Your market predictions for the next 5 years...

[MrsBadger]

We're moving house (hurrah!)

The only question is whether we should:

A) sell the current house (agent has a buyer very interested even though it's not on the market yet, may be willing to pay a premium to stop it going on the open market).
Bottom line: we make a sure £10k.

or

b) borrow some money from FIL, keep the current house, let it out for 5years then sell up and give him his money back with interest.
We gamble on the property market rising more than 1%pa and possibly make up to £20k.

It's the old bird in hand vs bush debate.
Mortgages etc are sorted if we want them (fixed rate for 5y on both houses), it is purely if we want to let or not.
I know the market may fall within 2-3yrs but will it steady itself and/or bounce back in 5?

Your thoughts and opinions please...

agree south ut.I think after the eastyer holidays the agents will realise the traditional bounce is not happening and they will advise sellers to drop.Historically prices always revert to affordibility of 3-4 times salary.I have made 2 really cheeky offers recently one was accepted but fell through the other was rejected but not as strongly as I expected and the seller sis consider it,but his wife wants to wait a bit.I offered 20% under for a good house in a good area.It is still for sale Last year it would have been snapped up and probably wouldn't have even got on rightmove.Things have changed just taking a while to filter through

Sell. I work in Banking and am convinced that we are in for a very very rough ride over next few years. Banks are reluctant to lend commercially at the moent, companies that could raise money in a heartbeat in last few years may not be able to do so quickly now. The push is all for quality (why lend to a start-up company when you can lend to M&S instead?) which won't affect the top end for a while but will affect those with higher risk. That will start to filter down, because companies have to pay (much) more for their loans. This eventually will push prices, people will resist, companies will start to falter and fail. Which equals unemployment. Unemployment affects the likes of M&S as well because spending goes down. Unemployment also equals house reposessions which deflates house prices. People who might have considered trading up the housing ladder will 'hold off' due to the fear factor. Government income goes down so they either have to rein in their own spending (which has same effecton economy as redundancies) or raise taxes (which will have the same effect albeit more diluted from an economic point of view and more explosive form a political point of view). The drop in the number of houses being sold will also have a knock-on effect on the revenues earned from Stamp duty so the direct stamp on houses might be raised as a % to offset this...

The recession is marching our way - I am absolutely convinced (although I recognise that other people in Banking don't see it quite so negatively). The normal cushions of new markets aren't around this time to help stop it (last time we had booms in technology, then booms in service industries then booms in India and China to counterbalance).

So sayeth the woman of doom and gloom.

Saying that, I have been contemplating trading up recently myself so I guess I'm not the best one at practicing what I preach ! Prices might filter up and down a bit and not move much overall, but I wouldn't risk it myself on an investment property in the UK.

Definitely sell. I also work (ed - about to go on mat leave for DC2) in banking and echo Squiffy's sentiments albeit from a slightly different angle - think the retrenchment of banks in terms of lending multiples/credit criteria will have a large and pretty rapid effect. I think the forthcoming house price declines will affect the economy and become self-fulfilling as the consumer goes into hiding and starts to save instead of spend (in spite of continuing interest rate declines as Gordon tightens his hold on Mervyn's bollocks). We MAY be back here (in nominal terms) in 5 years' time but it's not worth the risk. There is a huge credit hangover to be had and I'm not sure that we're all going to keep blindly swallowing the Kool Aid/hair of the dog.

I would invest at least some of your proceeds in a foreign currency. I can see GB trying to inflate his way out of this which is going to be horrible for sterling.

Squiffy - the heart and the mind are two very different things, eh?