First time buyer - am I doing the right thing by waiting?

[Beautyandthebeast12]

Evening all...

First time buyer here and been trying to get on the property ladder for the last 2 years. It always seems to be the wrong property or bad timing. I nearly bought a flat in 2021 but there were issues with the lease and I decided to pull out as it would have been a money pit and difficult to sell later down the line. Then came the crazy prices of 2022, bidding wars and everything going over asking. I put an offer in on a house but it went to best and final and I couldn't afford to offer any more. The beginning of this year I changed jobs and was on a temporary contract so couldn't apply for a mortgage even if I had seen a property I wanted so decided to take a break from house hunting. I've recently been put on a permanent contract in work so no longer need to worry about the job side of things, but there are literally no houses in the areas that I like at the moment and any that do come up are still being priced at 2022 prices, although they do seem to be sitting on right move for a lot longer than last year. I appreciate nobody has a crystal ball and can predict the future but I'm just curious to hear other people's thoughts, especially first time buyers. Are you holding out to see what happens? Do you think prices will come down even more next year?

I have a healthy deposit but I am buying alone so it makes it a bit harder in terms of what I can afford. I would also like to have some money left over as a safety net so I'm really not keen to spend my entire deposit.

But you still need somewhere to live in the meantime - so while waiting for prices to fall you're throwing money away renting.
Nothing happens if you don't buy shares.

I'm not sure I would describe renting as throwing money away. You are paying for a service. The OP hasn't mentioned any problems with her current rental and we don't know how her rent would compare to a mortgage.
I was responding to the other poster's comment about housing being an investment. That being said, you wouldn't want to buy high when prices are falling and expected to fall more. You could equally say that you are throwing money away spending more on a home than you need to during a period of decline.

renting is not a waste unless you're someone who doesn't grow personally and professionally i.e you don't have a salary increase to show for it. i tend to see that those obsessed with getting a mortgage/buying a house are usually completely reliant on it "going up in value" because they have nothing else, no other assets, and no 21st century skills.

renting can be super cheap and flexible for people who are high earners, need to move around to skill up and have career opportunities beyond a fixed postcode and address... and they're probably the cash buyers who are the only buyers in today's market lol.

this obsession with property "ownership" in the uk is a sickness. it doesn't work for millenials and the younger gen. Labour are seeing that now.

OP, I wouldn't see the house you made an offer on as a "rejection" but just a seller who is desperate for a particular price. that is someone who was probably fixated on a postcode for many years and did not grow in other areas, now completely reliant on their house sale to pay for retirement and other things they want to "achieve". many people are actually just slaves to the market... that's why they get super stressed when they are in a "chain".

for a lot of millenials, property is not really gold anymore. millenials especially see property as a home, first and foremost, while boomers rely on it as a retirement injection.

the worst time to buy is during an over-inflated boom like 2021-2022/2023.
same for 2006-2007.
I know people who only got out of their negative equity in 2021, now fearful it's going to drop again because of the market today.
property is not the prized gold the uk culture brainwash people to believe it is.

Ok, so let's say your rent is 1.2K. Over 3 years that's 43.2K. A 10% drop in a 250K house is only 25K, so you get a cheaper house but during the period of waiting you paid 43.2K in rent so that's 18.2K gone. You had to pay it anyway - but because it went to rent and not a mortgage you gain nothing. Saying 'it's a service' is meaningless we are talking about investment and as an investment it's money that doesn't buy you an asset = waste.
If you had bought earlier despite it being 10% more expensive you're putting that money into your house and in a position to build equity.

Finances aside what @IhateJan22 is probably referring to is that for many people especially FTB a home is not an investment it's a place to live. Apart from being able to do as you like, if you really wanted to calculate the costs and benefits like a real economist you'd factor in the risk of you rent rising, or being moved out of your house.

Especially in this era of LL's selling up. I know quite a few people whose deposits have been absolutely decimated by having to move multiple times in the space of two years. Just because OP has no issues with her current rental doesn't mean it'll stay that way forever.

Finally, you also have to factor in opportunity cost in calculating you profit - even if you sell at a loss after many years - what would the situation have been like if you'd paid rent instead, all those years?

All these factors need to be taken account and if you do, you realise there's' no clear answer. It depends on your personal risk assessment.. But when people talk about houses as an investment they only think about price, like you. 'Buy low sell high' makes sense for stocks but not houses, and using that as a comparison/guiding principle is naïve and ignores the complexities.

One thing I will say though negative equity is a real danger - which is why if possible don't overstretch yourself. If even the cheapest house is a stretch then maybe you have little choice but it's good to allow some room.

I don't know if it's as big of a risk these days - with 100% mortgages it was a very real possibility but the chances are lower with a double digit deposit (standard) also some can get 5% they're not a choice for everyone.

You seem to be really bitter about house owners... are you even a higher earner?

many renters are actually in an okay or better position that "homeowners".

rents have gone up but sadly this is affecting the people who don't earn as much to keep up with rents - that's what the media is highlighting (and rightly so as there needs to be a solution for people in this situation).

but this portrayal you have of renters being poor suckers is wrong. it's still cheaper to rent now vs a high interest mortgage and this benefits higher earners who are renting and happily waiting for house prices to drop further, which they will.

you only see the "value" in terms of money figures, by doing basic additions and subtractions, but for a lot of people whom the media don't report on, renting has been flexible and a freedom for them. if you have a mortgage, you are a slave to the bank until you pay it off. in fact, you don't own your property at all, you're technically renting it until you paid your debt off. you even have to notify your lender of any changes you make and they'll sieze your property if you miss like 2-3 payments, which many have on this tail end of 2023.

erm. is that all you got? 🙄typically no substance, just "you're just jealous" spiel. please educate yourself on the market and how professionals actually grow in the 21st century.

Where have I said renters are 'poor suckers'? You must be really insecure to take this so personally and read into things that don't exist.
What I did say was if you are considering buying and thinking about whether to wait you need to consider the rent you are paying as part of the opportunity cost.

If you don't want to buy then this is irrelevant.

Also banks don't seize properties if you miss a few payments - they need to work with you to sort out a payment plan and there are options like going interest only. It's a loss to them if they foreclose so they try to avoid it.

But I suppose, as you are a higher earning professional with keen knowledge of the market this will not affect you, as you can work in multiple countries and have a pot of cash ready waiting to buy when prices drop like a stone - this would still make you a 'slave to the bank' though. In the meantime, you can be, erm, a slave to your landlord.

@iovebread

I am a long term renter. I would much prefer to temporarily be a slave to a bank until I pay off my mortgage than a slave to a landlord until I die!

This watchful waiting for prices to drop has gone on for years and could go on for years.
Friends that took a risk ten years ago have paid ten years worth of mortgage on their home.

I have paid ten years of my landlords mortgage.

Everyone tries to predict what will happen when no one really knows, there is clearly less property on the market at the moment which means you could be still competing with the few buyers. You may also have to settle for what you can find rather than what you want. Surely if you see what you want you may as well try and buy to have a home of your own rather than waiting it out to see what happens? Renting might suit some people but always having the worry your landlord might sell up is a worry. Demand for rental properties is also at a high so prices are not cheap.

Certainly prices will fall further in 2024. It could be quite a lot more, or it could be a relatively small decrease. I think it's worth waiting if you don't HAVE to buy. I think there will be substantial falls through next year.

It totally depends on your location - we’re in SE London, and prices haven’t come down by much, and properties do seem to be moving again. It’s depressing, but I guess there is always somebody around who can afford to pay these prices!

We’ve ended up putting an offer in on a much smaller house than what we were looking at a year ago. From talking to estate agents, that is generally what is happening - prices are staying the same, people are looking in lower price bands, or just staying put if they were upsizing.

Our seller did accept an offer because we are chain free, but only 5% below asking.

This was our view - we plan on staying on our next house for at least 20 years, and in 2043 I am not going to care whether we paid £900k or £950k.

@Saschka a 5% reduction is in line with what many Economists are saying about how far prices have reduced this year - about 5% over the last year and about another 5% fall forecast for 2024. With some regional variations, of course.

You always get those people who predict a far steeper crash in house prices, many have been predicting it for years and hope to finally be proved correct. But we haven’t seen many (any?)examples on Mumsnet over the last year of Buyers getting offers accepted at huge reductions. Plenty of people have reported putting in low offers - sometimes based on what they imagine the house will be worth in 24 - but these “realistic “ offers never seem to get accepted.

It's all very area specific. Where I live saw the 'boom' later than most places and prices are continuing to increase with houses selling quickly. Our home has naturally increased in value by 50% in the last year, having seen a minimal increase in the 5 years before that

if you're going to respond to me and others as being "bitter" and the tone of your posts ar emotionally charged without much factual backing, then you're not worth responding to imo.

people come on MN to share their experiences and that's all I have done. i think my comments have been fair and balanced and showing a different more positive side of renting which I have seen many people benefit from because they have been able to stay focussed on their careers and earning potential (usually by accident due to the over-priced housing market over the decades and more recently).

And these same people are usually the cash buyers or the ones with high deposits from my own experience. I'm not one of them, but they are my friends, some family and I think the rental situation worked for them.

I think they have more autonomy over their lives in their later 30s and early 40s than someone who scrabbled to get a deposit in their 20s/early 30s and settled on the first house they could afford which isn't always the best area, nor the best location for work and career opportunities. i have only shared what i have seen and how it has benefited them, they are not necessarily my personal experiences but i have learnt from others.

i am also not someone who is obsessed with property. i have other things going on in my life that are more important. people who are obsessed with property usually have a particular mindset and thinking of how life should "be", and usually their biggest ambition in life is becoming a landlord (which hasn't worked out for many LLs right now lol).

take care

thanks for sharing. I think i definitely resonate with: a property is home. wishing you the best in your home :)

I am a long term renter. I would much prefer to temporarily be a slave to a bank until I pay off my mortgage than a slave to a landlord until I die!... Friends that took a risk ten years ago have paid ten years worth of mortgage on their home. I have paid ten years of my landlords mortgage.

erm. I'm sorry but that's not what I said at all.

Why are you renting then if you're so concerned about this? You sound like you want to be in one place and stay there? If so, you should buy if you can afford to, no? If you want to buy, just buy?

But point in my post you responded to is not about people in your situation. A lot of people who rent do so not because they are waiting for the prices to crash but because renting gives them freedom of movement. i know people who moved abroad to UAE and Singapore, USA silicon valley doing great in life... and renting. They benefit from renting. Some of them are the cash buyers of today lol. I'm not, but I can learn from people around me.

If you don't benefit from renting, then my post was not about you so please read it properly. It's about how renting can be beneficial to others that you might not know about because the media focusses on those who can't afford rents (which they should).

If you are that fixated on property values then maybe it's because this is all the value/asset you think you'll ever posses? maybe there's something wrong with that way of thinking? just some food for thought? I believe you possess more in yourself, not just bricks and mortar.

Also, buying property isn't about "risk". It's about finding a home you feel settled in. I and many people i know don't feel settled enough in life to stay in one fixed postcode. just because that's not your reality doesn't mean their experiences mean less. some people don't feel lost and vulnerable because they're renting.

Prices have come down very quickly for 1st time buyer houses in my area. We wanted to move but our house has dropped by about 15% in the last year and the next rung hasn't caught up yet.

Our type of house keeps coming back up for sale on rightmove sold and then not sold with another 10 grand off.

One house has dropped from 325 to 260
and still not sold.

There's a few from 300 to 250 before sold

I'm sure it will spread to other areas soon

(Small rural town s/e)

@iovebread

Haha! Your responses are dripping in anger and performative condescension.
It's a thing of beauty!

ok 🙄 your response explains a lot.

@iovebread

It says I dismiss the views of someone that makes these comments based on saying I don't want to pay my landlords mortgage** :

"If you are that fixated on property values then maybe it's because this is all the value/asset you think you'll ever posses? maybe there's something wrong with that way of thinking? just some food for thought? I believe you possess more in yourself, not just bricks and mortar."

@iovebread do you really find it so hard to imagine reasons why people who would prefer to buy could end up renting for years instead?

Most people in the position to do so would want to buy at the bottom of the market. Smaller mortgage, less interest over the lifetime of the mortgage, more profit for the next onward purchase.