Would you look seriously now, or wait due to potential market crash?

[Nowanextraone]

Hi
We are relocating next year to Wales.
We have sold our house and are in rented. When we move, we'll only need a small mortgage of about £50k. We have been looking at houses and seen a couple of perfect ones, thinking we might buy and get it ready during the holidays etc ready for when we move.

Anyway, we keep reading about house prices dropping and the market crashing and my husband thinks we should wait as we would be in touch a good position with no chain, cash ready etc should this happen.

We need to be in Wales for next summer.

Thank you and really looking forward to hearing opinions

https://www.thisismoney.co.uk/money/mortgageshome/article-12214547/Soaring-mortgage-costs-fixed-25-year-homeloans-dont-them.html

Some homeowners are struggling with soaring mortgage rates, and now housing secretary Michael Gove has called for lenders to offer longer-term home loans as an antidote.
Most UK mortgages are two or five years long, meaning homeowners remortgage often. This makes it easier to access a bargain when mortgage rates are low, but also means being exposed to higher home loan costs when rates rise. But in countries such as the US, France and Denmark, fixed-rate mortgages are normally between 20 and 40 years long. Gove said these longer-term fixed mortgages would help smooth over sudden rate hikes like the ones currently battering UK homeowners.
Speaking to the Telegraph, Gove said: 'One of the things that I think is right for levelling up overall is making sure we can develop the types of products that are elsewhere in the world... which are long-term, fixed-rate mortgages, so you don’t get the oscillation of how much you pay every two or five years, but you have certainty over as long as 25 years on what you pay. I think that is something we should look at.'

I don't think that prices will crash. They will probably dip a bit, but not enough to make it worth spending years waiting in a rental. I would say, buy your dream home and get on with your lives.

A third of property sales go to cash buyers, with no mortgage required, so I think that people are generally overestimating the potential impact of the rate hikes. What we are more likely to see is a sluggish market with fewer people moving.

What I'm noticing in my area is that good condition, renovated properties are still selling quickly, while fixer uppers aren't shifting. Not a surprise I guess given how much labour and materials have gone up in recent years.

Just doing a bit of research this morning. An anticipated 35% fall in house prices over 2 to 3 years seems to be the least of our worries. A certain macro-economist is predicting pretty much full mad-max mode come the 2030's once the level of worldwide indebtedness becomes too much to pay back.

Full gore available here.
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If the market didn’t crash over Covid, it never well. The powers that they will move heaven and earth to prevent it.

How much are you paying in rent? I'm a week or so from exchange on a house in South Wales. I'm currently renting in London, waiting a year would have meant I'd have spent another £25k in rent. I doubt the house I'm buying would drop by that much and the £25k will go towards buying my own home. I have no doubts I've made the right decision.

How much will you be paying in interest?

I wouldn't set too much store by "research" that involves YouTube "documentaries" (especially ones making predictions)

Lol - I agree, some people put way too much store by unreliable YouTube sources

By the way @KievLoverTwo it was 1991 that had the highest rate of repossessions at 75,000

https://www.estateagenttoday.co.uk/features/2023/3/repossession-fears-over-new-moj-numbers

Oh, cheers, don't think I went that far back.

I'm older than you I believe so unfortunately I do go that far back 🙁

Tee-hee.

Actually, I think maybe we had to sell up and downsize in that year. My parents always told me that the Government blighted our row of houses because they wanted to expand the A2 by a lane either side, so they had forced us into selling our house to them.

It never happened. Maybe they just couldn't afford the house anymore. It would have been 90 or 91 and we had only been there 4-5 years.

@Nowanextraone if you only need a small mortgage and plan to stay long term, buy when it suits you best. It's not as if you are a FTB or stretching to your max affordability.
@XVGN I don't know who that economist is. He appears to be a gold bug. If you are interested, Adam Taggart on Wealthion interviews lots of very reputable people. As the name suggests, it is mainly for wealthy investors but some of the interviews are v informative. As I have said several times already, I think the global economy is in trouble and the UK economy is going to be particularly badly affected.

average house price in Wales is £245,000. A 'crash' of 10% (unlikely imho) would bring that down to £220,500. A fall of 5% (possible) brings it down to £232,750. So if either these scenarios were to happen you could 'save' between £12,250 and £24,500. However, you have to factor in your current rents costs. If, for example, you're paying £1k a month, based on the above figures your saving would only be between £250 and £12,500.

Is it worth the wait?

The sums really involve, how much are you paying in rent per month over the next year or so, versus what you might save if you hang on and wait to buy a house of a mystery value.

I'm renting and hanging on. My equity is invested and earning almost as much in interest as I'm paying in rent. If you're in a similar position op, id wait. PP are divided on whether prices will come down or not but serious commentators, even estate agency publications now, are predicting that they will. You might be able to buy without a mortgage at all.

Yeah, I wouldn't be in a hurry to buy right now as you don't need to - you have a whole year until you need to be there @Nowanextraone

Better to buy in winter when the market is always slower. If you buy around November time the market will be even more sluggish than now so you could pick up a bargain. You could complete in late Winter/early Spring & that would still give you months to get it ready before moving there permanently next summer.

You have to offset the falling price with the cost of renting. A FTB I know keeps hanging on for the price drop and meanwhile is paying almost 12k a year for a room in a grotty London flat. Why? I don't see how that makes sense financially.

This will be your home. That's its main function. Not an investment. A place you choose to live. If you find a home you love and can afford. Buy it! Live there. When you need to move again is when you need to think about house prices.

I agree I wouldn't want to spend 12k a year renting a room in a grotty flat, I would prefer to buy a nice place and get on with my life.

But that's not all "wasted" money compared to buying because when you buy, most of what you pay in the first few years is interest not capital anyway.

Well, I doubt they will go up, more likely to stagnate or go down up to about 20%, so depends really on how much the house is that you are buying, if it is about £200k, it won't make much difference but if it is £800k it will

Ignore the predictions from so called experts whether it is the economy, inflation or house prices. They are always wrong. Do what is best for you. It might even be a good time to put in some lower offers.

It depends what you are looking for. We were in a similar position having sold last summer. and been keeping an eye open. A house came up on a road earlier this year that we like where whole houses rarely come up as they are split into flats. It will give my adult DC some independence and accommodate a lodger should we want one.

Needs work but we got 10% off a sensible price making what we paid £175 less than asking price of a similar house a road down that has gone under offer recently. If they paid 10% under asking and the sale we will have paid well over 100k less for ours and it won’t take that to get it up to same standard, even with today’s prices for doing work plus we have somewhere I absolutely love, potential for income from a lodger and potential to have a self contained section for DC.

In our case it was sensible to go for it, your case will be different as everyone is . I would keep looking and if something you really like comes up see what you can negotiate on price and see how you feel at that point.

@SheilaFentiman exactly this. I have been looking for a house for a year. When I find a house that is in my budget that I like I will snap it up.

By the time you factor in rent and taking a chance on the market, why risk missing out on a house you like. In a few years time when someone is sitting in their perfect house that they bought within their budget I really don't think anyone will be thinking 'oh I wish we waited and put our life on hold and spent more money on rent so we could have saved some money'

No they will have a sense of relief that they found the house and are getting with their lives.

OP needs to give a lot more detail

Prices are set at the margin, so all those people staying put will have little to no effect on what happens next. What will affect the market are the 3 D's - Death, Debt and Divorce - the forced sellers. They will set the prices for everyone else.

But those prices will be meaningless if sales decline to a trickle. This happened 15 years ago and everything just stagnated for a couple of years, then roared away worse than ever. Deaths and debt and divorces were certainly occurring throughout this period but the actual volume of sales that couldn't be deferred was not enough to reset the market in a way that benefitted anyone.

I would wait just because prices are unrealistically high right now. Wales had quite a boom in Covid so think it could be due a bigger correction than some areas. That said if you find something you like within your affordability, I wouldn't put life in hold for too long, there will be ups and downs. But the market seems pretty unrealistic whilst we wait for these interest rates to he's in, if it's a long term purchase it's less of an issue.