily for 5+ years.

Process is still ongoing thanks to the lawyers being slower than athsmatic ants... as time goes on it seems the news each day gets worse and worse and I am having a few sleepless nights about buying at the peak and being in negative equity for 12+ months from completion :( .. not to mention that the mortage offer was agreed on the basis of 30% LTV so I'd be seeing best part of £150k life savings go is frankly frightening.

Has anyone had experiences buying in a downturn? Just wondering what to do - am I better staying put (my first home bought 6 years ago with negligble debt remaining thanks to overpaying) and waiting for a better priced house next year (admittedly not at the 3.4% interest I have agreed in the mortgage offer) or biting the bullet and moving....

We bought in 2006 and sold in 2010 for a 15% profit. When houses fall in value, they don’t all go down at the same rate. There are many variables such as location, condition, original purchase price etc. Ours was a family home in a popular location and in excellent “move in” condition.

We bought in 2006-impossible to find a house - it was a private sale.
In 2008/9/10 prices didnt go down at all here- but more properties came onto the market

Our house has more than doubled since 2006, adding £720k based on a remortgage valuation.

I bought a nice house 2007 in a desirable area (for the area) in the East Midlands.
Sold up 2010 due to relationship breakdown for 20k (c. 15%) less than purchased for.
It's generally said to be all relative. I bought another house where I moved to which sould have been cheaper than it would have been without the crash. But still only saw a net capital gain over the 12 years I held both properties of less than 10k.
When you take account of the costs of buying and selling, I definitely lost out.

If the mortgage is 30% LTV on what planet do you think you’ll end up in negative equity? Am I missing something?

Tbh I would not buy into the my house went into negative equity but then it doubled in value. I don't think that will happen again for quite sometime as that was off the back of emergency interest rates & people stretching themselves. It's going to be a lot harder for FTBs to build equity & equity drives so much of the market.

However if you have a good LTV, a good rate & are happy to stay in your next house for a while then I would go ahead.

We bought a fixer upper in 2008 fixed it up and sold in 2009 for the same price we bought for so lost all the money we had spent on renovations. The house we bought after, which also needed fixing up, we then made a huge amount on so longer term it all worked out fine.

We bought in 2007 fully understanding and anticipating a crash.

What it boils down to is how much you need to move and whether the move is longer term.

If you are buying with the view that it's about your need being great enough and you are in it for the long haul the decision shouldn't be about how many much you might lose or how you might be in negative equity. The point is you are there long enough for it not to be an issue.

If you are renting now you have to consider how much you would spend on rent - so for first time buyers, getting a house usually is the right step provided you think you will be there for at least 5 years or you think you can over pay your way out of the negative equity. You have to factor in how muhh equity you build up and how that will affect the interest rates you may pay further down the line too. You want to be finishing your mortgage when you are younger, so delaying buying will usually affect that.

If you are up sizing it comes down to whether where you are is sustainable for the foreseeable.

Don't stay put waiting for a crash on the belief you will be able to get more for your money. It's unlikely to make any difference. You will find it harder to get a buyer yourself and the rules on lending with get tighter/more expensive which will restrict what you can get.

In our case if we had not have gone for an opportunity we saw, we probably would have been priced out of the area for a good 5 to 7 years when the market bottomed out. We would have had to rent or buy elsewhere which probably would have meant a very different life to the one we have now.

My point is plan for the life you want based on the opportunities you actually have rather than the chance of the opportunity you may get but equally may not get which involves you having to compromise now.

In the long term house prices (and the overall cost of housing to you including rent, changes in interest rates) will tend to sway to being cheaper / better for you if you start now.

Where you have issues is if you plan to buy for shorter periods and move on or if you are likely to have a significant change in circumstances. So if you are buying a two bed and plan to start a family (or accidentally start one) in the near future or you are liable to need to relocate you will run into problems.

How stable is your lifestyle is the big question. If you work in leisure or another vulnerable luxury industry I'd be more cautious unless I was very confident that should the worst happen, I'd get another job quickly. How future proofed in terms of lifestyle rather than finances is the big question.

For us, it made sense to buy at the top of the market. And still did in retrospect. We'd probably be a lot worse off now if we hadn't.

Others may well say differently, but I don't think the price on the house alone should be the only consideration.

Also, location, location, location ahead of a crash. Houses in nice areas lose less value and become more desirable quicker than housing in less nice areas. Plus if you do get stuck somewhere, due to negative equity make sure it's somewhere you want to live and like living. Don't compromise on the location.

We brought in 2007, for 350k. It was outer London, having moved from inner London. The price did go down, but by nothing close to 30%, and I think about 5years later, it was perhaps a little bit more than we paid (and this compared to a friend who had stayed in inner London, whose house value had never really dropped and 5 years on had added at least 20% more value). But, we have just sold, at the height of the market, for 910k. We have bought, and know prices will drop again (and likely more in the area we have bought than where we moved from), but we will be there for another 5-10 years minimum, so it doesn’t really matter, because they will have recovered by then. I do think area matters in terms of how fast recovery is, but the most important thing is not whether you are planning to stay for a while. If you are, try not to worry and enjoy your new house!

Yes, I completed in 2007 in the south east and saw value plummet, was hard to remortgage on a decent rate due to a significant valuation drop, but just 7 years later when I needed to sell (divorce) the house sold for 150k more than I paid for it. Dips are stressful but house prices bounce back. It's only really a problem if you don't intend staying long, or are forced to sell.

Can you re-negotiate the price at all? It might be that the house is no longer worth what it was in July, but obviously that depends on whether the market has changed. In my area it’s changed dramatically since then.

I bought in 2007 and sold in 2020 during lockdown. I wasn't in negative equity due to a big deposit but value definitely dropped a lot for a few years. Then it rose again, sold for the same price during lockdown as I'd originally bought for. Annoyingingly if we'd waited a few months longer we'd have sold for a lot more (judging by what other identical flats in the street sold for) but we had already offered on a house right before lockdown hit so needed to sell. So I bought and sold at the worst times but I think it depends what a house means to you. If you're planning on flipping a property quickly for a profit then maybe not the best but if you're looking for a family home and planning to stay a long time and it ticks all the boxes, it will maintain or regain its value, or even go up over the long term.

All these people saying they bought, then prices fell through the floor BUT then they made money when they sold aren't pointing out that if they'd bought a few months later in the first place, they would have made a lot more money. The market is going to fall - almost inevitable. It's up to you whether going ahead is worth the likely fall in value than the faff of waiting for a year or so to buy.

@NCHammer2022 - apologies typo! It is 70% LTV mortgage, 30% deposit - a 30% mortgage would be my fantasy...

Thanks everyone for the replies / experiences shared, they have massively calmed my nerves. Sounds like one of the key things is going in with the view that I may be in there a long time - which is the original thought process I had when embarking on moving in the first instance, it is quite a big step up and will provide us with a lot more indoor / outdoor space which I'm massively looking forward to having transitioned to primarily working from home post covid.

Area wise the houses do seem to sell fairly quickly although I'm not sure whether that would stand in a downturn, admittedly I guess the same could be said more broadly.

@dancemonke of course we understand the lost opportunity concept, however you’ve got to weigh it up against the risk that you might not have been able to take advantage of that opportunity in the first place. Just seven months after we completed having been employed for 10 years at the same organisation my ex lost his job that would’ve put his right back on the scrapheap for an absolute minimum of three months once he found a new job.

But actually he didn’t find a new job at that level for nearly 5 years.

during that five years we were able to pay the mortgage, we would not have been able to pay rent on a similar property and we wouldn’t have been entitled to any help for a similar sized property.

once you have a mortgage you can pretty much do what you like as long as you pay it. Getting the mortgage is the hard part.

Bought in London leafy suburb 300k in 2005 at a peak of house buying madness

2007/8 Market was okay but house prices stagnated still worth 300/350k
Sold it in 2011 when market picked up for 450k

Rentals went through the roof, lots of houses did still get bought and sold usually properties that people had for a long time or needed a lot of work.

@AuntSalli Your situation is quite unusual though - in that he lost his job but managed to keep paying the mortgage. A lot of people won't be able to keep paying the mortgage if they lose their jobs.

Yes, bought 06. Tried to sell 2014 for same price - didn't sell. Sold 2021 for 20% more than we bought.

DSis currently selling property bought in 07. Selling for approx 25% more than they bought for.

We've both been able to buy the properties we want - although the house we bought was £160k in 2002, and we paid £350k last year! But the people we bought off, although making a large profit, will have to pay a much higher price for their new house.

As long as you view your property as your home and you're not planning on moving quickly, and you can afford your mortgage, I don't think you'll have an issue. Property seems to rise and fall as a block, so if you lose money on your sale, chances are you'd pay less for your next home.

Bought a flat in 2007.... 100% mortgage. It was about £990 a month.
It had a very odd layout, but was in a v desirable location. Only other BIG issue was that is had a very short lease. Being very young, had no idea what that would eventually mean.
Our plan was to live with the odd layout, remortgage in a few years and get the loft done and layout sorted.
Then everything crashed.

The cost to extend the lease was gonna cost £20k and without the lease extension we couldn't remortgage and we were in negative equity.

We stayed in that flat for 7 years, living with the odd layout.
Had to take out a loan to extend the lease, move back to my parents for 6 months to enable us to move up the ladder.
Sold it for £5k more then we bought it.

Only saving grace was, our mortgage company went bust and with how low interest rates were we were paying barely any interest once our fixed period ended. So out monthly payment went down to £500 a month but we continued paying the £990, so over the years managed to build a bit of a cushion.

Could you live in your current place for the foreseeable? How urgent is the move?
And how long do you plan on being in the new place? If this is the forever home then I would bite the bullet

Have you tried to renegotiate the price? So much has changed in a short time.

I bought my first house in 1989 at peak of market. I paid 50k ( I know a joke compared to current values) the market crashed and I sold 6yrs later for 45k. Fortunately, huge drop in interest rates meant I’d paid of a good chunk so came away with the deposit I’d initially invested.
We bought current house and another property (business) at the bottom of the market which tripled in value over the last 25 yrs.
However, no way would I be risking 150k of equity at the moment, or taking on a mortgage with rising interest rates. I have the benefit of hind site and experience though.
Unless you need to move stay put and enjoy an easy life. I am forever grateful that we didn’t make the next move. It has given us security and peace of mind.
Life can turn on a pin and leave you in difficult situations. Both DH and myself have had serious health issues this year. DH can no longer work and I am only able to work part time. Our life choice not to overstretch our finances mean that we have massive savings that will support us until I take my pension next year. We have been able to live comfortably as a result, albeit in our average sized house. No mortgage to antic about, heating bills will not crucify us and money in the bank to cover emergencies.
It hasn’t always been this easy but I am so glad we chose not to overstretch. Keeping up with the Jones’s is exhausting. Money is irrelevant if all it does is balance the books each week. You don’t have to be rich to have disposable income you just have to make sensible choices.

@dancemonke Well Boris alluded to a scheme to keep people who own their homes in their homes if it goes pear-shaped on the basis that it will be cheaper for the government to pay £650 in mortgage payments that it will be for them to cover 950 in rent minimum. Will have to see if that comes off but if it does it makes a lot of sense.
back to the point though paying for housing was not an option one way or the other the 650 for the 950 had to be found.

And for any posters reading, this the banks will be far more open to negotiation surrounding coming up with a solution that keeps you in your house than landlord who has a queue of people waiting to rent.

Very much depends where you live, in the North East where I live, houses typically had only just made the money back, before this covid boom, that they lost after the 2008 crash. We bought a 3 bed detached repossession in 2007 in a good area, over the years added a conservatory, converted the garage, increased the hall size, landscaped the garden, opened up the kitchen into the dining room etc but only sold for 25k more than the repossession price in 2020. We are getting more and more people moving up from the South now though so house prices have risen more in the last few years than other areas (percentage wise of course!).
As a first time buyer I would be more cautious but also very much believe a house is a home and as long as you can afford the mortgage repayments, I wouldn't worry what its value is. It only becomes a problem if you have to sell and are in negative equity.

I'd be more worried about ducking out and then being unable to find a mortgage at your lower interest rate... than sticking with your purchase for a house you see yourself in for 5+years anyway.

We bought in 08. We sold for about 10k more than we paid 4 years later but of course had the benefit of reduced interest rates so managed to pay off £60k.

According to zoopla in the following 10 years our new house has increased in value by £500k (nearly doubling). Our old house has done similar.

We are in an expensive area though.

Yes I’ve bought and sold properties in all sorts of market conditions including 2007. The main thing you can do to protect yourself is to be fussy with what you buy - buy a nice house that attracts a lot of interest in a good area.
No out of town new builds if you think you might want to move in the next few years because they do not appreciate in value as quickly (in a rising market) and drop in price more in a falling market. They lose their USP of being new the minute you move in and tend not to be in the most convenient locations.