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pollyb

Buy Or Not To Buy?

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Help wanted!

Looking to buy a property in North Down, have about £420k max to spend and want to make it work for us as much as possible. Some properties have been reduced before Xmas from £695k to £400k!! Obviously a (very!) distressed sale, appreciate they are not all like this.

Looking at houses from £495/£525k, hoping to buy for the £400k mark ......is this realistic as they have been on the market for some time and have been already reduced? If someone has had a property for sale for the last 18 months, hasn't taken it off the market, and has had a couple of reductions already, it is priced at £550, what would anyone say would be an offer that we could look at going in at, looking at making the right decision at the right time.

Looking at the whole market place and predictions that property is set to fall in N Ireland still further over the next year(s),, is this a good time to buy? Or should we just sit tight?

Struggling with all the scenarios, so any advice welcomed.

Thanks

Edited by pollyb

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It's strange that we don't really discuss this any more. Probably because the answer to your question is so obvious to us now ;)

pollyb - I'm in a similar situation. When I got out of the market in Autumn 2007, I did some financial projections then on the benefits or renting Vs buying using assumptions for house price deflation, rental costs and the future risk free value of cash. The model tells me that I shouldn't really contemplate buying a house until at least 2017, if the decision were to be taken purely on financial considerations. In reality however I wouldn't want to rent that long and therefore I will buy when the marginal financial benefits of continued renting aren't perceived (by me) to be worth the price of being unsettled in a rented house. For me, using current projections, that point arrives this autumn so I will probably begin to look in the North Down area from this summer onwards. By then I expect to pay not more than £440k for a house valued at around £650k at the peak. I expect it will continue to depreciate for several years thereafter but at a level that is acceptable to me. i.e. it becomes a home then primarily, not an investment vehicle. BTW my peak to trough assumption is -54% reduction in nominal house values. So yes, this is rather nurdy rational decision making model but it will give me greater confidence when I eventually pull the trigger. Otherwise you're just into a guessing game in my view and I couldn't sleep at night making decisions on that basis. (P.S we won't ever be bidding against each other as I simply won't get into that situation with any other interested parties, either real or a figment of an EAs imagination. ;)

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pollyb - I'm in a similar situation. When I got out of the market in Autumn 2007, I did some financial projections then on the benefits or renting Vs buying using assumptions for house price deflation, rental costs and the future risk free value of cash. The model tells me that I shouldn't really contemplate buying a house until at least 2017, if the decision were to be taken purely on financial considerations. In reality however I wouldn't want to rent that long and therefore I will buy when the marginal financial benefits of continued renting aren't perceived (by me) to be worth the price of being unsettled in a rented house. For me, using current projections, that point arrives this autumn so I will probably begin to look in the North Down area from this summer onwards. By then I expect to pay not more than £440k for a house valued at around £650k at the peak. I expect it will continue to depreciate for several years thereafter but at a level that is acceptable to me. i.e. it becomes a home then primarily, not an investment vehicle. BTW my peak to trough assumption is -54% reduction in nominal house values. So yes, this is rather nurdy rational decision making model but it will give me greater confidence when I eventually pull the trigger. Otherwise you're just into a guessing game in my view and I couldn't sleep at night making decisions on that basis. (P.S we won't ever be bidding against each other as I simply won't get into that situation with any other interested parties, either real or a figment of an EAs imagination. ;)

It's always interesting to see the angles that others come up with...I look at the rationale and think 'yep! I agree with that!!' however ............... when it is your money on the line and you do see a house you want, do you act now .... or later? This will be a family home, not just an investment, but as always, you have to take into account unforseen circumstances, so your future is inextricably tied to your home ... as an investment. Looking at your predictions regarding house values ie £650 v £440 come Autumn time, I would take it that an offer of £400 on a house valued at £525 in the current market would be similar, particularly as there is no chain involved.

Edited by pollyb

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......In reality however I wouldn't want to rent that long and therefore I will buy when the marginal financial benefits of continued renting aren't perceived (by me) to be worth the price of being unsettled in a rented house. ......from this summer onwards. By then I expect to pay not more than £440k for a house valued at around £650k at the peak. I expect it will continue to depreciate for several years thereafter but at a level that is acceptable to me. i.e. it becomes a home then primarily, not an investment vehicle. BTW my peak to trough assumption is -54% reduction in nominal house values. So yes, this is rather nurdy rational decision making model but it will give me greater confidence when I eventually pull the trigger.

Using your figures you would be prepared to buy after a drop in price of 32% even though you expect prices to fall by 54%. In the example you gave, if you bought at £440k, you would face a potential loss of £141k on your own peak to trough assumption. I would hardly call the avoidance of such a loss by renting as only a "marginal financial benefit"!

"Greater confidence" when you " eventually pull the trigger"? On the basis of your model you shouldn't have any confidence at all!

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It's always interesting to see the angles that others come up with...I look at the rationale and think 'yep! I agree with that!!' however ............... when it is your money on the line and you do see a house you want, do you act now .... or later? This will be a family home, not just an investment, but as always, you have to take into account unforseen circumstances, so your future is inextricably tied to your home ... as an investment. Looking at your predictions regarding house values ie £650 v £440 come Autumn time, I would take it that an offer of £400 on a house valued at £525 in the current market would be similar, particularly as there is no chain involved.

i'm looking also in the north down area (being bangor, ards, comber etc), but half the cost that you are talking about!!!! lucky sods!! i tend to agree with lolacarrascal with expected reductions. I'm looking at houses that were around the £400k price june/july 2007 and halfing it. I reckon there are some to be had, i'll let you know of my progress in due course!!

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Help wanted!

Looking to buy a property in North Down, have about £420k max to spend and want to make it work for us as much as possible. Some properties have been reduced before Xmas from £695k to £400k!! Obviously a (very!) distressed sale, appreciate they are not all like this.

Looking at houses from £495/£525k, hoping to buy for the £400k mark ......is this realistic as they have been on the market for some time and have been already reduced? If someone has had a property for sale for the last 18 months, hasn't taken it off the market, and has had a couple of reductions already, it is priced at £550, what would anyone say would be an offer that we could look at going in at, looking at making the right decision at the right time.

Looking at the whole market place and predictions that property is set to fall in N Ireland still further over the next year(s),, is this a good time to buy? Or should we just sit tight?

Struggling with all the scenarios, so any advice welcomed.

Thanks

It's impossible to say what you should offer for a house with a current asking price of £550k - and that's the point, no one has the foggiest notion. One thing is for certain if it isn't over-priced now it soon will be. There is no reason why house prices in NI should stop falling and every reason to suspect that they won't. As has often been commented on in the site, prices in the range that you have been looking at have been, to date, very sticky. This is probably as expected but it won't last. There is no support for this market if potential buyers are faced with having to sell their current home at a considerable reduction before they trade-up.

Credit crunch, escalating unemployment, failing banks, doomed construction industry, closing estate agents, over-indebtedness of consumers, and the total absence of any confidence at all in the property racket - "is this a good time to buy?". You couldn't pick a worst time in the last 60 years! "Sit tight?" - When this is over many will be grateful they still have a home to sit in at all. I wouldn't struggle to much with the scenarios if I were you.

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It's always interesting to see the angles that others come up with...I look at the rationale and think 'yep! I agree with that!!' however ............... when it is your money on the line and you do see a house you want, do you act now .... or later? This will be a family home, not just an investment, but as always, you have to take into account unforseen circumstances, so your future is inextricably tied to your home ... as an investment. Looking at your predictions regarding house values ie £650 v £440 come Autumn time, I would take it that an offer of £400 on a house valued at £525 in the current market would be similar, particularly as there is no chain involved.

Pollyb - I won't offer advice because I don't know. I've just tried to develop a framework which helps make sense of this. If this is your money, real money in the bank/matress, then it becomes all the harder to part with it when the illusion of an ever lasting appreciating asset has been so convincingly shattered. Not wishing to complicate this any further for you, but has Monday's events with the banks raised any concerns about inflation eroding the buying power of that cash. Certainly starting to spook me. I got out at the very top and don't really care now if I miss the absolute bottom. I'm no spring chicken and have to put a price on quality of life.

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It's always interesting to see the angles that others come up with...I look at the rationale and think 'yep! I agree with that!!' however ............... when it is your money on the line and you do see a house you want, do you act now .... or later? This will be a family home, not just an investment, but as always, you have to take into account unforseen circumstances, so your future is inextricably tied to your home ... as an investment. Looking at your predictions regarding house values ie £650 v £440 come Autumn time, I would take it that an offer of £400 on a house valued at £525 in the current market would be similar, particularly as there is no chain involved.

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This reply is only my opinion, I'm not going to take any responsibility should you act on it.

If you are going to buy now and intend to live in the house for the next 10-15 yrs or more (in other words it is going to be your home,) then yes I would go ahead and buy now at the best level you can. If, however, you only plan to stay in that house for less than 5 yrs then I would wait for a while yet as I reckon (short term) prices have a bit to drop yet, maybe by up to another 25%. This wont affect you in the long term as if you plan to stay there and make the place your home the market will rise again.

Again, this is only my opinion. All the best with your plans.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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