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Original poster

To buy or not to buy...

35 replies

blisscake · 21/03/2008 22:10

What is really going on with the housing market? Am ready to buy a house but can't commit as keep seeing prices falling. I know exactly the area I want to live in but our budget is about 20% below the asking prices of any of the houses we really like. As such are we letting ones that are not quite right but that are nice enough,in nearby areas slip away. I am holding out for prices to fall so that I can move into the village I want to be in. Is this just being wildly optimistic? What would be a reasonable offer for a house on the market at £370,000?

OP posts:
CarGirl · 21/03/2008 22:12

I think there is no harm in offering what you can afford even if it's 20% less, some people may need to move asap and if they haven't had other offers they may just accept?

lalalonglegs · 21/03/2008 22:15

Depends where you are - in some areas, people more likely to accept falls than others. Always offer but don't be surprised if it's turned down. Prices aren't going to go up any time soon so just play waiting game if none of your offers stick.

Shout · 21/03/2008 22:54

If house prices drop by 30% over next 4 years thats 111k you could be down. Renting that house would be about 1500pcm if you are paying a lot less rent than that for a similar house stay where you are and save save save until the houses truly are more affordable.

Parts of USA which are about 18months ahead in the detriorating housing market have perfectly good houses not even reaching 2001 prices. Housebuilders are cutting their loses and reducing drastically and you have situations of new houses being cheaper than 1 and 2 year old properties in the same road.

I too would love to buy a house following my seperation but the numbers just dont stack up, at the moment renting is cheaper than buying. I'd rather have my money in the bank growing at 5% year than it in negative equity.

Original poster
blisscake · 22/03/2008 20:46

When you put it like that Shout it is a crazy time to buy! How likely is it that we will follow what's happened in the states? Aren't the conditions here different enough for prices to just even off in a relatively short time? You're right about the numbers not stacking up, negative equity is a frightening thought.

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uptomyeyes · 22/03/2008 20:55

Depends how long you intend to be living in the house you want to buy. If you look at things over a 10 year period then negative equity shouldn't be a worry for you. If you want to buy and sell at a property relatively quickly then I wouldn't buy now. is it a home you want or an investment?

When I met DH in 1992 he had a flat in £55k negative equity. We rented it out for a while and then sold it for £70k profit in 1999.

Original poster
blisscake · 22/03/2008 21:13

We're looking for a family home to stay in for the long term. I guess my concern with negative equity is if my DH's job changes and we have to move before we've got the equity back in the house.

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Original poster
blisscake · 22/03/2008 21:20

Also we will be stretching ourselves to get the house, possibly not a good idea at the mo.

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Shout · 22/03/2008 21:51

Nobody knows for sure but if a new house was bought in 2000 for 180k and is valued at 420k now if it can go up that much in 8 years why can't it come down.

The fear factor for me is that even when prices have finished dropping they dont increase drastically and is more likely to be a slow incline.

If you can be patient hold on a few years get the the 400k for 250k put a larger deposit down and then live in your lovely affordable house for the next 10 years and sell at a good profit.

BrummieOnTheRun · 23/03/2008 14:32

I'd hold on blisscake. Houses in nearby areas will keep coming up, but your dream village may be affordable if you wait.

At the moment, i wouldn't start at more than 350k for a 370k property but you could get away with a much cheekier offer if the vendor is desperate to sell (I always ask the agent what the 'story' is with the vendor. you can gauge how open to offers they're likely to be).

Now isn't the time to panic buy, or to over-extend yourself, for that matter. (The bank of england seems to have limited control over the interest rates offered by the banks, so we can't rely on interest rate cuts.)

Youcannotbeserious · 23/03/2008 14:39

I'd also wait... The house we wanted has just fallen through and we've made the decision to rent until we know what's happening...

We're renting somewhere pretty small, so the rent is nowhere near what our mortgage would be.

It's not ideal, but neither is stretching yourself to buy the ideal house, only to end up with a huge mortgage and a house which is worth A LOT less....

I'm afraid I actually do believe things will get worse. The Govt. has been pretending inflation is OK for years, but we all know, really, it's not - fuel, petrol, food, education, health, travel - it's all costing more than we are 'told' it's costing. It's not sustainable....

uptomyeyes · 23/03/2008 19:45

The expectation of being able to pick up your dream home after a market crash is not really realistic. People in negative equity can rarely afford to sell, therefore relatively few properties come onto the market. You need to find a home that is affordable, that you like and that suits your needs. In time its price will rise.

Shout · 23/03/2008 21:49

I am not disputing that you shouldn't buy your dream house just not at the top of the market price. I don't think any body believes house prices are going to rise for the next few years.

Nodody sells unless they have to. But the baby boomers start to retire this year.They will not be in negative equity but looking to downsize to release capital to pay towards their retirement. They may wait a few years but can't hold off for ever.If you are a first time buyer with nothing to sell you will be in a better position to negotiate.

noddyholder · 23/03/2008 23:09

I agree.wait The laws on tax for buy to lets change on April 6 and apparently agents have houses just waiting for that date from landlords for whom the figures just don't stack up anymore so the market will be flooded.

WideWebWitch · 24/03/2008 12:36

I think you should wait too. I'm knocking 30-40% off prices in my head when I look at the property pages.

turquoise · 24/03/2008 12:53

I would definitely hang on, especially if you would be stretching yourselves to buy now.

dinny · 24/03/2008 12:55

don't buy in a falling market

wonder what will happen this coming week, NH and WW...

chocolateteapot · 24/03/2008 13:19

I'd wait. I personally the whole housing market is balanced at the edge of a cliff atm with sellers being told by agents it will pick up after Easter and are holding out for this to happen. I don't think it will and combined with other economic factors eg hike in mortgage payments, tightening of mortgage lending, general price increases in food, fuel, energy etc mean that things will gradually fall.

Sadly three of my friends are going through a bad time atm financially. One has just come to the end of her mortgage fix and can't afford the SVR they are on. A small part of her mortgage is fixed until July so her broker advised her to pay SVR until then. She said that if she can't then get back onto a much lower rate (they were paying about 4.5% I think) then they will have to sell and I guess they will have to accept whatever they get offered. They won't end up in negative equity their mortgage is still fairly low compared to house price but they will have to take what they can get. The others are similarly stretched for different reasons ie. divorce and lack of work (building trade)

We were going to extend but there is no way I am spending large amounts of money on our house in such uncertain times. So off to a caravan dealer in a moment and DH will hopefully be working in a caravan for a bit !

WideWebWitch · 24/03/2008 13:26

I reckon easter pick up estate agents are waiting for won't happen. It's a waiting game, buyers won't blink first imo, sellers will.

dinny · 24/03/2008 13:27

yeah, too right, Easter wkd traditionally one of busiest viewing wkds of the year

llareggub · 24/03/2008 13:33

Would it be stupid to extend our house and as a consequence our mortgage? Obviously we don't have to extend but we are very cramped and the extension plans we have would mean realistically we would never need to move again.

chocolateteapot · 24/03/2008 13:55

We are in the same boat on the extension front and I have been all over the place about it. I guess it depends on the value of your house now, how much equity you have in it and how the multiples of your mortgage stack up against your earnings.

Although we have a fair amount of equity atm, I'm not happy with the multiples of our wages compared to the mortgage and we are on interest only. So our priority has to be to get some of the mortgage paid off and the money earmarked for the extension will now be going to this.

I guess if you know you can realistically afford the increased mortgage payments, are fairly sure that jobs are secure and you would be able to stay long term, then I guess it doesn't matter. Look at what it would cost you in fees to move as well and make that part of the equation.

lalalonglegs · 24/03/2008 13:59

LLGG: I do firmly believe that you should do what you can to make your home work for you so, if extending your home won't force you into ludicrous borrowing, then you should extend to make life more comfortable. Not every decision should be factored around how much your house will/won't be worth at the end of it - first, no one knows at the moment, second, what's it matter if you don't plan to sell?

llareggub · 24/03/2008 14:01

lalalonglegs, that's my view too. We shall probably go fir it..

Original poster
blisscake · 25/03/2008 18:56

The house I had my eye on was due to be going on the market (heard of it through word of mouth) just found out the vendor has added 50k to the asking price. so that's that dilemma out of the way!! Will just keep browsing rightmove and will hold on for a while I think.

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Crunchie · 25/03/2008 19:16

llareggub That is what I keep doing. Why pay the government £9 - £10 in tax JUST for moving. Spend that on your own houe. So far I have done up my kitchen, added a conservatory, I am doing the bathroom next then I will be finished. I WILL NOT MOVE!