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House Buying In Hertfordshire

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Posting this as I would like some advice specific to my situation, apologies if similar queries have already been posted.

My partner and I are considering purchasing a house in south Hertfordshire. We have about a 20% deposit already and no chain, so we are in a good position if we found the right house.

I am very nervous about whether this is the right time to make a purchase or we should wait.

There is so much talk about a housing bubble being created as a result of H2B and I watch some economic commentators such as Max Keiser, Peter Schiff and Gerald Celente who hardly fill you with confidence.

However the area we want to buy in is very desirable. Its 20 minutes from London, low crime rate, good schools, lots of professional people, that it’s actually difficult to get a house as they go so quick.

So one question is would an area such as this, also face big drops in house prices, should things go very wrong? My partner thinks the situation here would be different to the rest of the UK.

Would it be more beneficial to continue to rent and wait for prices to drop, even though our mortgage payments would be just about the same as our current rent and interest rates are so low?

Is it worth considering investing our deposit money, in precious metals for instance? This is something we have zero experience in!

Thanks

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Unfortunately, all bets seem to be off at the moment. If you had asked the same question 3 years ago, I'd have told you it was definitely a bad time to buy.

Since then, the government have consistently shown that they will support the housing market at all costs with policies like the long term low interest rate 'guarantee' and now the Help To Buy debacle.

The problem is, the longer they do this, the bigger the problem becomes and they will not be able to step away from the support in the future.

There is no getting away from the fact that the fundamentals in the market are still severely skewed and that affects all areas of the country with perhaps the exception of the very prime parts of London where houses are not bought by people with 'normal' incomes.

I am also about 20 minutes from London (but the other side), and prices have gone up massively here in the last 18 months. To me, it has to be unsustainable when a 2 bed flat reaches £400k in an area where the average income is more like £35k. That means that even a couple earning £70k between them have to borrow 4x their joint income and still fund a £120k deposit + fees to buy one. OK, so Help To Buy removes the deposit problem, but that means that the interest rate on the £280k is 5% rather than 2%.

Even couples earning double that need not even think about getting an actual house!

Love it or hate it, London and it's surrounds will always (for the foreseeable future) be the most popular area to live in the UK and this will always put a floor underneath how far prices can fall in absolute terms, but I can't help but think it will come a little bit more into line with the rest of the country at some point. Where does the money come from for prices to grow any more and we know that the government aren't happy for them just to remain stable.

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I live near cambridge and our prices have only gone up since 2008

one that sold near us is 45,000 more than a better house sold 2 years ago.

your area seem similarly desirable.

Ideally house prices would stagnate and let wage come up to meet them but that doesn't seem to happen.

Just make sure you get a good deal on the house. I've had friends who paid asking for their house in 2007, 35000 more than any house there had sold for and only now are they in positive equity!

check the sold house prices around any house you buy

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Hello and welcome to the forum!

If you buy, buy somewhere you could live in for at least 5 years to allow for:

1. Prices soaring (in nominal terms) and anywhere larger becoming unattainable.

2. Prices crashing leaving you with no deposit if you want to move.

If you're calculating whether mortgage repayments are cheaper than rent, consider that at some point real interest rates will rise from their current historic lows. (But I have no idea when.)

Cheers

Will

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Thank you for taking the time to respond.

What you have all said are pretty much the kind of things we have been discussing ourselves. If we buy I can't see us wanting to move in the next 5 years, we like the area and it suits our needs.

However things like being in the nightmare of negative equity long term, employment circumstances changing and interest rates going sky high when we come off a fixed rate are real concerns and make me nervous.

Personally I'd rather wait until after the next election, H2B to me a it is a vote buying scheme. I can barely watch mainstream news as I just don't believe a word which comes out of our politicians mouths.

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Thank you for taking the time to respond.

What you have all said are pretty much the kind of things we have been discussing ourselves. If we buy I can't see us wanting to move in the next 5 years, we like the area and it suits our needs.

However things like being in the nightmare of negative equity long term, employment circumstances changing and interest rates going sky high when we come off a fixed rate are real concerns and make me nervous.

Personally I'd rather wait until after the next election, H2B to me a it is a vote buying scheme. I can barely watch mainstream news as I just don't believe a word which comes out of our politicians mouths.

Not sure what part of South Hertfordshire you're referring to exactly... Hitchin, maybe? We lived there for two years. Great place. 25mins to Kings Cross. Good schools and decent affordable-ish housing. Only moved due to family reasons. I'd avoid Hatfield like the plague though.

Can't give you an opinion on whether now is the right time to buy though. London and the SE in general seems to be in a world of its own, esp compared to the North East where we are now. I still work in London two days a week and looking at the property prices in the Standard on Wednesdays makes my jaw drop. They just seem to have gone mega insane since we left the Smoke in 2009.

Good luck!

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Is it worth considering investing our deposit money, in precious metals for instance? This is something we have zero experience in!

Gamble by all means, but never more than you can afford to lose!

One thing to consider about south Herts: if you commute into London by rail then be sure to add the cost of season tickets to your total cost of ownership when comparing house prices to those in London and remember that capital repayments on a mortgage buy you a house you ultimately own whereas season tickets rent you a seat on a train.

Regarding employment, a house you've bought can be a millstone around your neck if you have to relocate unexpectedly.

Regarding the risk of unemployment, some people would prefer to be able to easily move to somewhere with a cheaper rent if they find themselves unemployed, others would rather have a mortgage and gamble on the forbearance of their bank. See my first point about never gambling more than you can afford to lose!

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