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Original poster

Buy Now or Wait for a crash???

164 replies

DeathByWorry · 29/01/2023 08:32

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??

OP posts:
VegetablesFightingToReclaimTheAubergieneEmoji · 29/01/2023 16:47

Banks also get twitchy about lending in proper crashes.

safeplanet · 29/01/2023 16:49

I think it depends on the individual. My brother moved during in 09. Their house in theory had lost value but what they were moving up to had lost more.

WoolyMammoth55 · 29/01/2023 17:59

Hi OP, I'm a property owner but not a financial guru! Just sharing my experience for what it's worth...

My best friend is (always has been) a higher earner and she bought her first place with partner in 2007. They split up and she stretched herself massively to buy him out - JUST before the big crash of 2008.

Her flat lost 16% of its value pretty much overnight, and she was in negative equity. But she didn't need to sell as could (just!) afford her mortgage payments.

She sold it 8 years later for a massive profit - the flat was nice, near good transport, in a desirable area, and was a great investment.

I don't earn as much as her, it took longer for me and DH to get on the ladder. We bought in 2011. It's a flat in London zone 2 with good transport, desirable, safe, etc. The property's value has risen consistently since, it's now worth roughly 35-40% more than when we bought.

The market may crash next year but as long as we don't sell, it won't affect us. We are hoping to hold onto the flat for when our kids are grown (though landlord regulations changing might affect that plan).

In my experience, the market does it's thing - up and down, whatever - and as long as you can hold on and only sell when it suits you, then it's nothing to worry about.

We would have spent around £18K a year renting something equivalent, which over more than a decade is a 6-figure sum... Instead we've gained a 6-figure sum in the property value. So it's a no-brainer in my opinion to buy as soon as you can - just ensure it's at a level you can afford and that you have tolerance built in for crises like a breakup or job loss, etc.

Whammyyammy · 29/01/2023 18:47

If you wait for a crash, then you'll miss the boat and be a tenant forever..
Slight decrease, maybe, but overall house prices go one way.

WednesdaysNameIsFullOfWoe · 29/01/2023 19:07

safeplanet · 29/01/2023 14:17

But there won’t be fewer people. Our population is increasing, not decreasing.

It's not increasing because there's more people, people are living longer so we have an ageing population.

Which is utterly irrelevant to the question about whether we’ll have an oversupply of houses or not.

Alexalee · 29/01/2023 19:26

The huge 20%+ jump in prices since the start of covid are all down to the government throwing billions of tax payer pounds around, finding their way into assets.

That free money isn't coming again

And house prices are more aligned with how much a bank will lend a buyer than any Other metric.

Op I don't think you will find anyone who thinks house prices will be higher in 12 months than they are today

safeplanet · 29/01/2023 19:32

@WednesdaysNameIsFullOfWoe but I was replying to a poster that said our population is increasing? The population decline is forecasted for 2025 when there will be more deaths than births although we will likely push for more immigrants as the pyramid is too too heavy.

Tryingtokeepgoing · 29/01/2023 19:36

MaoamAddict · 29/01/2023 08:34

The government won't allow house prices to drop 20%, as half of the country would be in negative equity. There's a very slight drop in prices of 3-5% in some areas but typically the market stabilises by a period of static prices, rather than an actual fall.

A drop of 3 to 5 % while inflation is at 10% means that, in real terms, in 18 months houses will have dropped by 20% or so anyway without headline prices crashing. I think prices will remain flattish for a while and inflation will take a while to come down, so there’ll be a fall in real terms for the next few years. Which is probably a good thing; few people end up in negative equity or being repossessed that way, and houses get more affordable. Ready for the next wave of increase just before the next but one election ;)

safeplanet · 29/01/2023 19:48

There is a belief that overpopulation is an issue across the world when in many western countries we have ageing populations & population growth has been caused in by people living longer & migration as opposed to more & more babies. One reason I think the government has got away with not planning for it.

There will be an oversupply at some point, in the next 10 years England schools are facing a loss of around 3/4s of a million pupils. London schools are already being affected & boroughs are looking at merging or closing schools.

WednesdaysNameIsFullOfWoe · 29/01/2023 20:41

safeplanet · 29/01/2023 19:32

@WednesdaysNameIsFullOfWoe but I was replying to a poster that said our population is increasing? The population decline is forecasted for 2025 when there will be more deaths than births although we will likely push for more immigrants as the pyramid is too too heavy.

No, it isn’t. It’s predicted to rise every year for the next decade.

www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/bulletins/nationalpopulationprojections/2020basedinterim

safeplanet · 29/01/2023 20:50

@WednesdaysNameIsFullOfWoe but that's based on projected immigration figures I think. The "natural" population is predicting to decline.

"The Office for National Statistics (ONS) revealed predictions in January that the natural population of the UK will begin to decline by 2025 due to falling birth rates and an ageing population."

safeplanet · 29/01/2023 20:54

As your link says

"All population projections are subject to uncertainty. These projections are based on the most recent mid-year population estimates covering the period up to 30 June 2020. Therefore, they only include some of the impacts on the UK population from the early part of the COVID-19 (Coronavirus) pandemic. Assumptions of future fertility, mortality and migration are based on observed long-term demographic trends."

The also didn't expect birth rates to drop so dramatically hence why the 2018 predictions were wrong

"The projected UK population growth is slower than in the 2018-based projections; the projected population is 0.6 million fewer in mid-2030 and 1.8 million fewer in mid-2045."

WednesdaysNameIsFullOfWoe · 29/01/2023 21:11

safeplanet · 29/01/2023 20:50

@WednesdaysNameIsFullOfWoe but that's based on projected immigration figures I think. The "natural" population is predicting to decline.

"The Office for National Statistics (ONS) revealed predictions in January that the natural population of the UK will begin to decline by 2025 due to falling birth rates and an ageing population."

How can you possibly not understand this? Yes, the total population change involves births, deaths, immigration and emigration and despite your claims, the population is predicted to increase, so the claim that there will be an excess of housing is simply wrong.

What are you basing your claim on?

WednesdaysNameIsFullOfWoe · 29/01/2023 21:12

safeplanet · 29/01/2023 20:54

As your link says

"All population projections are subject to uncertainty. These projections are based on the most recent mid-year population estimates covering the period up to 30 June 2020. Therefore, they only include some of the impacts on the UK population from the early part of the COVID-19 (Coronavirus) pandemic. Assumptions of future fertility, mortality and migration are based on observed long-term demographic trends."

The also didn't expect birth rates to drop so dramatically hence why the 2018 predictions were wrong

"The projected UK population growth is slower than in the 2018-based projections; the projected population is 0.6 million fewer in mid-2030 and 1.8 million fewer in mid-2045."

Well, if you think you know better than the ONS, please do share the data that you are basing your claim on.

I think you pulled it out of your arse, but am happy to be corrected.

Alexalee · 29/01/2023 21:40

@WednesdaysNameIsFullOfWoe

If you could provide any prediction from the ons that has turned out to be accurate i would love to see it

safeplanet · 29/01/2023 21:55

Well, if you think you know better than the ONS, please do share the data that you are basing your claim on.

I quoted the ONS... I think you are misunderstanding me. The "natural" population is expected to decline. Any increase in population will only be driven by migration.

It's an article in the FT which I don't know how to share but this similar.

https://www.swlondoner.co.uk/news/01072022-uk-population-slowdown-will-halt-economic-growth-and-accelerate-health-problems

safeplanet · 29/01/2023 22:02

And at some point (decades away) there will be an oversupply. We already have more over 65s than under 15s. We are going to have to compete with lots of other countries for migrants as many countries are facing the demographic shift.

LookingOldTheseDays · 29/01/2023 22:09

safeplanet · 29/01/2023 22:02

And at some point (decades away) there will be an oversupply. We already have more over 65s than under 15s. We are going to have to compete with lots of other countries for migrants as many countries are facing the demographic shift.

With the climate crisis set to render large swathes of the world less inhabitable over the coming decades, migrants won't be in short supply.

Bunnyfuller · 29/01/2023 22:17

It’s not prices coming down in isolation….it’s the value of the house going down combined with the mortgage going up…ergo mortgage interest rate rises pushing owners into unaffordability. Hastened by the cost of living continuing to rise, and employers restructuring to save money (redundancies). Your house dropping in price is no issue as long as you can afford the mortgage. The problem comes when other factors make that impossible. Suddenly you owe more than you can sell the house for (at a speed fast enough to mitigate not being able to make the payments). This against a background of lots of people hunkering down to weather the storm means fewer people looking to move…less buyers…

if the govt and BoE continue to try to resolve the financial situation with interest rate rises, we WILL head back to this. I’ve lived through it twice, and no one stepped in to stop people losing their homes!

safeplanet · 29/01/2023 22:22

With the climate crisis set to render large swathes of the world less inhabitable over the coming decades, migrants won't be in short supply.

Nonetheless we will be competing with many other countries who also need them.

Mark19735 · 29/01/2023 22:30

Yes, but the recessions of the 90s were very different. Entire towns were affected by the closure of the major local employer, so everyone lost their jobs and no-one wanted to move there.

Nowadays, with a services-based economy and the ability to work in different ways not always tied to being geographically close to a colliery or mill or plant, the chances of of everybody in an area needing to sell up, AND nobody wanting to buy a particular house, is smaller than it was back then.

safeplanet · 29/01/2023 22:47

I think the shift to more hybrid working will impact expensive flats in inner London though. If I was the average FTB now & wanted to end up in a house I would just skip the flat stage.

Mark19735 · 29/01/2023 22:52

Yup - me too. It's the cost of moving that is crippling. SDLT is far too high. Much better to save longer and stretch to the 'forever home' as soon as you can.

safeplanet · 29/01/2023 23:35

yes exactly, frequent moving is just not viable now.

Ideally we will move to a bigger house in 6/7 yrs and that's it now until we downsize.

Rosiefifi · 30/01/2023 13:26

I'm waiting but I'm not a FTB , I'm waiting to upsize. Bigger houses lose more value than smaller ones that's why I'm not bothered. If I was a FTB I would try to buy the one I can stay in the longest.