What happens if everyone waits to buy?

[UnknownDecisions]

There’s a handful of posters repeatedly giving the same advice to first time buyers to hold their nerve for the market to come crashing down. But if this happens don’t we end up with loads of people waiting and then trying to buy all at the same time? Which is how 2020-2022 felt

You get a blip in the rollercoaster of house price rises and falls. Investors call it a dead cat bounce (horrible term). https://en.wikipedia.org/wiki/Dead_cat_bounce

Prices come down and a logjam forms - meaning once sentiment changes you need to have your ducks in a row and be ready to take advantage. Same cycle historically, just timescales vary.

Yes that can happen.

It's hard to be ahead of the curve. When interest rates finally start falling, there will be a lot of pent up demand. Competition for properties will have an impact on property prices. And so the cycle begins again.

I wouldn't be too keen on buying right now while mortgage rates are so high. But it's a hard trick not to leave it too late.

When interest rates finally start falling
you think interest rates will go back to where they were?

No, not in the foreseeable future.

agree, the cheap money days are over

I am forging ahead with my purchase, but luckily got a mortgage deal of 4.3% before it started going up again. As a FTB I was deliberating whether to wait and take advantage of prices coming down, but I don't fancy the risk of paying more interest and I've found a property that I really like and is very good value for money now, so I'm just gonna go for it and hope for the best.

That sounds sensible as you have secured a good rate there and found somewhere you really like

A few of my friends and colleagues are FTB are continuing with their purchases. A couple of them have locked into 5years at approx 5.5%.

they said they just want to ‘get on with it’ than trying to time the bottom

Lots of things drive house purchases. Needing to get into a school catchment area, moving jobs, inheritance etc. Not everyone will wait to buy. Some people will be able to proceed and just want to get on with it.

While the market is sluggish, prices will be discounted especially for those houses that are all very similar, in the same place, same design, same price etc. Until either interest rates fall or the supply of houses coming onto the market is less than the number of buyers wanting to proceed, and then prices will stabilise.

Essentially yes.
If you are actually in a position to buy right now, the smart thing would be to drive very hard bargains and press on - there are undoubtedly fantastic reductions currently being agreed where the sellers hands are forced by a need to sell and lack of buyers.

I completely agree that it is irresponsible to advise people to wait that do not own property for a price drop that really might not happen. Even if they happen mortgages etc could be difficult to find and no stock for sale. Paying down mortgages takes decades. There are a few examples of people waiting to buy and then being priced out. At the beginning of the year I was speaking ro someone able to proceed who had found their dream house but was advised to wait until July for mortgage rates to reduce. That clearly hasn't happened and they could be in that property with an affordable fix by now if not waited. I think its very suspect advice and wonder if people giving it take it themselves or if they already own.

My friend (39) has been renting for 12 years, she says she is waiting for the market to crash before she buys. I estimate she has paid circa £120k+ to rent her 3 bed house just outside Bath, £120k!!!

She will be renting for life, instead of being mortgage free in 13 years or so....

To all those waiting for the "big crash" must enjoy paying someone else's mortgage.

My friend was also "definitely going to grab a bargain" post brexit and then after Covid and now her Goldeb Ticket (her words) has come....

From experience (first bought in 1991) what happens is a lot fewer houses come onto the market. Essentially the market stalls.

At the moment I am seeing higher end houses which I thought had sold come back up for sale as I presume chains have broken down or mortgage offers have been revised/changed/removed. The prices on these houses have been reduced. I expect they will stick for some time.

We will still see some movement but a lot more people will stay put for a few more years.

I'm hoping we don't see the repossessions we saw in the early 1990s. Lenders have more controls around them now (there was a lot of sharp practice going on back then). Borrowers are also a lot more aware. Way back I knew a few people who put the keys through the lender's door and thought repossession would be the end of it, only to find it wasn't.

That's my view from my small Midlands Town anyway. I'm neither buying or selling but I like to keep a close eye on what the local market is doing.

"they said they just want to ‘get on with it’ than trying to time the bottom"

But at the present time that's like taking a lift from the 100th floor to the lobby and getting out at the 95th floor instead, because you don't want to risk missing your stop. At least stay on until you get near the ground!

The decline in house prices has barely started yet. the next year to 18 months should see some really chunky falls as BTL people sell up, recent buyers have to move back in with parents and other families have to downsize because they can't keep the crazy mortgage payments up.

Having said that I guess if rates are still high when those falls happen then it's no use if you can't get a mortgage because the rates are too much. So who knows.

IMO the idea that huge price falls are coming is naive. I have over the years watched it be trotted out every recession. I agree people are in financial trouble and it is worrying. The idea that will turn into a massive sell off of nice houses with mortgage availability is really unlikely I think. In the meantime the longer people wait the more unattainable property becomes for them due to their age and the time frame of mortgages. Supply and demand are completely out of kilter. People will go interest only/ not move/ take mortgage breaks.

A house is primarily a place to live, not an investment vehicle. You'll never get the days of your life back - that's worth some extra money.

Of course, maybe I'm very anxious, and other people hold their nerve better but the whole house buying process was torture. Going for viewings (difficult while working full time), applications, solicitors etc it took a year. Under the spectre of rising mortgage rates, and chains falling apart meaning you have to start all over again.

Now I'm happily settled in my new home and while I do feel a twinge of regret at not having gotten a 'bargain', I've gotten my life back! Out of our cold and expensive rental, able to decorate etc. My performance at work has improved as well.

I agree in that I think further price falls are coming but not huge price falls. Of course there will always be some properties that get steeply reduced, but only because they were massively overpriced to begin with or are horrible. People will not pay over the odds in a falling market and unattractive properties become extremely difficult to shift.

But good properties or average properties in desirable areas will maintain their value well as they tend to do even in difficult markets, and I too have observed this over the years. It's certainly not the case that Buyers can rely on huge price falls over the next year or so to buy that perfect property.

There will be bargains to be had but not necessarily in the area people want or with the sort of properties they want. As you say, it won't be a massive sell off of nice houses.

Early 90s we sat in our house with theoretical negative equity. We got on with our lives as we didn't need to move.

The people for whom negative equity was an issue were people who needed to move whether for geographical reasons or to get on with their lives.

At the moment I can see that prices on new build estates have come down as developers are trying to offload finished/near finished houses. But this is only on individual plots.

We will probably see housebuilding stall for a while which also slows the market down.

People just need to look at what they can afford and try and have a big enough deposit to avoid negative equity. If your property goes down in value after you buy, it will almost certainly go above what you paid in the long term. I first bought in a market crash and everyone was predicting it would fall another 10%. It didn't and I bought at the bottom. If I had waited it would have increased.