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.

For those who are desperate to out think the housing market….

Article from Telegraph this morning.

House prices increased last month, according to an influential index, as reductions in mortgage rates and improving consumer confidence helped stabilise the market.

The average sale price stood at £285,476 in February, a rise of 1.1pc from £281,684 in January, according to lender Halifax.

The annual rate of house price growth has sped up to 2.1pc, up from a rise of 0.2pc in January and a fall of 1.3pc in December.

Kim Kinnaird, director, Halifax Mortgages, said: "Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December."

It comes after lender Nationwide said house prices suffered their worst slump in 11 years last month.

It said annual house prices declined on an annual basis by 1.1pc, which was the market’s worst performance since November 2012.

The property market has come under pressure after a surge in mortgage rates following the mini-Budget last September and the Bank of England raising interest rates for ten consecutive months to 4pc in an effort to bring down inflation.

If a property is accurately priced and new to market making an offer of 10% (or more) under the asking price will see you get a lot of rejections.
More likely on a project house, or one that has sat on the market for a while, but with the latter you probably do not have motivated sellers.

@Chippy1234 I have seen it but it is a complete contradictions to Nationwide HPI as well as Zoopla who reported a 5% drop in asking price.

The country is full of people waiting, waiting, waiting. You see them being ultra picky on what to buy and having a huge list of must haves.

I have never rented and been a home owner for 40 years. One bed flat and then upwards.

i don’t believe it’s a bad time to buy but there isn’t an awful lot available. People who don’t need to move are just staying where they are but actually if you are up sizing you could do quite well now. And of course you get your own place. Just sold relatives house and put on at a sensible price so it was sold within 6 weeks (needed a lot doing to it, very dated etc) in a good West London location.

Its often the much older generation who think they know how much their house is worth and if it doesn’t they will just wait it out.

Put on at a sensible price. It will find its value once on. 99% of time if you have little in the way of viewings and no offer then it’s the price.

Zoopla is useless on pricing imho. Their potential valuations on houses is so vague ( and completely useless)

Agree that Zoopla is useless, they just take the overall % price rises from the local area apply it to the last known sale price without taking into account different house types.

According to Zoopla our house is worth about £150k more than we would actually be able to market it for!

According to Zoopla our house is worth about £150k more than we would actually be able to market it for!

Same here because the ones that have sold recently, although outwardly the same, have been renovated, with new bathrooms and kitchens and loft extensions etc, whereas mine is... not.

House prices actually rose last month. I assume the mortgage market is settling after last year and the usual trajectory of a slow uptick for in demand areas will continue.

I agree about people waiting. We are planning a move at some point in the next few years, can afford to wait, but everything that would work for us is currently overpriced. Like almost double what we could achieve for ours. Whereas in the past we’d have looked at an extra 40% - 50% to upgrade. These houses are overpriced as they’ve been on the market 6+ months. These are bigger houses, typically 5 bed executive houses but other houses in this price range have sold quickly when priced appropriately. I have friends in a similar position, wanting to move up but unwilling to spend ££££s on the next step up especially with interest rates going up.

However, if prices soften and interest rates start to stabilise then I think the pent up demand could push prices up again.

@mathis2006 I wouldn’t want to overpay in this market. Especially whilst you have the benefit of below market rent. I don’t think house prices are going to rise significantly this year. But in your position, if something amazing or a bargain came on the market and I could afford it I would go for it!

The Magic - so if the houses are overpriced they either will not sell at the overpriced amount or they will remove from the market and stay put.

I am on the fringes of property development and work with a number of EA's. Basically if they had a penny for anyone who says they want top dollar for their own place and a bargain price for the next proerty they would be multi millionaires!

That and giving some reason why they just MUST get say £400k for their old place and because they want to give the kids a treat to Disney, or they want to do xxx on the new place hence demanding £400k. As if a random stranger would give them a place at a discount...

The facts are that most people dont NEED to move. A small % HAVE to move for say a job relocation but the vast majority could wait 12-24 months but who knows what will happen in the time. Life has a funny way of paying you back and you never know what is around the corner. That and the fact you are in a smaller/larger place than you need but that is OK. You just keep in waiting..

I know it looks like I am trying to big up the market but honestly I have no interest in that. I am not planning/need to move from our current house

My relatives house was nearly £800k out on Zoopla (was very nice in stockbroker belt).

It was a one off build house and Zoopla are useless at pricing and make the banding huge between minimum and maximum. They laughed out loud when they saw it because they knew it wasnt true. However some people do believe Zoopla figures!

I wouldnt be an agent out there in a million years. So many people thinking they can outperform the market, know what they are doing having NEVER sold anything before but of course Uncle John knows...

When I sold a relatives large house when they moved into care (very desirable part of London) I was shocked at how many people in their 80's were still living in houses that were far far too big.

Very dated but that is their choice of course but rooms being closed off as not being used, and just almost overwhelming. They waved relative off when he sold and I asked one what kept them in the area. They said too old to move, know the house is too big but that is was going to be kids issue when they finally passed.

I'd think less about 'the market' and more about your own circumstances. How old are you and DH? When do you think you will stop working/retire? Do you have any expectations of major changes in your circumstances between now and then? Children (or more children)? How many times are you likely to need / want to move in that period?

The answers to those questions (which cannot sensibly be addressed on an anonymous forum frequented by strangers) will be far more influential than timing the market in assessing whether a decision to buy now or later was wise.

Best case ... you are young, unencumbered with dependents, and flexible. You can probably take a measured risk and wait - the indications do appear to be that you may get a better house for the same money, or maybe your preferred house at a discount, if you do. But its a risk, and not an easy one to calculate, although you have time on your side to rectify things if you're wrong.

Worst case ... you are within 25 years of retirement, have a large and growing family, parents that may need care, and can't afford the dream home right now. In that circumstance ... every year you delay buying is a year's worth of equity accumulation that you won't have at the end of your mortgage. Any savings you might make in the next year need to be seen in the light of lower overall equity at retirement.

Most sensible case ... you step up the housing ladder in affordable increments. You buy whatever you can afford as soon as you can afford it, and pay it off as fast as your earnings allow. Your equity compounds over time. You will be rich at retirement, and will have enjoyed peace and security as a homeowner throughout your life. You may have had to defer buying the dream house until later on in life, but you'll get there eventually.

Mark - you are so right. Its what I did in that a 1 bed was all and boyfriend could afford. In think some young people in particular get very comfy at home with M&D. They have other things to get before buying a house.

Sw London. Here fewer properties are coming on the market but those that do sell pretty quick and at similar prices as last summer.
Any predictions of a drop can't be applicable to all areas - some may some may increase. Here we are walking distance to three very good primaries, two parks and two different line train stations, so property will likely keep its value and increase.
As you have building skills you are in a good position to buy a fixer upper but I also find they tend not to be as reduced in price as their renovated counterparts by the amount actually required to do them up. For example, on my street most houses have converted the loft, but there are a few that haven't. But the price difference on those being marketed is less than the cost of the conversion (and add on top the inconvenience and mess).
My first property (back in the 1980s) I sold for the highest amount achieved on the street (£105k). The agent said I should take the money and run as we'd never see it that high again. Less than a year later several more had sold at that or higher, and of course now the prices are over £800k.
However, if your rent is low you could wait. I do think interest rates may come down and I don't think prices will go up much in the short term. But definitely keep an eye on what is actually happening rather than looking at 'expert' predictions.

I was brought up in London but dont live there now.

London is different from the rest of the country. If you offer say 15% off a £900k house that is £135k and houses are defintely not being reduced by that amount.

Relatives house was very dated in London so it took a few weeks to sell but we accepted 4% reduction. In the end we got a couple of offers at the same time but it was truly the worst time to sell (we had a very good reason) and it sold in the end.

Whenever you decide to buy, it will always be the "worst time to buy" in the eyes of some.

We had this when we started looking in 2016: "don't buy now, brexit will tank house prices". 2017-2018: when the deal is done house prices will crash, 2020:covid will crash house prices, 2021: end of government support will crash house prices. 2022: inflation is coming and will crash house prices.

Yes, there gave been wobbles in the market in those years, but never a crash and not enough to reverse the long term trend. Not to say the future will be the same, but house prices work in mysterious ways!

Plus, we are in a housing shortage and house building is set to be slower than any year since ww2 this year, which suggests that there is no real interest in fixing the problem of house prices. So blips will happen, but if you are looking for a home and not looking to flip you'll probably be ok

I think that's a bit disingenuous. You don't quite the part where Kim Kinnaire said that all indications are for a general downward trend.

The message is all over the place!
www.theguardian.com/commentisfree/2023/mar/05/house-prices-freefall-property-ownership-rent-britain?CMP=share_btn_tw