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About To Exchange Contracts


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Due to exchange contracts next week and feeling oddly clam about it despite still feeling every bit as bearish as I have for the last ten years.

House prices are plainly a farce, and what’s more real loanable funds seem to be dry. I find it highly unlikely that the value of my new house will increase. But at the same time I also don’t think it’s massively likely that the price will do much in either direction.

The place I’m buying is on the London/Kent Boarder, 15 minutes to Victoria, but still just far enough out to feel suburban rather than blockish London hellism with fried chicken shops that you get if you go much closer in. It’s a reasonably well off area, plenty of decent restaurants and schools, even a bit of culture.

The house is a decent sized 1930’s semi, with scope to extend to even a 5 bed (loft+side extension) one day. The bear in me feels that’s important, as I could be stuck in it for 25 years if the market goes tits up. But I would be cool with that, it’s a family home I could retire in if needed. I spent years renting, passing over the normal chain of 1 bed flat -> 2 bed terrace, and gone straight to family home and driveway. The bear in me also went with a 10 year fixed rate mortgage. If I maintain my saving habit I have had for the last few years I will pay of a decent chunk at the end of those 10 years.

Very glad I skipped those earlier steps. There was a 2-bed terrace just around the corner from the place we are buying that for me summed up that market segment. These house, and there are a lot of them, contain a young professional couple that bought the house in their mid 20’s as it was all they needed. 5-10 years later and they already have at least 1 kid and another on the way. They are bursting at the seams and desperate to move, but these houses are not moving without a substantial reduction. In this particular house I turn up and the EA flat out says “look you’re a serious buyer, so I’m not going to mess you around. Its on for £290k, but they bought for £245 back in 2005, offer them that and you can have it.”. These couples are in an odd situation. They have probably done well in their careers, and have plenty of budget to play with. They all want to move into 3/4 bed family homes with driveways and gardens, but can’t shift their starter homes. Or at least not without loosing the money they spend redoing it from top to bottom, they always have immaculate new kitchens, bathrooms, fixtures and fittings etc. The starter home market is tight as a nuns chuff, even in the London commuter belt. But interesting not from a lack of money. The reverse, too much.

The guys in their early 20’s can only afford flats, and these sell fast, weirdly. The guys in their 30’s can afford a family home, but can’t find a buyer for their starter homes, unless it’s a downsizing boomer.

However the family homes market is uber-competitive. Stick a house like the one we are buying on the market and your get 8/9 viewings in the first weekend, and a raft of offers. And that’s because there is so few coming on the market. Normally you have to wait for an old timer to die. We got our place because everyone else was in a place they need to sell first. ‘Chain-free’ seems compelling to EA’s right now.

I’ve spent some time on our new street and almost every house is a boomer, if they do have kids they are fully grown, although not always moved out. Our new Asian neighbours has a daughter living with them who is older than I am. Although most of the street is boomers rattling around in half empty family homes.

The decision to buy was not easy as a HPC’er, we tend to always assume we are 6 months away from housing market armageddon that never actually appears (London and SE anyway). I won’t bother mentioning the reasons I hesitated all those years, instead I might as just well list the reasons why I decide to take the plunge.

Firstly I am paying £950pm in rent for a 2 bed flat on a shitty road with crappy neighbours right now. After I move I will be paying £1,150 rent to the bank for something twice as large with a garden and next to a great park. The type of road where the neighbours rivalry manifests itself with everyone trying to outdo everyone else front garden. That is an extra £200 that I will be very happy to spend.

So just on a basis of rent vs mortgage I am happy with the move. But also if I was not buying this I would still need to do something with the money. If I leave it in the bank its destruction at 3-5% a year is guaranteed. If I buy stocks or bonds I’m buying into markets that have become addicted to freshly printed money and long since disconnected from the actual economy. I like gold, but its manipulated to hell. That’s said I still have a strongbox load of Krugerands should the worse happen.

They just are not building a new houses in the areas people want to live, but they are printing money. In that environment I feel fine buying a desirable house in an area I want to stay in. So yeah, I know maybe I should defer until Autumn/Next Spring/Next Autumn. But I’m getting older and governments/central banks are not getting any less corrupt. I’ve had 2 months since offer-accepted to get cold feet, and I don’t. I’m looking forward to my moving in day immensely.

Edited by KingBingo
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Good luck in the new house.

One comment stuck out:

The guys in their early 20’s can only afford flats, and these sell fast, weirdly.

I dont know many in their early 20s able to buy a flat in London - the only ones that do are the ones that are given the deposit from their parents.

Edited by blackgoose
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Good luck in the new house.

One comment stuck out:

I dont know many in their early 20s able to buy a flat in London - the only ones that do are the ones that are given the deposit from their parents.

There seem to be enough parents for now.

And its not central london, I claim its Kent really. So its sub 200k

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Congratulations! Hope all goes smoothly.

We're in a similar position. We've had an offer accepted on a property (Couple in early 60s looking to downsize, they're moving into rented while they decide what they want to do, so it should be a fairly quick and straightforward sale). They said they wanted to move fairly quickly, so we were in a good position. The house needs some work - its not been well maintained, but it's a fair size, on a good size plot, in a location we're happy with.

We too, are glad we skipped the initial rungs of the ladder. We see friends who've bought 8 years ago or so, and they're stuck! One friend I was speaking to, when I told them about our impending purchase, got talking about their mortgage... They usually go for a 2 year fix, as that's about as good a deal as they can get. Last time they remortgaged, they extended the term back up to 25 yrs to effectively reduce the monthly payments. Their current monthly payment is £200/month less than ours will be, for a house that cost less than ours will, but that was bought with a much smaller deposit. theirs is a 3 bedroom house, and they're on their 3rd kid now - they want and need to move, but it's just not an option.

Now, they might not be the best example of prudence and sensibility, but It was that conversation that really made me realise that we really aren't worse off than those who got on the housing ladder years ago - and how glad I am that we have a substantial deposit. I fully acknowledge that prices will go down, and it'll be straight after we've exchanged, but we're ready to move.

Like you, we feel the 10 year fix is the sensible choice for us (we know we're paying more than an SVR, or even a 2 yr fix but the knowledge of the monthly payments being steady is worth it for us). Is the interest on yours calculated daily or annually? Can you repay some of the money as you go? We have the option of paying off a max of 10% of the mortgage amount per year - we don't think we'll manage that by any stretch (we know that houses are money pits!) but plan to pay off the odd £1000 a few times a year to get the interest down.

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All the best KB and W&S. :)

Thanks Matt! :) still waiting for all the paperwork to be dealt with... Think the vendors are in a spot of financial bother, and I think they're going to try and get as much as poss out of us.... We're prepared to pay the minimum amount to get the house, without them saying that it's not worth the sale. Thing is, they need to move, they've got themselves over a barrel, and quite frankly, we're their best prospect. So, hopefully, it should go through smoothly.

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Due to exchange contracts next week and feeling oddly clam about it despite still feeling every bit as bearish as I have for the last ten years.

House prices are plainly a farce, and what’s more real loanable funds seem to be dry. I find it highly unlikely that the value of my new house will increase. But at the same time I also don’t think it’s massively likely that the price will do much in either direction.

The place I’m buying is on the London/Kent Boarder, 15 minutes to Victoria, but still just far enough out to feel suburban rather than blockish London hellism with fried chicken shops that you get if you go much closer in. It’s a reasonably well off area, plenty of decent restaurants and schools, even a bit of culture.

The house is a decent sized 1930’s semi, with scope to extend to even a 5 bed (loft+side extension) one day. The bear in me feels that’s important, as I could be stuck in it for 25 years if the market goes tits up. But I would be cool with that, it’s a family home I could retire in if needed. I spent years renting, passing over the normal chain of 1 bed flat -> 2 bed terrace, and gone straight to family home and driveway. The bear in me also went with a 10 year fixed rate mortgage. If I maintain my saving habit I have had for the last few years I will pay of a decent chunk at the end of those 10 years.

Very glad I skipped those earlier steps. There was a 2-bed terrace just around the corner from the place we are buying that for me summed up that market segment. These house, and there are a lot of them, contain a young professional couple that bought the house in their mid 20’s as it was all they needed. 5-10 years later and they already have at least 1 kid and another on the way. They are bursting at the seams and desperate to move, but these houses are not moving without a substantial reduction. In this particular house I turn up and the EA flat out says “look you’re a serious buyer, so I’m not going to mess you around. Its on for £290k, but they bought for £245 back in 2005, offer them that and you can have it.”. These couples are in an odd situation. They have probably done well in their careers, and have plenty of budget to play with. They all want to move into 3/4 bed family homes with driveways and gardens, but can’t shift their starter homes. Or at least not without loosing the money they spend redoing it from top to bottom, they always have immaculate new kitchens, bathrooms, fixtures and fittings etc. The starter home market is tight as a nuns chuff, even in the London commuter belt. But interesting not from a lack of money. The reverse, too much.

The guys in their early 20’s can only afford flats, and these sell fast, weirdly. The guys in their 30’s can afford a family home, but can’t find a buyer for their starter homes, unless it’s a downsizing boomer.

However the family homes market is uber-competitive. Stick a house like the one we are buying on the market and your get 8/9 viewings in the first weekend, and a raft of offers. And that’s because there is so few coming on the market. Normally you have to wait for an old timer to die. We got our place because everyone else was in a place they need to sell first. ‘Chain-free’ seems compelling to EA’s right now.

I’ve spent some time on our new street and almost every house is a boomer, if they do have kids they are fully grown, although not always moved out. Our new Asian neighbours has a daughter living with them who is older than I am. Although most of the street is boomers rattling around in half empty family homes.

The decision to buy was not easy as a HPC’er, we tend to always assume we are 6 months away from housing market armageddon that never actually appears (London and SE anyway). I won’t bother mentioning the reasons I hesitated all those years, instead I might as just well list the reasons why I decide to take the plunge.

Firstly I am paying £950pm in rent for a 2 bed flat on a shitty road with crappy neighbours right now. After I move I will be paying £1,150 rent to the bank for something twice as large with a garden and next to a great park. The type of road where the neighbours rivalry manifests itself with everyone trying to outdo everyone else front garden. That is an extra £200 that I will be very happy to spend.

So just on a basis of rent vs mortgage I am happy with the move. But also if I was not buying this I would still need to do something with the money. If I leave it in the bank its destruction at 3-5% a year is guaranteed. If I buy stocks or bonds I’m buying into markets that have become addicted to freshly printed money and long since disconnected from the actual economy. I like gold, but its manipulated to hell. That’s said I still have a strongbox load of Krugerands should the worse happen.

They just are not building a new houses in the areas people want to live, but they are printing money. In that environment I feel fine buying a desirable house in an area I want to stay in. So yeah, I know maybe I should defer until Autumn/Next Spring/Next Autumn. But I’m getting older and governments/central banks are not getting any less corrupt. I’ve had 2 months since offer-accepted to get cold feet, and I don’t. I’m looking forward to my moving in day immensely.

All the best - fingers Xed it all goes smoothly for you.

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Thanks Matt! :) still waiting for all the paperwork to be dealt with... Think the vendors are in a spot of financial bother, and I think they're going to try and get as much as poss out of us.... We're prepared to pay the minimum amount to get the house, without them saying that it's not worth the sale. Thing is, they need to move, they've got themselves over a barrel, and quite frankly, we're their best prospect. So, hopefully, it should go through smoothly.

What's your strategy for gazunder timing and % cut?

And enjoy the new home :)

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So just on a basis of rent vs mortgage I am happy with the move. But also if I was not buying this I would still need to do something with the money. If I leave it in the bank its destruction at 3-5% a year is guaranteed.

I can understand the motivation to buy on the first reason. It's been testing.

The second reason isn't guaranteed. My savings are gaining value against the value of houses. The value of my savings is up 10%against house asking prices over the past year. Someone looking at the higher end of the market has seen asking price cuts of £100Ks, so their savings are even gaining value at a faster dynamic.

I find it highly unlikely that the value of my new house will increase. But at the same time I also don't think it's massively likely that the price will do much in either direction.

Here isn't really the place to get critical, but you have said the area is full of boomers rattling around in half empty homes. Only takes a few wanting to downsize and few upsizers being able to afford former asking prices. I don't think you have to worry about increases in value.

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  • 3 weeks later...

Complete next Monday on a modest 3BR place with a decent garden in North Wales. Needs a bit of modernising but otherwise OK.

I have no doubt prices will continue to fall - but we're buying mortgage free and have a fair cash buffer left. In the end it's only money and the missus will be very happy after living in various dodgy rentals (we've moved a lot for work etc) while saving.

Transport wise - it's only a few miles to the nearest town - and the garage looks big enough to store an armageddon's worth of baked beans.

31% off May 12 asking price, 17% off their last asking price. Basically, 2002-3 selling price for the area. My tactic was to offer at least 20% off houses we liked until someone took the bait. A few of the EAs were not impressed.

Edited by StainlessSteelCat
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