Buy Now or Wait for a crash???

[DeathByWorry]

We're in rented in a place we like. The rented house is pretty crap and we want to get our own place. DH is all for buying now, even if the place isn't perfect and has loads of compromises. I'm not sure. Won't prices crash and we will end up overpaying for a house?? In the news it's all about 20% off house prices, interest rates going up on Thursday etc etc

Is is better to wait for 6 months even if it is in a crappy rental??

As another poster future proof as much as possible with what you do buy.

We also haven't seen the true impact of the rate rises as people will be coming off low fixes this yr & next.

I'm reading these posts about how the housing market has never crashed - I've known 2 in my memory. I was affected myself by the 2008 crash. I remember in the 90s watching the news and it would say each day how many repossessions there had been - bit like the coronavirus statistics in 2020.

House prices can crash and have done, leaving millions in negative equity. If can ride out the recession, then they tend to recover after a few years. If you can't ride it out, negative equity means you can't afford to sell your house because selling won't cover the amount you owe the bank, and you're trapped into mortgage default and lose your house.

Trying to play the housing market is a risk, but the risk lessens over the long term. If you want to buy now and can afford the repayments for a few years, then you're probably ok.

A £200,000 mortgage at 5% is more affordable than a £170,000 at 7%.

This - find a calculator and play round with the figures.

Buying a house is cheaper than rent in the long term. So add in what you pay rent as that is a loss to you.

Certainly in my area of London Brexit hit prices & Ive seen quite a few flats sell recently for the same or a bit less if they were bought a few yrs ago. Prior to Brexit you could make 150k in 2 yrs on a flat.

Ignore people saying houses never crash.
House 1 I bought when prices were about to crash. I sold it for twice what I paid for it.
Bought the next one, and a year later, prices dropped significantly. We lost about 20% , and have just sold it, 15 years later, for what we bought it for.
If it's the right house, and you are planning on keeping it, it doesn't really matter when you buy. The only thing that would change things is if you have a crystal ball to see what prices and interest rates are going to do.

Not everyone can sit tight
Abs building societies sell off the stock they repossess

The number of houses for sale has already fallen but it's never impossible to buy

( jammy uncle sold just before the 1990s crash
Moved into rented
Bought in the dip
Pure chance

I think it really depends where you are and the local demand and types of houses. There are plenty on here who haven't exactly been inundated with buyers on the last 6 months

My main thought on this unanswerable question is are you buying a home or an investment, if it's just the latter no one can tell you, if it is the former and you plan to be there long term it isn't worth obsessing over. You need a home, prices fluctuate in the short term, but if you wait for a crash you may find it much harder to borrow what you need anyway, even if it is cheaper.

Stress test yourselves, buy what you can afford, fix for longer if genuinely concerned about negative equity, and if you don't need to move for a while house prices don't really matter very much anyway.

When prices start going down in ‘some’ areas, it’s because people have overpriced in the first place. It’s hard to know if it’s price correcting, price dropping, something needs doing with the house…

In all reality if there was ever to be a crash it will be now. Cost of living crisis, rampant inflation, interest rates going up. All hit mortgage affordability massively. There's no guarantees but I expect about 30% off of peak prices over the next 12-24 months.

When the spring bounce doesn't materialise the writing will be on the wall for the rest of the year.
I would wait and see in your position

I think as a FTB in rented I would look to move but make sure it's a property you will want to stay in for years.

I'm personally waiting to upsize as the falls in my lower priced property are less than the savings to be had on a larger one..

interest rates going up on Thursday
What’s this??

As various PPs have said future proof: check that this is a property you could live in long term, check that you could afford hugely variable mortgage rates in the future, compare this to your rental costs now.

I also think you if you want to buy, you should buy when you can. People never consider this but if in the future something unforeseen happens, ill health, disability etc. you may never be able to get a mortgage if you can't work, and will be stuck in rented. I am very glad I got on the ladder before I became unexpectedly very ill.

Also, no one truly know how the market will go, there are just too many variables.

Definitely wait. This is the wrong point in the property-market cycle to be buying. The writing is in on the wall. We're heading into a massive recession, the UK economy has been trashed more than any other, and the government and the BoE have no firepower left to prevent the inevitable.

Sit this year out and see where we are next winter.

It's what is being predicted.

www.reuters.com/markets/europe/bank-england-lift-rates-4-feb-2-finish-425-march-2023-01-24/

I am a mortgage holder, but am in favour of further rate rises. There are indirect negative effects of maintaining lower rates, but people don't seem to make the connection between those negatives and the artificially cheap credit.

The risk of not increasing rates outweighs the negative imo. If sterling declines, all our imports will get more expensive and inflation will increase further.

I’m buying at the moment from rental. I’m paying about 7% less than the asking price from the summer. I feel like that’s about right at the moment. I will be saving around £600 a month on the rent so I figured that even if house prices go down a bit more I won’t lose over the next couple of years. Plus I’ll be living in a bigger nicer house.

The PPs talking about avoiding fixing uppers I would agree with. The house I’m buying only needs a new carpet I don’t need to do anything else to it Other than a bit of decoration. If I needed to do significant work I don’t think it would be worth it at the moment

Also rents for equivalent houses to my rental have gone up around £200 per month since the summer here. When I come to renew I would be paying at least £120 a month more.

ive rented since 2008. That’s many threatened crashes.
there isn’t. There’s too many people waiting to buy. From cash landlords to people like you and me.
if you want to buy a house to live in, buy a house to live in.

I would say there has been a crash.

But it was a covid housing bubble anyway

My house was valued at 400k about 18 months ago, I now can't sell it for 300k.

I'm not going to sell it for any less so will stay put until we ride out this storm.

I think now is a good time to buy if you see a house at a fair price.

@VegetablesFightingToReclaimTheAubergieneEmoji

2009 was the bottom of the last crash, so you missed it.
Landlords are selling up, not buying back in as well

My current mortgage deal ends in June and I’ve been checking in to see what new deals there are. Wondering whether I should swap early or hold out.

Time in the market is always better than trying to time the market

@Winniethepig

Said no one at the top of the market when cheap interest rates and free covid money have all disappeared

I would always think carefully before buying if I couldn’t commit to 5 years. You pay such a large whack in stamp duty + other transaction/ moving costs that when you also factor in maintenance and insurance costs you won’t necessarily do better than renting unless the market really increases (never a safe short term bet). Also as mentioned it takes a long time to buy or sell - in my experience it has been 9-12 months from deciding to move to actually moving.