Cash Buyers - What Are Your Thoughts Currently?

[Mugwump Boy]

Would buy at 30% off peak. Was on verge of seeing it happening locally before the spring bounce came along this year... Prices have now rebounded a bit; splurge of SSTCs some with a very fast turn around. Lots of people shooting their cash wads on a limited selection of properties.

Am happy waiting if necessary but am unhappy about not having a risk-free place to stash my STR fund... Am thinking of buying in 2010 depending on how things pan out over the next few months.

[porca misèria]

im still holding out over winter. see where we are in march. what about you?

Depends what you can do with the cash.

To me, spare cash is EITHER a deposit on a house OR a float to enable investments worth £25k+/year in tax rebate. Can you see a home appreciating by £25k/year in the next five years or so?

[Mr Punter]

I am in long term rented until 2013. I sold earlier this year but my purchase fell through and I wanted to be in this area for schools and did not want the hassle of moving every year or whenever the landlord decided I should.

I think I will buy cheaper in 2013, but as I am a property developer, if prices rise in the meantime I will be quids in anyway. The STR cash is proving handy for developments.

[Democorruptcy]

Crash? Not in rural villages round our way.

Still not spent it.

We started renting in NE Scotland during 2008 prices had boomed pre-2007, didn't come down, (in general) and are still increasing on 2007 levels. This must be the most overvalued place in the country. One new on the market recently is up 29% from the 2007 sold price! A friend saw one new on the market last week, viewed it Sunday, offered over the valuation and it's gone to closing date next Friday. The government has ordered people to buy and it seems a lot are obeying.

We have a cheap rental in an idyllic spot but my partner is fed up of renting and if it has 4 walls and a roof she would now buy anything. When our 6% interest expires at the end of the year there will be no holding her.

[juvenal]

I think that house prices will level off for the rest of this year as the cash buyers dwindle and the 'bank of mum and dad' deposits run out . Next year I expect a steady but slow decline with vendors clinging to their hopes - until the General Election in May. Once the current government is history, and can no longer prop up the housing market with QE and pressure on banks to delay repossessions, and anything else that they think up in the mean time, I anticipate a second crash, gathering pace as people begin to realise that the UK is in rather a lot of trouble.

So I expect to buy, with my tiny pot of cash, at the end of next year at the earliest, and more probably in 2011.

'Bank of Mum and Dad' isn't an institution with a dwindling, finite pot of money. It's constantly being replenished by retirees who legally trouser 25% of their retirement annuity pot tax-free. Anyone with a £200K pension fund will have 50K or more tax free. Public sector, final salary pensioned retirees also take 25% of their 'pot' in cash, tax free. In the past this dough often went on cruises, new cars, visits to Oz , even holiday homes etc.

Many parents now accept their new role as house-deposit-providers for their kids, because of HPIand student debt.

I suspect many of the deposits being paid by parents have this particular tax-free source, and will continue to do so.

[Neverland]

'Bank of Mum and Dad' isn't an institution with a dwindling, finite pot of money. It's constantly being replenished by retirees who legally trouser 25% of their retirement annuity pot tax-free. Anyone with a £200K pension fund will have 50K or more tax free. Public sector, final salary pensioned retirees also take 25% of their 'pot' in cash, tax free. In the past this dough often went on cruises, new cars, visits to Oz , even holiday homes etc.

Many parents now accept their new role as house-deposit-providers for their kids, because of HPIand student debt.

I suspect many of the deposits being paid by parents have this particular tax-free source, and will continue to do so.

-1

Final salary pension schemes are on the decline

Pretty soon they will be a dead beast

You would be lucky if a £200k pension pot buys you £200 a week these days

Low interest rates, higher income taxes, a p1ss poor exchange rate and p1ss poor annuity rates will encourage mum and dad to keep the money for their (long) retirements

[Lagarde's Drift]

Still not spent it.

We have a cheap rental in an idyllic spot but my partner is fed up of renting and if it has 4 walls and a roof she would now buy anything. When our 6% interest expires at the end of the year there will be no holding her.

And would she be making a decision using your money?

Really weird that, the "nesting" instinct, combined with all the other VI arguments. I do get the whole "stability for kids" thing, but that should not be the only argument. After all, unemployment will be a big reason to move in the next few years.

My cash may have nowhere to go, but it certainly ain't going into bricks & mortar.

[Democorruptcy]

And would she be making a decision using your money?

Really weird that, the "nesting" instinct, combined with all the other VI arguments. I do get the whole "stability for kids" thing, but that should not be the only argument. After all, unemployment will be a big reason to move in the next few years.

My cash may have nowhere to go, but it certainly ain't going into bricks & mortar.

It's nothing to do with stability for kids as they have homes of their own. She is just fed up of not owning, in that she cannot be bothered doing the garden, decorating, etc. when we don't own it.

[twatmangle]

We could buy a reasonable place for 90-100% cash or a really great place for 50% cash.

We chose the latter and got a manageable mortgage fixed at 4.5% for 5 years. (<3x joint salary, and cash/gold reserves to pay mortgage for several years if needed.)

Firstly it's a home for us, and not an investment. This sounds like a cliché but it's how it is. In all honesty, I hope prices stagnate for a decade. We will aim to pay off our mortgage quite quickly and trade up - so why would we want higher prices?

We're due to exchange contracts this week, so there's still time to change my mind....

[Neverland]

We could buy a reasonable place for 90-100% cash or a really great place for 50% cash.

We chose the latter and got a manageable mortgage fixed at 4.5% for 5 years. (<3x joint salary, and cash/gold reserves to pay mortgage for several years if needed.)

Firstly it's a home for us, and not an investment. This sounds like a cliché but it's how it is. In all honesty, I hope prices stagnate for a decade. We will aim to pay off our mortgage quite quickly and trade up - so why would we want higher prices?

We're due to exchange contracts this week, so there's still time to change my mind....

If its such a "really great place" why the need to "trade up"?

[Lagarde's Drift]

It's nothing to do with stability for kids as they have homes of their own. She is just fed up of not owning, in that she cannot be bothered doing the garden, decorating, etc. when we don't own it.

Can't be bothered, or just plain can't (not allowed)? Don't know about you, but I can perfectly enjoy a garden I rent as much as one I "own". Just like I enjoy a walk in the big local park viz council tax. At the moment I am enjoying renting a much better house than I can buy so my garden, decor, QOL etc is much better. I also chose a house with decor I like so I see no need to change it.

Do you have a better reason to buy or is it so she stops nagging you?

[MinceBalls]

Not buying, not this year and not next.

[twatmangle]

If its such a "really great place" why the need to "trade up"?

There is always a reason to trade up, whether it be a swimming pool, house with land, extra couple of rooms, or just something different.

Maybe I could get a couple of BTLs instead.

[shindigger]

Expect the mother of all compound debt deflations, leaving cash as king, provided we avoid complete state failure.

Hope so.

[mikew]

Depends what you can do with the cash.

To me, spare cash is EITHER a deposit on a house OR a float to enable investments worth £25k+/year in tax rebate. Can you see a home appreciating by £25k/year in the next five years or so?

Care to elborate on how you get 25k per year tax rebates? Sorry if im being thick!

As for the thread..

My wife and I were not particularly looking to buy at the moment as we are in rented accom, but a really great place has come up for 400k and I know the vendor is keen to sell. As we have no chain and have financing in place, we are thinking of offering 300k.

Does that sound really cheeky?

Its been on the market a while, was SSTC for a couple of months but that seems to have fallen through. Its a great house and we'd live there for at least 10 years, maybe more. Not interested in a investment, just a home, etc etc. Its simply not worth more than 300k to us, so if we got it at that price great, if not, then happy to wait. Thats our approach anyway.

[Discopants]

Me and the missus have both lost our jobs, nice payouts though . We are off for an 8 month tour of SE and NE asia in November. With no jobs to return to I cant see us buying until late 2010 at the earliest. My missus on the other hand has been trawling rightmove for the last 6 months knowing full well our situation .

When we return I'll be under pressure to look for a place straight away, but I've told her we need to find work or a buisness to run first, then look for a house. (Although we may consider doing B&B so will need a property if we do). Hopefully the picture should be a little clearer by late 2010, post election and all.

Presently I can't see another bout of HPI taking off, but I fear we could just see a long drawn out 5 year decline. In which case STR isn't really going to pay off as any gains will be swallowed up in rent payments.

I just pray things will be clearer in 12 months time because right now it's very hard to call.

[Lagarde's Drift]

Presently I can't see another bout of HPI taking off, but I fear we could just see a long drawn out 5 year decline. In which case STR isn't really going to pay off as any gains will be swallowed up in rent payments.

Er, why? When yields are low and in some places continuing to drop, rent is lower than payments on an interest-only mortgage, so rent isn't dead money, a mortgage is!

[Neverland]

There is always a reason to trade up, whether it be a swimming pool, house with land, extra couple of rooms, or just something different.

Maybe I could get a couple of BTLs instead.

Now your just trolling

[live in hope]

I left the UK due to ludicrous house prices, but I’ll come back and buy with cash if sense returns.

At the moment, I’m in no rush, so a prolonged Japanese scenario is no problem.

From what i have seen of mainland europe this autumn, our house prices are no more inflated than theirs. and almost everything there is more expensive than here, especially petrol. If the pound stays the same or falls again, our houses will be cheap compared to them. Our pound is going to cost us all a big jump in inflation soon. I that when that happens our house prices will stabalise, and match europe in general. Its unlikely we will keep falling and thus become too cheap in comparison. Same with petrol, we have some way to catch up with them.

[Discopants]

Er, why? When yields are low and in some places continuing to drop, rent is lower than payments on an interest-only mortgage, so rent isn't dead money, a mortgage is!

Yes but we are cash buyers. If house prices decline by 3% per year in real terms for 5 years it's hardly worth the extra hassle of renting.

say a 300k house declines 9k per year might only be 3k nominal (assume 2% INFLATION). We could pay 10k a year renting that.

Our cash in the bank might make us 3% after tax but thats only 1% in real terms so we would be around 4K per year worse off renting, plus the hassle of renting.

[Neverland]

From what i have seen of mainland europe this autumn, our house prices are no more inflated than theirs. and almost everything there is more expensive than here, especially petrol. If the pound stays the same or falls again, our houses will be cheap compared to them. Our pound is going to cost us all a big jump in inflation soon. I that when that happens our house prices will stabalise, and match europe in general. Its unlikely we will keep falling and thus become too cheap in comparison. Same with petrol, we have some way to catch up with them.

Nah...

...as the £ falls UK workers can only pay the same amount for the houses, their wages aren't rising

I cant see many French and Italians buying holiday homes in the UK or Parisian workers commuting from Asford for the "lifestyle"

On the inflation side its costing us already - our CPI is 1.6%, in the Eurozone its 0.2%...

[Neverland]

Yes but we are cash buyers. If house prices decline by 3% per year in real terms for 5 years it's hardly worth the extra hassle of renting.

say a 300k house declines 9k per year might only be 3k nominal (assume 2% INFLATION). We could pay 10k a year renting that.

Our cash in the bank might make us 3% after tax but thats only 1% in real terms so we would be around 4K per year worse off renting, plus the hassle of renting.

+1

I've done similar sums and you need consistent house price falls of c. 10% per annum for STR to really be worth it...

[NotMyHouse]

We bought cash in Feb, completed in 1 month at 24% off listed price.

I know it's a bull trap but Mrs NMH got a bit freaked out about what happened in October (which was when I persuaded her that we needed to buy some yellow metal). So now we have a house to live (and probably die) in.

It's not as nice as the one in my avatar but it is paid for.

Edited to say: I reckon our STR from Jul 2007 until Feb 2009 got us from a semi-detached with no land and a 75K mortgage to a mortgage-free detached with 10+ acres plus an additional 25k. Mission accomplished.

Edited September 22, 2009 by NotMyHouse

[VeryMeanReversion]

So now we have a house to live (and probably die) in.

Bet you wish you'd had the Radon survey done then.

VMR.

[grizzly bear]

Yes but we are cash buyers. If house prices decline by 3% per year in real terms for 5 years it's hardly worth the extra hassle of renting.

say a 300k house declines 9k per year might only be 3k nominal (assume 2% INFLATION). We could pay 10k a year renting that.

Our cash in the bank might make us 3% after tax but thats only 1% in real terms so we would be around 4K per year worse off renting, plus the hassle of renting.

I hsve done the sums for us (STR, will have 75% deposit, paying roughly 3% yield on rented house) and if we get more than 5% gross on our STR money then we are better off renting - assuming prices stay completely flat.

If prices fall by only 2% per annum then thats equivalent to 2/3 of our rent, and so we only need a return of more than 2.2% gross to be better of renting.

Assuming we can get 3.75% gross when our current 1 year bond (6.4%) matures in November, then provided house prices fall by more than 0.6% a year we are better off renting.

Edited to say that a decline of 3% per annum (quote above) would basically equate to our entire rent hence can't see why it isn't worth renting, especially as we love our rented house.

Edited September 22, 2009 by grizzly bear