should i complete the purchase of a house in this financial climate?? - HotUKDeals
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should i complete the purchase of a house in this financial climate??

the badger Avatar
8y, 2m agoPosted 8 years, 2 months ago
hi all

i made an offer on a 4 bed detached house 2 weeks ago that was excepted but now the crumbling financial world has fallen further do i still continue or any other ideas on reducing my risk on the falling house market ??

thanks in advance
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the badger Avatar
8y, 2m agoPosted 8 years, 2 months ago
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banned 1 Like #1
if it is to be your home then just go for it. by the time you come to sell then it will more than likely be worth more than you are paying.

your mortgage will probably be the same as any rent (dead money) and you have a home to live in rather than someone else's so you can make it as you want it.

People look at a house too much as an investment rather than a home IMHO
#2
i purchased enda september

it isnt cheap as my mortgage was 7% but in 2 yeras when come to re mortgage hopefully itl have all settled down and any improvment on 7% is gonna be good for me

just go for it
#3
some housing are going to get so much cheaper when we enter the winter , it hasnt even grazed the surface yet , Easy money in the past has pushed house prices way out of control and its over due a correction ,Many owners on buy to let may need to sell some soon as interest rates rise ,to realise some capital ,then the bargins will be about .Some i know are only just holding on and will need to sell soon
but if its a house you really want then go for it as it will probally not come on the market again in a long time
not going to be a good time to hold a big mortgage
banned#4
every indications point to interest rates FALLING in the next year so dont be too keen to get a fixed deal.

rents are rising fast now so I cant see buy to let sellers going into any kind of panic. Some areas are actually still rising and agents are reporting declines bottoming out across many more areas.

I believe that substantial further falls are not going to happen especially over the winter which is generally a very slow flat time anyway.

There will still be bargains about but more in the case of knocking down a seller rather than sellers dropping their asking prices at point of sale.
[mod]#5
Go ahead with it. If its a property of sound structure and you see yourself living in the property for more than about 3 years. The downturn in the market wont last forever. Yes, there arent many good mortgage products out there at the minute but you are always going to run the risk of payments going up and down dependant on when you remortgage and how long you are tied in for.
Good luck with it.
#6
csiman;3002320
if it is to be your home then just go for it. by the time you come to sell then it will more than likely be worth more than you are paying.

your mortgage will probably be the same as any rent (dead money) and you have a home to live in rather than someone else's so you can make it as you want it.

People look at a house too much as an investment rather than a home IMHO


ditto :thumbsup:
#7
If you are in a position to rent somewhere decent for a year or two instead, that still could be a better option. We have just moved after pulling out of a potential purchase and negotiating a 2 year rental with an option to buy instead. I disagree with the idea that rent is 'dead money' in a falling market. When you figure in costs of borrowing etc, it only takes a drop in value of about 6% over the next two years to reap financial benefits even taking into account rents paid (in fact, even less if you were to figure-in misc money for things the owner is responsible for while we rent). By my calculations, we'll have more options at better prices in a year or two and will have saved a larger deposit. Our rental price for this large 4-bed is still well below what we'd be paying on a mortgage if we had bought it. We'd be paying £710 more per month with a 80% mortguage (or £440 on interest only) than we pay in rent. I know most people don't like the insecurity of not owning their own home, but if you have lived in other countries where home ownership is not considered so important, it's much easier to make these kind of decisions in a more rational way. And anyway, we have the security of a home abroad, so the decision was even easier to make. You might be a very different position OP, but if you do have such choices available they are worth considering at least. GL with whatever decision you make :thumbsup:
#8
I've just pulled out of buying one and going to rent for another year - prices will fall for about another year (or more) I 'lost' about £ 250 'cos of fees I still had to pay. If you are talking about remortgaging in a little while your property may not be able to get it but at the same time you may not be able to get a mortgage in a years time either - so the 'gamble' has to be your decision - I'm taking the gamble and hope it pays off
banned#9
ignore the people stating the market 'will fall'

how the hell do they know that? If they knew that as a fact then they wouldnt even be on this site lol
#10
csiman
ignore the people stating the market 'will fall'

how the hell do they know that? If they knew that as a fact then they wouldnt even be on this site lol


i agree. Noone knows nothing about the economy for 100% sure. The only ones who do only knows about their own company and is the ceo of possibly the "lehman bros"
#11
It is hard to predict house prices, but I'd wait. In fact I really need to move to a bigger house, but I am waiting because on balance I think prices will fall in the next couple of years. It certainly seems unlikely that they will rise and when the market does pick up there will be more choice. We bought our previous house (a 2 bed semi in Bournemouth) at the bottom of the last market fall for just £46k. This was only 15 years ago. At the last peak, the identical house next door sold for £72k. So the fall was over a third that time. This is not good evidence that the fall this time will be as high, but it is evidence that such falls are possible. Now imagine if the house you are about to but falls by 20% in the next two years...
#12
csiman
ignore the people stating the market 'will fall'

how the hell do they know that? If they knew that as a fact then they wouldnt even be on this site lol



"Now thats what I'm talkin' bout" - as Lee puts its.

If you are buying for yourself go for it....house prices shouldn't decrease as much as people are thinking....the economy is already in trouble but as you can see for once banks are getting together to prevent the market from totally collapsing....If recession were to occur- in which it technically hasn't then it will take another 10 years to come back to its economical glory which I think the government will prevent.
#13
csiman
ignore the people stating the market 'will fall'

how the hell do they know that? If they knew that as a fact then they wouldnt even be on this site lol


I don't think anyone here is claiming anything with any degree of certainty - I'm certainly not! And it goes without saying that nobody knows how the market will react for certain (which is why it is is called a market btw...). But it does make sense to listen to a variety of opinions and gather evidence from a range of sources - and there is increasing consensus atm that the market is likely to continue falling - the most common figures quoted are between 10-25% over the next 2 years. There is also quite a lot of evidence to support that thinking, not least the recent banking problems. ( And as for your logic about not being on this site, this would mean that nobody should listen to you either :roll: There's really no need to take it so personally. We are simply sharing our thoughts in a grown-up manner. That's how people learn, by listening to a variety of opinions before making their minds up :thumbsup: )
banned#14
Paidia;3004782
It is hard to predict house prices, but I'd wait. In fact I really need to move to a bigger house, but I am waiting because on balance I think prices will fall in the next couple of years. It certainly seems unlikely that they will rise and when the market does pick up there will be more choice. We bought our previous house (a 2 bed semi in Bournemouth) at the bottom of the last market fall for just £46k. This was only 15 years ago. At the last peak, the identical house next door sold for £72k. So the fall was over a third that time. This is not good evidence that the fall this time will be as high, but it is evidence that such falls are possible. Now imagine if the house you are about to but falls by 20% in the next two years...

We bought our previous house (a 2 bed semi in Bournemouth) at the bottom of the last market fall for just £46k................................At the last peak, the identical house next door sold for £72k

so in 1993 you bought a house for £46K and last year it had only gone up to £72K

Thats pretty poor going.

I bought a house in 1992 for £57K and sold it in 2002 for £170K, then bought a house for £245K now valued at £450K (but falling in price as I type lol :w00t:)
banned#15
Liddle ol' me;3005442
I don't think anyone here is claiming anything with any degree of certainty - I'm certainly not! And it goes without saying that nobody knows how the market will react for certain (which is why it is is called a market btw...). But it does make sense to listen to a variety of opinions and gather evidence from a range of sources - and there is increasing consensus atm that the market is likely to continue falling - the most common figures quoted are between 10-25% over the next 2 years. There is also quite a lot of evidence to support that thinking, not least the recent banking problems. ( And as for your logic about not being on this site, this would mean that nobody should listen to you either :roll: There's really no need to take it so personally. We are simply sharing our thoughts in a grown-up manner. That's how people learn, by listening to a variety of opinions before making their minds up :thumbsup: )

Actually I hadnt even read your comment but notice I use words like 'I believe and in my opinion' not factual statements :-D

I was responding to snotty saying " prices will fall for about another year (or more)" :whistling:

You really shouldnt take things so personally but if someone really knew facts like the statement above then they would be a top city trader, not someone frequenting HDUK IMHO.

And thanks for explaining what a 'market' is

lol
#16
csiman
Actually [...] lol


You're welcome :p Well then we obviously agree that nobody knows these things for sure - and certainly not city traders! Yes, perhaps snotty should have hedged her language, as we all should all of the time. And perhaps that's how you should have responded rather than taking the more aggressive "how the hell would you know" route... That's what my response was to, not taking anything personally. Although to be fair, I do have a personal stake in the confidence of the market, and I'm gambling that the housing market will continue to fall. So in that sense I hope that snotty is right! In fact, I'm hoping for a 20-25% fall over two years, as it would bring housing levels back to a level that fits with average wages and would ultimately be more equitable for all. Unfortunately lots of people would be burned during the correction, but at least they'd be able to get back onto the ladder at a reasonable price - and more importantly, their kids will be able to as well.. It's not good for any of us when housing prices move beyond the reach of the ordinary person. But I would say that, wouldn't I?!
[helper]#17
csiman
if it is to be your home then just go for it. by the time you come to sell then it will more than likely be worth more than you are paying.

your mortgage will probably be the same as any rent (dead money) and you have a home to live in rather than someone else's so you can make it as you want it.

People look at a house too much as an investment rather than a home IMHO


Agree with CSI - one other point to consider. A surveyor company I know is trying desperately to keep their staff despite their financial problems. In previous downturns in the housing market , when it begins to take off, it takes off very quickly.

If you think about it, there will be very many people waiting for the market to bottom out and as soon as the prices start to rise, they will buy quickly, to avoid being priced out of the market....

If you wait you could miss out.
banned#18
Liddle ol' me;3005583
You're welcome :p Well then we obviously agree that nobody knows these things for sure - and certainly not city traders! Yes, perhaps snotty should have hedged her language, as we all should all of the time. And perhaps that's how you should have responded rather than taking the more aggressive "how the hell would you know" route... That's what my response was to, not taking anything personally. Although to be fair, I do have a personal stake in the confidence of the market, and I'm gambling that the housing market will continue to fall. So in that sense I hope that snotty is right! In fact, I'm hoping for a 20-25% fall over two years, as it would bring housing levels back to a level that fits with average wages and would ultimately be more equitable for all. Unfortunately lots of people would be burned during the correction, but at least they'd be able to get back onto the ladder at a reasonable price - and more importantly, their kids will be able to as well.. It's not good for any of us when housing prices move beyond the reach of the ordinary person. But I would say that, wouldn't I?!

I stopped reading at '"how the hell would you know" route'

I didnt single out an individual in my statement :whistling:
#19
csiman
ignore the people stating the market 'will fall'

how the hell do they know that? If they knew that as a fact then they wouldnt even be on this site lol


csiman
I was responding to snotty saying " prices will fall for about another year (or more)" :whistling:


csiman
I stopped reading at '"how the hell would you know" route'

I didnt single out an individual in my statement :whistling:


Oh right, that makes sense then! :?
banned#20
Liddle ol' me;3005677
Oh right, that makes sense then! :?


glad we're on the same wavelength at last :thumbsup:
#21
csiman
glad we're on the same wavelength at last :thumbsup:


you wish! :w00t:
#22
csiman
We bought our previous house (a 2 bed semi in Bournemouth) at the bottom of the last market fall for just £46k................................At the last peak, the identical house next door sold for £72k

so in 1993 you bought a house for £46K and last year it had only gone up to £72K

Thats pretty poor going.

I bought a house in 1992 for £57K and sold it in 2002 for £170K, then bought a house for £245K now valued at £450K (but falling in price as I type lol :w00t:)


Nope, the last peak that I was referring to was the end of 1980s and beginning of the 1990s. But actually I'm old enough to remember the house price crash before that too. I think we are possibly still towards the top of this peak. The painful bit of the fall is yet to come. IMHO of course
#23
Paidia
Nope, the last peak that I was referring to was the end of 1980s and beginning of the 1990s. But actually I'm old enough to remember the house price crash before that too. I think we are possibly still towards the top of this peak. The painful bit of the fall is yet to come. IMHO of course


IMHO YHO is spot on :) It seems to me that the painful part must be ahead if the housing market in this area is anything to go by. Take my case that I mentioned above. The figures are for the house we have just rented (I've adjusted them all by the same percentage for anonymity). The House-Price Rent ratio in this factual case signals problems ahead for property owners if it is a typical case and interest rates don't fall quite sharply:

House purchased 13 months ago for £210,000
Owners invest approx (est.) £25,000 to upgrade
3 months ago they put it on the market for £270,000
Last month they agreed to rent at £800 p.c.m. of which they get (after agency fees) approx £736

By my calculations, if they purchased with a 80% mortgage at 7% (not including the upgrade costs) they will be paying £1344.36 (or £1096.66 interest only).

So mortgage outgoings @ £1344.36
rental income @ £736

Now I'm not sure how much of an unusual case this is, but by my estimations this signals trouble for the buy-to-let owners at least, if not others.

EDIT: If interest rates fall, mortgage outgoings @ 6% = £1225.55 / @ 5% = £1111.58 / @ 4% = £1002.85
1 Like #24
Yep. The more you think about this and the more calculations you do, the worse it gets. Inflationary pressure and relatively low interest rates already make rate cuts difficult too. So 4% seems a distant dream.

Each boom in the housing markets seems to rely on FTBs who can't remember previous falls. BTL seems to have made this cycle worse if anything. Deregulation seems to have given us terrible boom/bust cycles in house prices. I'm not a financial expert, but I've looked into this enough to put my money on a falling house market over the next couple of years.
#25
Paidia
Yep. The more you think about this and the more calculations you do, the worse it gets. Inflationary pressure and relatively low interest rates already make rate cuts difficult too. So 4% seems a distant dream.

Each boom in the housing markets seems to rely on FTBs who can't remember previous falls. BTL seems to have made this cycle worse if anything. Deregulation seems to have given us terrible boom/bust cycles in house prices. I'm not a financial expert, but I've looked into this enough to put my money on a falling house market over the next couple of years.


Well said. You've pretty much summed up my position perfectly. Glad to hear also that you won't be negatively effected if things do play out this way :thumbsup:
banned#26
Paidia
Nope, the last peak that I was referring to was the end of 1980s and beginning of the 1990s. The painful bit of the fall is yet to come. IMHO of course


Yup, thats quite correct. I bought a house in Jan 1989 in an area that at the time had the highest jumps in the country (new high speed train service was the catalyst.) In 8 months it had risen in value by about 70% to August 1989. At that time (and I cant remember what the change in stamp duty was and also the pole tax issue) the colapse began. I actually wanted to sell at that time (after my car got knicked), but sales only happened if you took a big hit on the value that was placed on it. (Like everything, its value is only what someone is prepared to pay.) I ended up renting it for a couple of years (for a lot less than the mortgage value.) And of course interest rates rose at one point to 16% (Thanks Liam Britain and John Major!)

When I eventually sold in 1992, I just about broke even. (Though I was out of pocket in reality as I was effectively subsidising the tennants. It was a wasted 3 years of investment. I would have been better off just saving and buying when it bottomed. Had I of done so, the next house I bought would have been better than it was.

Moral. The housing market is only just begining to colapse. It has a long way to go. Unless you have to, bide your time and save. I wished my nephew had done this about 4 months ago. He paid £249,999 for a one bed flat in Docklands on interest only. (Purely because renting was actually more expensive than doing this.) But he's fortunate in one way. His huge salary will double by this time next year (hopefully) and he will be capable of absorbing this hit. Others are not so fortunate.

In some respects, I'm not too sad from a personal level. We had already decided the next rung on the ladder was a step too far. We were planning on buying a 4 bed detached literally over the road from my 3 bed semi. We lost out buyer whilst waiting for the owners to complete the chain - and eventually asked for another £30K (which we told them to get stuffed.) That house has now risen by huge amounts - even percentage wise far in excess of ours - I just hate guzumpers out of principle! We would have avoided the higher rate of stamp duty too - but hey ho. Spilt milk and all that!:p
#27
do what feels right for you x


i have just sold stc, and am soooooooooooo excited
#28
thanks all above for all your input :thumbsup:
i think i will carry on with the purchase as it to be a family home and even in todays market isnt dear but what tomoro brings no one knows :thinking:
if u step back far enough everything go's up in value even if its only driven by inflation so fingers crossed its not going to drop silly amounts after ive made it mine :oops:
banned#29
guv;3007557
........The housing market is only just begining to colapse. It has a long way to go.


Can you substantiate your statement of fact with hard evidence?
#30
csiman
Can you substantiate your statement of fact with hard evidence?


Well no he wont be able too, as it has not happened yet. Experts expect prices to drop so people class them as facts. You and I will die, is that a fact? You would say yes because somebody has told you so and you have seen it before so you believe it is fact. Well it only becomes fact when it happens.

In my opinion I think house prices will fall a little until spring 2010. Maybe 20% total.
banned#31
GAVINLEWISHUKD;3010308
Well no he wont be able too, as it has not happened yet. Experts expect prices to drop so people class them as facts. You and I will die, is that a fact? You would say yes because somebody has told you so and you have seen it before so you believe it is fact. Well it only becomes fact when it happens.

In my opinion I think house prices will fall a little until spring 2010. Maybe 20% total.

Yes, opinions are not facts. I actually agree with you and that I feel another 10% fall is likely having seen a 10% fall since the October 2007 peak.
#32
csiman
I believe that substantial further falls are not going to happen especially over the winter which is generally a very slow flat time anyway.


csiman
ignore the people stating the market 'will fall'. How the hell do they know that?


csiman
Yes, opinions are not facts. I actually agree with you and that I feel another 10% fall is likely having seen a 10% fall since the October 2007 peak.


I'm a bit confused. If you have felt all along that another 10% drop is likely, why the aggressive stance against those who have been saying the same thing :? Anyway, glad to know we actually are in agreement! :thumbsup:
banned#33
Another 10% is not substantial compared to the 20% plus doom merchants :)
#34
From today's Guardian, just to give a flavour of what the 'experts' are predicting - a rather mixed bag!:
http://www.guardian.co.uk/money/2008/aug/07/house.prices.housing.market (see below)

Each month several house price surveys are published which draw together data from recent sales and show which way the market has been moving. Off the back of these, housing market commentators make predictions about where house prices will move next. This page brings together their latest forecasts.

HBOS: House prices to fall by 18% by February 2010.

Nationwide Building Society: On the record as predicting single digit falls for 2008, but says double-digit falls are "not inconceivable."

Council of Mortgage Lenders: Had predicted a fall 7% fall this year but now says forecasts are "futile".

Howard Archer, chief economist at Global Insight: Fall of 15% in 2008, and then 12% in 2009.

Centre for Economic and Business Research: Prices should rise by 30% between late 2009 and 2012, "partly driven by the shortfall in housing supply that the reduction in completions will inevitably precipitate."

National Housing Federation: Prices to rise by 25% by 2011.

Capital Economics: 35% drop in prices from the peak in 2007.
#35
Liddle ol' me;3042274
From today's Guardian, just to give a flavour of what the 'experts' are predicting - a rather mixed bag!:
http://www.guardian.co.uk/money/2008/aug/07/house.prices.housing.market (see below)

Each month several house price surveys are published which draw together data from recent sales and show which way the market has been moving. Off the back of these, housing market commentators make predictions about where house prices will move next. This page brings together their latest forecasts.

HBOS: House prices to fall by 18% by February 2010.

Nationwide Building Society: On the record as predicting single digit falls for 2008, but says double-digit falls are "not inconceivable."

Council of Mortgage Lenders: Had predicted a fall 7% fall this year but now says forecasts are "futile".

Howard Archer, chief economist at Global Insight: Fall of 15% in 2008, and then 12% in 2009.

Centre for Economic and Business Research: Prices should rise by 30% between late 2009 and 2012, "partly driven by the shortfall in housing supply that the reduction in completions will inevitably precipitate."

National Housing Federation: Prices to rise by 25% by 2011 http://www.smileyhut.com/laughing/hysterical.gif

Capital Economics: 35% drop in prices from the peak in 2007.

the last one seems about right , its not there arnt buyers its just they wont lend unless there is very little risk , so the capital is not about too have ,whether you can afford it or not they dont want negative equity it costs them even more in the long run , the ones that had cars and holidays on the mortgage will be hit hardest !! About a 30-40 % fall i recon

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