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ladyj

First Time Buyer

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I am a first time buyer who has just discovered this site (shame it wasn't a couple of months ago). In the excitement of discovering that with my savings I could now afford a house rather than a flat in Reading I am in the process of purchasing at the moment. Having read the experts predictions on there being a housing market crash over the next couple of years I am now in a quandry as to whether I should pull out at this stage or not. The House I am buying had an asking price of £175k and I am paying £167k. Obviously by pulling out now I will lose between £1.5-2k already spent on fees, surveyors etc but compared to the risk of losing much more, I now feel this may be an acceptable loss to wait and see what happens to the market?

I noticed that Hometrack predict the market will only continue to fall until the end of the year?

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I am a first time buyer who has just discovered this site (shame it wasn't a couple of months ago). In the excitement of discovering that with my savings I could now afford a house rather than a flat in Reading I am in the process of purchasing at the moment. Having read the experts predictions on there being a housing market crash over the next couple of years I am now in a quandry as to whether I should pull out at this stage or not. The House I am buying had an asking price of £175k and I am paying £167k. Obviously by pulling out now I will lose between £1.5-2k already spent on fees, surveyors etc but compared to the risk of losing much more, I now feel this may be an acceptable loss to wait and see what happens to the market?

I noticed that Hometrack predict the market will only continue to fall until the end of the year?

Can you post a link to your intended purchase?

We can't really say much without knowing what you're buying and where.

The gut reaction is to say 'Get the hell out. NOW!' but without knowing anything of the circumstances it wouldn't make sense. You may earn such a fantastic wage and have so much cash that it just doesn't matter.

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Hi there.

I appreciate your quandary and think you are far more open minded than most to re-evaluate your decision in the light of new information. Whether you decide to go ahead or pull out your decision will be well-informed and you should then be happy with it whatever happens.

Now for some practical advice. Check out rightmove.co.uk and see if you can find out what the purchase price was for the house if it changed hands quite recently, or others in the same street with similar specs.

That should give you some clues.

Also think what would happen if you continued to rent, how long would it take you to replace the money spent so far and could you indeed add to your deposit in a year and re-evaluate this time next year?

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I would not buy now, you will save the fees you already have paid. Buying a house is unfortunately all about timing and this is definitely not the time to buy - the financial implications for you longterm will be greatly affected by the decisions you make now.

I wish that we had the knowledge when we bought before, that I have learnt since looking at this site. A wrong decision when buying a home can be a disaster financially. Been there, done that - don't ever wish to go there again!!!! :(

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Guest prudence

When reading opinions on the housing market bear in mind who is making them. By now you must have come across the term vested interest - on both sides. Personally I am bearish about the market but I know that those of us who are sitting on the sidelines waiting for it to fall will have to be patient. No overnight crash this time round...

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To be fair, if you like the house, haven't overstretched yourself, and are reasonably secure in your job, and don't need to move in the near future (lucky you), then there's every chance this could be a good purchase!

None of the above would apply to me, but your circumstances might be different.

None of us know how the market will pan out, and only you know about the how the purchase will fit with your personal circumstances.

Welcome to the forum,

backtoparents

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Can you post a link to your intended purchase?

We can't really say much without knowing what you're buying and where.

The gut reaction is to say 'Get the hell out. NOW!' but without knowing anything of the circumstances it wouldn't make sense. You may earn such a fantastic wage and have so much cash that it just doesn't matter.

The link to my actual purchase does not appear to be on teh rightmove website any longer (even under SSTC section). There are a couple of very similar properties on there though to give an idea:

http://www.rightmove.co.uk/viewdetails-392...pa_n=2&tr_t=buy

http://www.rightmove.co.uk/viewdetails-511...pa_n=4&tr_t=buy

Mine is 2 bedrooms with bathroom off the 2nd bedroom and stairs to a loft conversion off the 2nd bedroom as well.

I recently received a substantial payrise and therefore am not stretching myself on the mortgage at all but conversely both myself and my partner (with whom I am buying) are living with our respective parents and are therefore only paying minimal rent at present and are able to continue saving a substantial amount of money lving at home (though obviously we would much rather be living together in our own property).

Hi there.

I appreciate your quandary and think you are far more open minded than most to re-evaluate your decision in the light of new information. Whether you decide to go ahead or pull out your decision will be well-informed and you should then be happy with it whatever happens.

Now for some practical advice. Check out rightmove.co.uk and see if you can find out what the purchase price was for the house if it changed hands quite recently, or others in the same street with similar specs.

That should give you some clues.

Also think what would happen if you continued to rent, how long would it take you to replace the money spent so far and could you indeed add to your deposit in a year and re-evaluate this time next year?

The vendor purchase fairly recently, she paid £165k back in Sept 2003.

Both my partner & myself are living with our parents at present so are only paying 'housekeeping' rather than rent & bills etc. I'd probably be able to save the same amount as the fees etc we'd lose within the space of 2 months so I guess it wouldn't be a massive problem unless prices did only continue to fall til the end of the year.

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ladyj : what is your current combined saving rate? Even the experts are expecting a levelling off /slight fall for the next year or two. Personally i believe prices will continue to fall until january, level off again in spring before falling hard in the final two quarters of 2007.

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If you can afford it and really fancy it then carry on.

It sounds like a bit of a pig however, access to further rooms through rooms is always a serious negative. If you buy it now you will take a larger hit tahn average if prices fall because of this quite serious drawback.

If on the other hand you don't mind your current lifestyle and are happy to wait then I would save. The middle road might be to rent with your partner so long as you could still save something each month.

We are definately in a phase of the market where patience is much more likely to be rewarded than jumping in but I know that I couldn't have coped with living with my family for ages.

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Well it's definitely going to go down in value but then I think it's likely that house prices in the UK are going to drift downwards for many years to come so how long do you want to keep living at your parents? If you aren't stretching yourselves and you are looking at a repayment mortgage with the ability to pay more off when you can then you should probably go for it but expect it to go down in value. A 5% discount on the asking price doesn't look very clever in today's climate though.....

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ladyj,

Things to consider:

Stability of work or likelihood of having to move due to employer reloaction.

Will the house be suitable for an extended period of time in case neg equity and cashflow/job problems hit.

Was the area a good area prior to the recent boom or is an up and coming area that could just as quickly dive again - especially if it BTL land and full of rental properties which in bad times can sometimes only get filled with housing benefit tenants.

Good thing is that being an older property you are unlikely to take a big a bath as some of the well-overpriced new build rubbish around at the moment, a lot of which seems to have no attraction for not only OO's but renters as well.

As suggested try and look up some recent sales in the area and see what other property has actually sold for recently.

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If you won't want to move for 7+ years, you REALLY like the property, and you have calculated you can still pay the mortgage if interest rates rise a few percent, then go for it. It is not the best time to buy if there is a crash, or even if prices stagnate for some time, but ultimately it's your decision and you should go with your gut feeling (I am a FTB, tentaively looking, but willing to wait if I don't find something I really like).

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ladyj,

How much percentage of deposit will you both be putting down?

How much is your combined salaries in comparison to the total mortgage - i.e. How many times

to multiply your combined to make the mortgage total

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I am a first time buyer who has just discovered this site (shame it wasn't a couple of months ago). In the excitement of discovering that with my savings I could now afford a house rather than a flat in Reading I am in the process of purchasing at the moment. Having read the experts predictions on there being a housing market crash over the next couple of years I am now in a quandry as to whether I should pull out at this stage or not. The House I am buying had an asking price of £175k and I am paying £167k. Obviously by pulling out now I will lose between £1.5-2k already spent on fees, surveyors etc but compared to the risk of losing much more, I now feel this may be an acceptable loss to wait and see what happens to the market?

I noticed that Hometrack predict the market will only continue to fall until the end of the year?

Ladyj, always remember that if you are asking a question like that on a site called House Price Crash you are going to get mostly one answer. Perhaps you should find a site called "House Price's are going up" for an opposite view because most of these guys are desperate to see prices head lower so they can get on the ladder or they want to be proved right. I am a house price bull, well that is what some of these guys call me because i don't think prices will drop by 30%, but saying that even i would wait till next year, if not because house prices are set to dip but becase interest rates will be lower, making your monthly mortgage payments cheaper. However saying that if you are going to lose a few grand and think that you have a house that is good value then you should go ahead with it because what you are going to save on the mortgage is not going to equal £1,500 for a long time. Also if prices in Reading have already fallen there is a good chance the area is bottoming out. Look at NetHousePrices.co.uk to see what other houses have sold for on that street, and look into whether Reading house prices have been falling recently. Also get some opinions on the market.

If its a good deal, think about whether you may kick yourself if you miss out on it this time, lose £2k and then find something substandard for the same money next time

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i would wait till next year, if not because house prices are set to dip but becase interest rates will be lower, making your monthly mortgage payments cheaper.

Don't count on it. If IR's have to go down it will be becaue of deteriorating economic conditions which is likely to include higher unemployment, in fact this scenario is looking highly likely as unemployment is on the increase, I think this will accelerate as especially retail businesses consolidate. This will increase the amount of bad debts banks have so just because the BoE lowers IRs it won't mean that banks will pass these costs on to the consumer. Take Barclaycard as an example, BoE lowered IRs last month, Barclaycard added 2% to it's standard credit card APR. I think your dreams of lower IRs proping up the economy are simply that - dreams. Wake up and smell the coffee, prices are too high, only those commiting financial suicide are entering the market at the moment. Prices will come down.

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My thoughts, for what they're worth, and no doubt overlapping with other advice in the thread...

1) The government and assorted vested interests will do their best to make any long term decline gradual, as previous falls have been. Interest rates will not suddenly rise (sadly for my savings) to produce a crash... and that's the only thing really likely to tip the scales downwards into short term crisis. Well, that and the USA using tactical nukes in Iran, but if that happens we're all stuffed anyway. :-)

2) Is this house one of those rare properties that really appeals to you (fulfilling all the location*3 tick-boxes), or is it just the right price at the right time? If it's "just another house" then don't blow your strong negotiating position too easily. Another year of saving hard (you'll never have a chance like this again) for you both would see you in a stronger position even if (big if!) prices rise in the area you want to live.

3) If you and your partner are stable (hard to tell until you've lived together, maybe you should rent first? :-) and in equally stable jobs where you won't be stretching yourselves financially in the forseeable future, then if you *do* buy there's no reason why you shouldn't continue to save in order to insulate yourselves from a downturn. No rushing in and spending a fortune tarting the place up with exotic Mongolian wall hangings (should such things exist) or an extension to house your partner's stamp collection (though if he has a stamp collection that big I'd recommend staying with your parents anyway*. ;-)

4) Use services like http://www.nethouseprices.com/ to try and build up a long term history of the prices houses in that area have sold for. That might (that's a big might though) help establish whether it's an area that's likely to drop a lot or not so much.

Good luck with your choice. I think whichever way you decide you have the power to protect yourselves if you're both careful.

Andrew McP

*Disclaimer: my lawyer has asked me to point out that this is in no way intended to be a slur against philatelists. I've nothing against stamp collectors either.

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ladyj : what is your current combined saving rate? Even the experts are expecting a levelling off /slight fall for the next year or two. Personally i believe prices will continue to fall until january, level off again in spring before falling hard in the final two quarters of 2007.

About £1-1.2k a month at present.

ladyj,

How much percentage of deposit will you both be putting down?

How much is your combined salaries in comparison to the total mortgage - i.e. How many times

to multiply your combined to make the mortgage total

We have a 12% deposit and are mortgaging ourselves at 2.8 x combined salaries.

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I noticed that Hometrack predict the market will only continue to fall until the end of the year?

It may be of interest to learn that this was also the refrain in the last crash:

http://www.telegraph.co.uk/property/main.j.../17/prosy17.xml

By January 1990, with the market obviously in trouble, the Halifax changed its tune and admitted that prices were likely to continue to fall for the remainder of the year. But, it added, they would "recover strongly" in 1991. In fact, they fell in 1991, too, and the UK housing market did not recover strongly for another six years.

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I personaly would delay the purchase (or not hurry the purchase) to see what happens in the next month.

If interest rates go up next month, I would cancel buying. But if they go down, I would continue to buy (as this shows the stance the MPC take on inflation vs economic growth).

If you do decide to pull out why don't you gazunder (offer a lower amount at the last minute)? Everyone was gazumping on the way up... But there are morals to this...

But being realistic, your not stretching yourself and will most likely be ok. You have to ask yourself if you want a home or an investment!

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It doesn't sound like you're buying from a forced seller.

If the vendor bought the place 2 years ago for 165k there's going to be huge resistance to selling below that price.

There are however plenty of people out there who bought 10 years ago (say for 60k), and they shouldn't have a problem dropping the price.

Get a forced sale (ie a deceased estate,divorce, bought 20 years ago for 25k), and they won't have any trouble knocking 20% (or more) off the price.

If I was really keen to buy I would be looking at vast numbers of properties and putting in low offers.

If they're not interested, walk away. Don't even bother to negotiate.

Sooner or later you will find someone desperate enough to sell.

Another thing, you're a proceedable buyer. You are very, very scarce right now. Get a mortgage approved, walk in to an EA and tell them that. They will fall over backwards to help you.

Best of luck with your decision.

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  • 301 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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