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Wurzel Of Highbridge

Is It Silly To Buy A Property Now?

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When will people learn?

Original post http://forums.digitalspy.co.uk/showthread.php?p=72017515

As you all know I've been looking for place to buy to live and have been in a position to purchase since last Dec. I have 10% deposit but will be using the 5% homebuy scheme if I buy now, but the question is.... is it stupid to buy now or should I wait?

The media have gone on about how fast the house prices have risen and that its risen at a faster rate than before the last crash, so there is a price bubble, especially in London and its surrounding areas.

Everyone seems to talk about how its inevitably going to burst again too.

So obviously I'm worried about buying now and ending up in negative equity straight away, but the rate in which they are rising will also mean that if I don't purchase within the next 3 months then I will probably be priced out altogether and not be able to afford to buy at all.

As an example I was looking at 2 bed houses 3 months ago, but now I can only afford a 1 bed flat.

.... There is more....

Deb Arkle: Personally, I think it's a great time to buy - you're at the bottom of the next price rise. I'd go for it if I were you.
Frankie_Little:Don't get cold feet, go for it. You won't regret it. You'll regret it more if you miss out on having your own place.
ianradioian:Buy. Time for your own place, and put down some roots. Houses and flats will only ever go up and up over years. The time will come when you cannot do it. Privacys great when you want it as well.
whedon247 Posts: 12,379:would you guys suggest the same for first time buy to let?

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"...at the bottom of the next price rise"

That says it all really doesn't it - people think that prices are just going to keep going up and up. The rise in London prices is frightening quite frankly and I was reading on another forum where a poster was looking to buy a two bed flat for £450,000. WTAF, who WHO would pay that sort of money for a flat??! (and it wasn't in Central London either, not even close...)

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Depends entirely on where.

London? Mug's game right now. But plenty of places where the risk is FAR lower.

As ever the answer depends on individual circumstances. There is no perfect, always right answer to this question right now.

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"...at the bottom of the next price rise"

That says it all really doesn't it - people think that prices are just going to keep going up and up. The rise in London prices is frightening quite frankly and I was reading on another forum where a poster was looking to buy a two bed flat for £450,000. WTAF, who WHO would pay that sort of money for a flat??! (and it wasn't in Central London either, not even close...)

This is kind of an aside, but I dont really understand the attitude that says "houses are always better than flats". For the same price, I'd much rather have a large and spacious high-ceilinged flat in a good part of the city than a typical 3 bed detached house out in the sticks. For £450k I'd take something like this over 99% of houses without a second's thought for example: large, in a nice buildings, and right in the middle of a great city: http://www.rightmove.co.uk/property-for-sale/property-42811414.html

Edited by Smyth

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"...at the bottom of the next price rise"

That says it all really doesn't it - people think that prices are just going to keep going up and up. The rise in London prices is frightening quite frankly and I was reading on another forum where a poster was looking to buy a two bed flat for £450,000. WTAF, who WHO would pay that sort of money for a flat??! (and it wasn't in Central London either, not even close...)

We really at the new normal?

I was chatting to a new friend who could not understand how people were buying houses, I told her about interest only, and you could just see everything click into place.

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Depends entirely on where.

London? Mug's game right now. But plenty of places where the risk is FAR lower.

As ever the answer depends on individual circumstances. There is no perfect, always right answer to this question right now.

Yes......will be as many winners as losers as time goes by, the buying now losers will grow........so I think we have got to the tipping point when waiting longer before committing will pay dividends for many more potential buyers IMO........what have you got to lose by waiting? ;)

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This is kind of an aside, but I dont really understand the attitude that says "houses are always better than flats". For the same price, I'd much rather have a large and spacious high-ceilinged flat in a good part of the city than a typical 3 bed detached house out in the sticks. For £450k I'd take something like this over 99% of houses without a second's thought for example: large, in a nice buildings, and right in the middle of a great city: http://www.rightmove.co.uk/property-for-sale/property-42811414.html

Three things spring to mind. Length of lease, ground rent and service charges.

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This is kind of an aside, but I dont really understand the attitude that says "houses are always better than flats". For the same price, I'd much rather have a large and spacious high-ceilinged flat in a good part of the city than a typical 3 bed detached house out in the sticks. For £450k I'd take something like this over 99% of houses without a second's thought for example: large, in a nice buildings, and right in the middle of a great city: http://www.rightmove.co.uk/property-for-sale/property-42811414.html

There`s nothing wrong with flats, if they`re done right. Unfortunately most flats in the UK are either shitty conversions of houses with little or no effort made at sound insulation, or "luxury executive apartments" without enough room to swing a cat.

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"...at the bottom of the next price rise"

That says it all really doesn't it - people think that prices are just going to keep going up and up. The rise in London prices is frightening quite frankly and I was reading on another forum where a poster was looking to buy a two bed flat for £450,000. WTAF, who WHO would pay that sort of money for a flat??! (and it wasn't in Central London either, not even close...)

Since around 96/97 this is what the majority of "mortgage" holders have known. Since buying my first house in 2000 I've only ever seen property go up and I'm now sat in a house I couldn't afford to buy now, but at a stretch I could possible have bought it in 2000. In 6 years my house earned more money than I did working and it contributed nothing to the economy.

People don't want to use critical thought because that's going to mean lots of people lose "wealth" and everyone wants to be a winner. It's not surprising that people think prices are only ever going to go up, however if you ask people if they think there house is worth £1bn they'd look at you with crazy eyes but that's where the average price is going to end within 100 years if this current insanity continues. We might even get the first £1bn property in London within 25 years.

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It's bizarre that people think we are back to normal in the housing market. With an average gain of 6% last year in prices being hailed as healthy it shows that the majority are morons. At 6% per year in just 5 years the average price of a home will be £237,998. Heck in 10 years the average price will be £318,495. Who on earth can logically conclude this is healthy? Add to the fact we have huge youth unemployment, lower inflation adjusted income compared to 2002 data and lower paying service jobs replacing production jobs.

Ideally we need to see interest rates rise to a high level to flush out the crap. 20% is a good target for a short period and this time let the over leveraged lenders go down the toilet where they belong. Mortgage holders who have contracts with the bad lenders can renegotiate a new mortgage at a sensible rate with whoever steps in to buy up the cheap mortgage deals. Something like wipe 30% - 40% off the original amount and peg repayments at 8% or so Interest. New buyers win because price of property has fallen and existing mortgage owners win because they get a large portion of their debt written off therefor re-selling is not dependent on flipping at a higher price than they originally paid. Even the BTL crowd can win in this scenario.

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It's bizarre that people think we are back to normal in the housing market. With an average gain of 6% last year in prices being hailed as healthy it shows that the majority are morons. At 6% per year in just 5 years the average price of a home will be £237,998. Heck in 10 years the average price will be £318,495. Who on earth can logically conclude this is healthy? Add to the fact we have huge youth unemployment, lower inflation adjusted income compared to 2002 data and lower paying service jobs replacing production jobs.

Most people won't reason like that. Property is the only asset they will have that will be worth anything so it has to rise in value, otherwise their whole future comes crashing down. They have seen prices rise and they expect prices to continue to rise well into the future, doubling every 7 years or whatever. Their jobs won't make them wealthy but bricks will. Even the "greatest recession since the great depression" only caused a minor blip and they ended up on better mortgage rates - bonus. Now that messy business is apparently over it's back to the usual.

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If you live in a flat you are basically living in a shared house with complete strangers. Even in a solid well built one. There is always a weak link. In Edinburgh new town - where a two bed flat can cost 300k - and you have many lawyers and high paid people living - your walls are about 3 foot thick.

Which is fine - except when you hear the person above you walking about in their heels - as all you have is afloor board , a small gap and then a ceiling to separate you.

Three feet thick walls don't help you in that situation.

And this is the main reason I think the price of many flats us just ludicrous.

There will be people in London spending 2 million to live in a flat where they can hear their next door neighbours washing machibe .

I think that's mental.

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If you live in a flat you are basically living in a shared house with complete strangers. Even in a solid well built one. There is always a weak link. In Edinburgh new town - where a two bed flat can cost 300k - and you have many lawyers and high paid people living - your walls are about 3 foot thick.

Which is fine - except when you hear the person above you walking about in their heels - as all you have is afloor board , a small gap and then a ceiling to separate you.

Three feet thick walls don't help you in that situation.

And this is the main reason I think the price of many flats us just ludicrous.

There will be people in London spending 2 million to live in a flat where they can hear their next door neighbours washing machibe .

I think that's mental.

I owned a flat 2008-2011. It was in the country house of a famous Georgian industrialist. The celings were 13 feet high and so unusually there was not a sound problem from above either. I think the contingent liability of communal repairs and getting agreement on them is a big consideration in these mansions, the roof being a case in point.

It beggars belief that on a recent featured mansion block in Grosvenor Square the service charge was £17,000 per tiny unit. we never went over a grand and it had woods and grounds. God knows how these Londoners manage to spunk the cash. No wonder their GDP is so high with that level of waste.

Edited by crashmonitor

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It's bizarre that people think we are back to normal in the housing market. With an average gain of 6% last year in prices being hailed as healthy it shows that the majority are morons. At 6% per year in just 5 years the average price of a home will be £237,998. Heck in 10 years the average price will be £318,495. Who on earth can logically conclude this is healthy? Add to the fact we have huge youth unemployment, lower inflation adjusted income compared to 2002 data and lower paying service jobs replacing production jobs.

I totally agree, but you have to remember that most people are financially illiterate.

Like most on here, I don't air my views on the property market very often as it is a very quick way to become unpopular, but sometimes I just can't resist.

In London, prices in some of the down at heel areas are up more like 50% in the last year and I have spoken to quite a lot of people that think even that level of growth is sustainable! I just tend to ask them who they think will be buying tiny flats in the outer-SE postcodes for £750k in a few years time. Of course they don't know, but they still seem to think it will happen because 'property only ever goes up'.

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This is kind of an aside, but I dont really understand the attitude that says "houses are always better than flats". For the same price, I'd much rather have a large and spacious high-ceilinged flat in a good part of the city than a typical 3 bed detached house out in the sticks. For £450k I'd take something like this over 99% of houses without a second's thought for example: large, in a nice buildings, and right in the middle of a great city: http://www.rightmove.co.uk/property-for-sale/property-42811414.html

If you had ever lived in a flat with neighbours from hell who keep flooding you, you would understand why people think that.

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It's bizarre that people think we are back to normal in the housing market. With an average gain of 6% last year in prices being hailed as healthy it shows that the majority are morons. At 6% per year in just 5 years the average price of a home will be £237,998. Heck in 10 years the average price will be £318,495. Who on earth can logically conclude this is healthy? Add to the fact we have huge youth unemployment, lower inflation adjusted income compared to 2002 data and lower paying service jobs replacing production jobs.

snip

well done, you have perfectly outlined the case for "missing the boat".

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House prices have been at 'record highs' for most of the last 100 years now. Thats all the unthinking masses see. Theyre not wrong, they just never seem to consider that in the first half of that period wages grew quickly too, in the second half wages grew until the 80s/90s and interest rates slowly fell thereafter.

Neither is likely (or in the case of rates, possible) in the next 50 years.

Economically, falling prices are a dead cert.

Of course, when you have cameron effectively bribing people to buy homes, who knows.

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How far can it all go is what I am wondering. I mean just how much credit will be loaned out to keep pushing the prices higher before the average Brit is forced to face reality? I thought my generation would be the ones to do it but since HTB came on the scene more and more people I know are jumping on board with delusions of playing the game of flipping flats for houses and houses for bigger houses the same way their parents did. The only people I know who aren't jumping in are not doing so because they see it as a scam, but because they're unemployed or working part time in a NMW job.

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Economically, falling prices are a dead cert.

Of course, when you have cameron effectively bribing people to buy homes, who knows.

It's Government intervention that is keeping this thing going and as the math becomes more of a problem they either have to get more involved or let the free market try to find the real fair value. I'm concerned as to what lengths the Government could end up going to to stop a significant correction in prices. Ramping up inflation to try and drive up wages is one way, the other and most disturbing would be them actually buying up the houses for the people wanting to buy and raising taxes to pay the mortgages. the latter is unlikely but who knows how wild tings could get if people get desperate?

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It's Government intervention that is keeping this thing going and as the math becomes more of a problem they either have to get more involved or let the free market try to find the real fair value. I'm concerned as to what lengths the Government could end up going to stop a significant correction in prices.

Yes. We should be concerned. They've already bet the farm on this and can't walk away from the table. They're privatising health care and nationalising mortgage lending. What does that tell you?

Ramping up inflation to try and drive up wages is one way,

Wasn't that what they did with zero IRs and ignoring inflation targets. We had several years of high inflation. Wages did rise for many people as a result. Now bricklayers are on £100k. There will be an inevitable catch up.

the other and most disturbing would be them actually buying up the houses for the people wanting to buy and raising taxes to pay the mortgages. the latter is unlikely but who knows how wild tings could get if people get desperate?

Isn't that just help to buy? Government to buy 20% of every new house. Soon to be 30,40,50%.

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Isn't that just help to buy? Government to buy 20% of every new house. Soon to be 30,40,50%.

What I don't get about HTB is:

1) Now the gov. has locked itself into buying 20% of each house, won't house prices just inflate upwards again as the market rushes to capitalise on this 'free' credit? So in a year of two, houses will just cost 20% more and be equally unaffordable and back at square one.

2) Why the gov thought HTB would be sustainable, without continually inflating its contribution? A very simple comparison would be pensions which typically have to inflate every year to catch up with cost of living - if they don't, voters will complain pensions are not enough and would vote labour/whoever.

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