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Answer To 'should I Buy Now Or Rent' Questions


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#1126 Si1

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Posted 02 April 2011 - 05:45 PM

Si1,
Em, not sure what you've been looking at in the Guardian. Happily I'm well on my way to paying off my mortgage and won't be looking for help for the government or care about mortgage interest rates much longer.


so I was right, you have exptrapolated your own ability to fleece the taxpayaer to your own ends and think the scenario still holds for people buying a house now

erm, right you are then

#1127 EdiLas

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Posted 02 April 2011 - 10:06 PM

so I was right, you have exptrapolated your own ability to fleece the taxpayaer to your own ends and think the scenario still holds for people buying a house now

erm, right you are then


Perhaps I could have been clearer I won't be looking for help from the government and never have, and since I almost have my mortgage paid off, through the conventional means of using money I earned at a job I soon won't care about mortgage rates

#1128 Annest

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Posted 03 April 2011 - 05:25 PM

Hello,

I'm pretty new and I'm not sure if I'm posting this question in the right place but here goes...

We are about to sign a contract selling our 5 bedroomed terrace property for £200,000 which is considered "crazy cheap" but which is £60k more than we paid for it in 2002. It does mean that we can't afford to buy anywhere where we are likely to be happier. We are selling because we have been pretty unhappy here and I hate being tied down to a property. I believe that house prices will continue to go down slowly over the next few years but nobody else (amongst friends, family etc) seems to share that view. I would like to rent for at least one year in the hope that we will be able to afford something quite nice by then. An added problem is our current inability to find anywhere to rent. I would be very grateful for any advice.

Thanks

Annest

#1129 LC1

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Posted 05 April 2011 - 08:39 AM

Hello,

I'm pretty new and I'm not sure if I'm posting this question in the right place but here goes...

We are about to sign a contract selling our 5 bedroomed terrace property for £200,000 which is considered "crazy cheap" but which is £60k more than we paid for it in 2002. It does mean that we can't afford to buy anywhere where we are likely to be happier. We are selling because we have been pretty unhappy here and I hate being tied down to a property. I believe that house prices will continue to go down slowly over the next few years but nobody else (amongst friends, family etc) seems to share that view. I would like to rent for at least one year in the hope that we will be able to afford something quite nice by then. An added problem is our current inability to find anywhere to rent. I would be very grateful for any advice.

Thanks

Annest


Hi Annest,

if you've been reading this site for years then you'll know that there's many on here who share your view that prices will continue to go down, even though this may not happen evenly (bulltraps etc) and will differ somewhat depending on locality.

The main problem for me, being in a similar position having already sold and with a wife who wants desperately to buy again for the 'security' of ownership, is that nobody really has a crystal ball to tell us all how far or how fast it will fall! I do not see property as an investment, but equally do not want to be trapped in neg equity at a time when the job market is so flakey and I might need to move for work at some unspecified time in the future.

Unfortunately there seems to be no right answer - you have to work out what is right for you? From your post you say that you weren't happy in your house, and that you hate being tied to a property. So that suggests that moving into rental for a year or two could turn out to be the smartest move? And buying again immediately given what you say about not being able to find/afford something nice at current prices suggests that stretching yourself or settling for something you're not entirely comfortable with could turn out to be a big mistake?

Good luck with your decision!

#1130 Conrad

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Posted 05 April 2011 - 03:05 PM

Wife is giving me some gip about not buying, family are also joining in the chorus of buy now or your never get on the ladder! I've been STR for 4 years and a good deposit saved in the bank and I've been sitting on the fence for a while but have started to wave a little and have viewed some properties in Bournemouth which are ridiculously expensive e.g more than peak 2007 prices. Lucky this shook me out of my moment of weakness and I'm now determined not to buy but the pressure is mounting. All my friends and relatives own and are sometimes shocked that we rent, I tend to keep my bearish comments to myself as to not upset too many people but occassionally I let it be known that its nice to be debt free and free as a bird.

come on HPC hurry the f**k up will you.

#1131 thebigpicture

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Posted 07 April 2011 - 08:28 AM

Wife is giving me some gip about not buying, family are also joining in the chorus of buy now or your never get on the ladder! I've been STR for 4 years and a good deposit saved in the bank and I've been sitting on the fence for a while but have started to wave a little and have viewed some properties in Bournemouth which are ridiculously expensive e.g more than peak 2007 prices. Lucky this shook me out of my moment of weakness and I'm now determined not to buy but the pressure is mounting. All my friends and relatives own and are sometimes shocked that we rent, I tend to keep my bearish comments to myself as to not upset too many people but occassionally I let it be known that its nice to be debt free and free as a bird.

come on HPC hurry the f**k up will you.



Conrad,

Being debt free is where you need to be at this time, nothing wrong with that at all. The housing bubble has not burst yet, its had a slow leak from the valve but is still mostly inflated today. The housing bubble is the key to everything, all stimulus and policy must be thrown at keeping the bubble alive, time though is running out, how long can we keep blowing in air before we become out of breath?
My own views on house prices are..........................the inevitable crash is coming, in commercial and private sectors, all time low interest rates have kept the bubble alive and today we are about to see interest rates go up in many countries (not ours yet???? - July or before). Jo public so far has been protected from the recession in many ways as their mortgage payments have dropped significantly, the affects of ever rising inflation is starting to use up the mortgage payment savings and pain is being felt across the board. Interest rate rises will increase the pain for many borrowers and the big borrowers (house buyers) will feel it even more. Wasn't mortgage default way up last month? even though interest rates are low? what will happen when default becomes much more prevalent as interest rates rise? it wouldn't surprise me if houses prices fell back 40-50% in the future back to a level of actual value.
Expect new schemes to be introduced by the Banks and Government to keep the bubble alive and big help for first time buyers, remember keeping the bubble alive is key to everything. Free money for deposits, low fixed rate terms possibly zero, cash incentives hmmmmm haven't we seen this before?

Edited by thebigpicture, 07 April 2011 - 09:20 AM.


#1132 Annest

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Posted 08 April 2011 - 07:31 PM

Hi Annest,

if you've been reading this site for years then you'll know that there's many on here who share your view that prices will continue to go down, even though this may not happen evenly (bulltraps etc) and will differ somewhat depending on locality.

The main problem for me, being in a similar position having already sold and with a wife who wants desperately to buy again for the 'security' of ownership, is that nobody really has a crystal ball to tell us all how far or how fast it will fall! I do not see property as an investment, but equally do not want to be trapped in neg equity at a time when the job market is so flakey and I might need to move for work at some unspecified time in the future.

Unfortunately there seems to be no right answer - you have to work out what is right for you? From your post you say that you weren't happy in your house, and that you hate being tied to a property. So that suggests that moving into rental for a year or two could turn out to be the smartest move? And buying again immediately given what you say about not being able to find/afford something nice at current prices suggests that stretching yourself or settling for something you're not entirely comfortable with could turn out to be a big mistake?

Good luck with your decision!



Thanks for your response and the other comments since mine have also been very helpful. Yes, I understand that many people believe that house prices will decrease but recently it seems that everyone I know has forgotten this in the same way that we've forgotten the snow now the sun is out! I'm under so much pressure not to sell and rent even though I'm very unhappy in my home and am excited to have found a buyer. It seems that people think that property ownership is more important than happiness! I've had a humiliating trip around the town's estate agents just to ask what the situation is with the properties we have put low offers on. Some of these properties are selling at 2007 prices! What's going on??? Is this a trap? My reasoning tells me that house prices will fall slowly over several years. But the people around me seems to think we're about to fly again!

#1133 luddite

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Posted 01 May 2011 - 09:08 PM

Conrad,
it wouldn't surprise me if houses prices fell back 40-50% in the future back to a level of actual value.


Hmmm, but what is "actual value"?

It would surprise me. To an investor who can get better than 5% yield on their cash by buying houses at todays prices then they could represent "actual", even good value, certainly when compared to bank interest. In my mind rental values remain a major barrier to the crash. Currently, I would say don't expect a HPC until bank interest rates are much much higher such that old money can go back to the bank vaults.

Don't get me wrong, I don't think our low wage-inflation economy can sustain high rents any more than it can sustain high house prices, but I am not sure that I can see how a rental yield crash can play out in conjunction with a house price crash. Buyers staying away actually fuels rental demand which, in turn, makes BTL more attractive to those who have cash. Interest rates SHOULD be sky high right now but they are artificially low for a variety of reasons which I won't go into now. The fact is that we are where we are and I see a crash as unlikely. The most likely outcome is stagnation

Should I buy now?
DYOR particularly in relation to you local Market and of course, haggle hard.

#1134 LC1

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Posted 05 May 2011 - 05:37 PM

Buyers staying away actually fuels rental demand which, in turn, makes BTL more attractive to those who have cash. Interest rates SHOULD be sky high right now but they are artificially low for a variety of reasons which I won't go into now. The fact is that we are where we are and I see a crash as unlikely. The most likely outcome is stagnation

Should I buy now?
DYOR particularly in relation to you local Market and of course, haggle hard.


Good post.

Unfortunately this is how I'm beginning to see it too. I don't think I'm prepared to wait 3+ years (probably more like 5) for house prices to creep down to more affordable (normal) levels.

#1135 Barefoot87

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Posted 10 May 2011 - 07:29 PM

Hi Everyone.

I've been coming to the forum for about a year now. I've learnt and read so much from many, so thank you all for that. I'm 24, and currently renting a flat with my fiancé in Middlesbrough. (Yep, officially the worst place to live (I know which parts to avoid!!) :) ).

Lived on Teesside all my life, but worked and travelled around the UK. We would both like to settle here for now as this is our home. Where our friends an family are. We have been renting for a year now and both of us are on average salaries for our age. We've been sensible with money and have no debts, any student loans paid off, and we have managed to save over £15k towards a deposit.

I'm a big believer that the bigger HPC is on it's way (or currently underway) and getting pressured by fiance and family to buy. I'd love out own place to put our own mark on however, personally would like to wait another 9-12 months to see what happens the housing Market. Saying that, whilst the over inflation in prices is completely different in the south compared to the north.

We've started looking at property in the area. Found a 3 bed semi which seems cheap for it's type and location. It's up for OIEO £99950, advertised as a lower price for a quick sale. Were going to view this week and if we like it may be tempted to put an offer in of around 90-95k. Not sure they would take it considering the other property sold on the road and area in recent months (110-140k) - similar property.

Looking back on right move data, the property was last sold in 1999 Q3, for £52k. Going by the average house price adjusted to inflation chart, i'd say it was relatively close??

Any advise would be great! Thank you.

#1136 ader

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Posted 11 May 2011 - 01:08 PM

Hi Barefoot,

If your jobs are secure then a 1999 50k house for around 100k in 2011 seems ok - at peak it was probably 150k?

Having said that, I just sold to rent so that should tell you I think big falls are coming.

If you bought and in 2 years time it was worth 25% less would you be upset?

I'm currently renting a house I could not afford to buy so I have a better standard of life than if I bought again at the moment.

I'm currently taking a short time view comparing renting to buying over the next 3 years. assuming house prices won't go up in that period then If the rent costs less than buying then I'm happy to wait.

#1137 Barefoot87

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Posted 12 May 2011 - 06:38 AM

Thanks for the reply Ader. Sounds like your doing the sensible thing by selling up an renting.

Whilst we thought our jobs were secure, in the past few months we have both had threats of redundancy. We still have jobs after cuts yet the threat still exists. So far from secure, but which jobs are these days? Saying that id rather have a different job before I bought to feel more secure.

If we did buy I'd obviously be really disappointed that we had if prices were to fall. It would probably be 15k worth of savings down the drain, however in one way we would be paying 5k a year in rent and would have paid off 2 years of mortgage too.

Were going to view the property tonight. We have only saw several photos so it should be interesting to see what the rest of the house is like and it's condition given the lower price.

I hope my fiancé doesn't fall in love with it and the idea as I'm really swaying towards renting for the next year or two, digging in and see what happens. In this time we could save more, enjoy life that little bit more and be risk free if our jobs did hit the fan. Whilst I am tempted by the lower price, I think it's true value is more near to 75-80k.

#1138 Si1

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Posted 13 May 2011 - 02:58 PM

Whilst we thought our jobs were secure, in the past few months we have both had threats of redundancy. We still have jobs after cuts yet the threat still exists.


public sector, nhs etc?

construction?

#1139 Barefoot87

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Posted 13 May 2011 - 03:23 PM

Private sector

#1140 Si1

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Posted 13 May 2011 - 03:43 PM

Private sector


which part of private sector? serving what customers or other organisations?

(just interested)




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