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??

Forecasts I'm seeing are prices will continue to rise for a few years then come down in 2026 (based on 18 year property cycle)

Yes, but you still leave out the most important participant in all of this - the owner.

For anyone buying new builds from corporate housebuilders, I'll grant you that their pricing model will involve mortgage affordability as one of the factors - but only one. Land values, the strength of their balance sheet, carrying costs of unsold property, and likely rental revenues will also influence their price expectations and some of those influences will act as a brake on price drops.

But for every other transaction, you are assuming that the seller is going to be willing to crystallise a loss, now, in order that a buyer can have their house at a lower price. Why on earth would they? If your argument is that they'll end up losing a similar amount over time through inflation, surely that's still preferential to losing it all in one go now? No one has offered a plausible reason why they believe anyone would prefer to lose £60k of real money today rather than maybe lose £1k of notional 'value' each month every month for the next 5 years.

Psychologists have studied this, and the ratio of preferring loss avoidance is more than 2:1 - so you'd have to be pretty certain that you will definitely lose £2k per month every month for the next 5 years before any sane or rational seller would prefer to lose £60k in real money now in the form of accepting a price drop. There's five more budgets and a GE in that time frame. If I was selling, I'd wait out. And unless I'm made redundant, I can afford to. So can most other owners.

Not everyone can wait it out. Obviously death, divorce and debt. People coming off fixed rate mortgages. Relocation for family and jobs that can't wait. People who are upsizing and don't mind dropping theirs £60k if the one they're buying drops £80k.
Those are the people who will set the market in the coming months, and the ones ftb and upsizers and tenants are waiting for.

All major housebuilders have issued profit warnings in recent weeks. But I agree that they'd probably rather lay off staff, stop or slow building right down and wait it out than reduce dramatically.

I’m surprised they are allowed to off massive incentives but will not lower the price, so far.
I remember the crash in the late 80’s.
There was a lovely development of 3 apartment blocks. Even had a swimming pool! First one all sold privately, enter the crash, last two sold to a housing association. You can guess what happened to the prices of the first one.

If a developer of let's say 100 homes sells one at a discount then that devalues the whole portfolio when it appears on land registry. Incentives don't show up on land registry.

But at the end of the 5 year fix the you would still owe less borrowing £170k than £200k and now your new interest rate on either mortgage will be the same.

Even after a 10 year fix the £170k is a better deal.

The more relevant point is that a £200k mortgage will allow you to buy a £200k house, whereas the £170k mortgage won't.

No matter how you play with the calculators, at the end of it all you'll have a smaller, less desirable house. And paid the banks a bigger fee for the privilege.

All of these affordability discussions are so buyer-centric. What really matters is the price at which the seller is willing to transact, not the price at which any single buyer thinks will let them win some game with mortgage lenders. And whilst a mid-chain seller may even hope to benefit by shuffling the losses up the chain, all those chains end with a seller who needs to be willing to take a haircut. Until someone provides a good explanation why those people, who are already rich, are going to find charity and subsidise a cascading housepricecrash to benefit everyone below them, I'll keep with my belief that prices are more likely to stagnate than fall.