Buy now or wait 2024

[mathis2006]

Hi,

I am after some advice, my husband and I are first time buyers, finally have saved enough for a 15% deposit on our first house. But looking at all the predictions it looks like prices are set to drop 10% between now and 2024. Interest rates are set to peak this summer. Question is shall we go for it now and stick maximum budget of to 10% under asking price or wait it out. Keeping in mind that it would be at top interest rates. We are privately renting at way below current renting prices, our landlord is mortgage free and is not affected by the rise of interest rates and does not want to cripple us with rent. Or we wait and hope for lower prices and lower rates next year.

I bought two and half years ago after the first lockdown. Everyone said that there would be a crash then, and that it was a terrible time to buy.

I bought anyway. Since then, the house value has gone up by more than 50k and I've paid almost 30k off the mortgage that would otherwise have been wasted on rent.

Trying to time the market is a fools game. Buy as soon as you are able would be my advice.

Think of it as a home, not an investment. Buy when you find the right place, and when you can safely afford it. No one knows what will happen next year.

A mortgage is a long term investment and the market will do all sorts of things over the next 25 years, so what happens over the next 12 months will get smoothed out up or down to the point where you won’t notice or care.

You’re in an ideal position with your deposit saved, not too much competition and a helpful landlord, so buy when you find the house you want and ignore the market.

Even if your rent is low it’s not nothing.

Is there plenty of the type of house you’d like to buy in your area? There’s not a lot on the market at present, and if there’s a downturn they’ll be even less available.

Life is short, just crack on with your plans.

@deadhighbungalow

Nope. Nobody is predicting a full housing crash. The worst case scenario is that prices will fall to what what they were 2 years ago - but interest rates will still be higher and I will have paid off a significant proportion of my mortgage.

I got my first house in 1999, everyone said it was a terrible time to buy. In the following years the house earnt significantly more just by sitting there, than my husband and I did by working hard!
By a home not a house and don't worry too much - it's never the right to but according to some.

Only you can answer if it’s the right time to buy for you, don’t try and play the market as odds are you’ll get your fingers burnt. If you see a house that fits your requirements and you can comfortably cover the mortgage then go for it.

it’s the same as mortgage deals, no one can tell you which is best as everyone’s circumstances are different - some people need the reassurance of a fixed rate and are happy to pay slightly more for the peace of mind, whereas others are happy to take a cheaper variable deal and risk it going up, or down.

@deadhighbungalow

The predictions of just about every expert there is? Most predict a possible 5-10% reduction (which would only take us back to prices a year ago).

They would need to fall more than 20% to get back to where they were two years ago. Have you seen any credible experts predicting that? I certainly haven't.

They've already dropped 1% in a period of 10% inflation, so 20% is not unthinkable.

We paid £24k at auction in 1992 for a cottage now worth £300k we were openly ridiculed for over paying. We currently receive £1,000 a month in rent on that property.

Personally I think in general it's better to buy than rent, that said my gut feeling now is to look to the political calendar with the latest General Electric date January 2025 I suspect the tories will call a snap election to finish December 2024 attempting to bury it under the Christmas chaos.

I suspect in preparation they will stabilise/reduce interest rates and artificially prop the housing market therefore I would be looking to secure a lower rate mortgage Spring/Summer 24 and locking in for a good while with a fixed rate to ride out the economic realities of 2025 onwards.

Obviously this is just my crystal ball feelings.

But unless you sold to downsize how did that benefit you

Clearly it benefitted them because they did not have to pay the increased price - if they even could pay it. I bought in 2000 and I could not have afforded the same property 2 years later, or any time since.

However I disagree that 1999 was considered a terrible time to buy - everyone I know thought it was a fantastic time to buy! Unlike now, where you could safely hold off for a year if feeling unsure.

Prices in this area (sw London) are going up around 5% and still selling, which surprises me.

As a PP said, if you have a deposit and find the right house then go for it.
Build in that drop by negotiating. Offer 10% below the asking price each time.
you can’t predict the future and most predictions by experts are wrong.
That said, I think interest rates will not come down. Not the BOE anyway. Even if Rishi halves inflation this year that still makes it 2.5 times more than the 2% target. So the BOE can’t drop or freeze them until inflation is back to 2%.

If you see something that fits your criteria and is affordable I say go for it. Have you seen anything that you want to view?

@Londongent I have seen a couple of properties that would be great for us. They are 10% overbudget, and it it is a guide price.
Shall I assume that guide price is the minimum price they will accept?

No, it would be 'offers over' if that was their minimum.

Even if it was offers over, it's still worth an offer as they may come back to you if they don't get a sale at the price they want.

You are in a perfect situation to view what you like. Offer what you can afford, even if below the guide price. If they say no, move onto the next one

@mathis2006 everything is open to negotiation, knocking off 10% may be a lot if a property has just come on to market. But it depends on how keen the vendor is to sell and how much interest they've had. Get to know your local market, get an idea for how much properties you like have sold for previously, and how much they are currently being listed for.

I am house hunting at the moment and definitely still eager to buy as soon as possible but I am absolutely not willing to offer asking price. My offers have been 5% - 10% under for houses that all need work.

One of the big issues is that the cost of materials/workmanship has gone up so much so any 'fixer-upper'' will have become more expensive to renovate.

Quite a few sellers where I am searching are pensioners who seem not to accept that the market has changed and still expect top price for houses that have not been updated for 30/40 years and have already been on the market for weeks if not months.

So as someone as mentioned above it is worth starting your search for the right house (because it might take a while anyway) and make realistic but lower offers and move on if the sellers don't want to budge until you find a motivated seller.

Quite a few buy to let landlords are selling up at the moment for example.

10 - 15 % below asking is an OK start point for negotiations.
There's no right or wrong way to do this, just know what you can and can't afford, and what you want, then go for it.

@Greenfairydust thank you. I have also noticed some houses needing work being overpriced and sitting for months. My husband is a builder so we are happy to take on a project although as you mentioned the cost of labor and material at the moment are through the roof.