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Advice- wait out or bite bullet


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A bit of background. 30 years old, renting and have a choice to make. What with all this talk of great reset, automation of jobs, QE, UBI and extension of furlough I am starting to think there will never be a crash. The aim of the elite is truly for us to won nothing and enjoy it. As someone who would like to travel for a period when all this is over, I can either :

a) buy a house now and travel down the line (in 1 year for 6 months- a year) while paying the mortgage. Would get me on housing ladder, downside would be it would be outgoings with no salary coming in. Could get a friend or family member in to live in it to pay rent-would there be legality issues?

 

b) continue to rent for another year and travel when allowed. Gives greater flexibility to do what I want but means I'm still not on housing ladder. Prices probably won't go down that much when I'm finished traveling for the price range I'm interested in (£120k).

 

Thoughts?

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What region are you in Bluto, first time buyer? Ill try and drag out some specific data for you.

image.png.d1a54c6d0af889b41a7e8f8fcc9c82da.png

You can see what happened last year to HPs on the chart. Came out of lockdown, banks started lending again and prices rocketed. Similar 'feel' this year but banks are still lending, thats the change. Demand up - supply down. Most HP indicators are lagging, esp from Land Registry. Forward looking or implied indicators are mortgage approvals [up] and rightmove actually. RM own the data and data is the new gold and they report searches are up. What that means of course no one without a crystal ball knows but its looking likely rises could occur. 

Prices are still below long term trend too. As per graph:

q42020.png

 

Max risk is a drawn out long term economic downturn. Last year we had 2 quarters of negative GDP growth. ie a recession before that each previous recession lasted 5 quarters. However HP crashed around 14% down from peak to trough. Are you fine with this, its down to appetite for risk....

See for more info https://www.housepricecrash.co.uk/recession-housing-prices/

 

 

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2 hours ago, Bluto Bites said:

A bit of background. 30 years old, renting and have a choice to make. What with all this talk of great reset, automation of jobs, QE, UBI and extension of furlough I am starting to think there will never be a crash. The aim of the elite is truly for us to won nothing and enjoy it. As someone who would like to travel for a period when all this is over, I can either :

a) buy a house now and travel down the line (in 1 year for 6 months- a year) while paying the mortgage. Would get me on housing ladder, downside would be it would be outgoings with no salary coming in. Could get a friend or family member in to live in it to pay rent-would there be legality issues?

 

b) continue to rent for another year and travel when allowed. Gives greater flexibility to do what I want but means I'm still not on housing ladder. Prices probably won't go down that much when I'm finished traveling for the price range I'm interested in (£120k).

 

Thoughts?

My advice for what it's worth is this, you're 30. Chances are you have another 38-40 years to work (state pension). You'll probably see multiple job and perhaps career changes before you reach state pension age, if it's even a thing then. I would spend a bit of time and see the world. I did and I never regretted it. I own a house and have a family, I love to travel but even with the money it's harder to do now. Get it out of your system now. 

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1 hour ago, Data Dave said:

What region are you in Bluto, first time buyer? Ill try and drag out some specific data for you.

image.png.d1a54c6d0af889b41a7e8f8fcc9c82da.png

You can see what happened last year to HPs on the chart. Came out of lockdown, banks started lending again and prices rocketed. Similar 'feel' this year but banks are still lending, thats the change. Demand up - supply down. Most HP indicators are lagging, esp from Land Registry. Forward looking or implied indicators are mortgage approvals [up] and rightmove actually. RM own the data and data is the new gold and they report searches are up. What that means of course no one without a crystal ball knows but its looking likely rises could occur. 

Prices are still below long term trend too. As per graph:

q42020.png

 

Max risk is a drawn out long term economic downturn. Last year we had 2 quarters of negative GDP growth. ie a recession before that each previous recession lasted 5 quarters. However HP crashed around 14% down from peak to trough. Are you fine with this, its down to appetite for risk....

See for more info https://www.housepricecrash.co.uk/recession-housing-prices/

 

Cheers for the detailed response, appreciate it!! I am a first time buyer, looking to get a house in south Belfast area. Would be interested in ballyhackamore, ormeau, four winds sort of areas. 

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I think prices are insane now.

But I also understand the desire to have the 'security' of owning somewhere.

I'd say; don't feel rushed into buying something and end up with something your not happy with.

And also, don't spend so much on shelter that it prevents you having enough money to enjoy life; whatever that means for you.

I'm 37 and when I was your age I had no interest in buying as I was paying cheap rent on a flat and going on plenty of holidays. In retrospect that was a big mistake because prices shot up, but regardless of what happens I'm glad I got out there and saw the bits of the world that I wanted to.

If you are wanting to travel, are there any friends or family members you could move back in with? I'm considering moving back in with the parents this summer after 10 years of renting.

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42 minutes ago, 2buyornot2buy said:

My advice for what it's worth is this, you're 30. Chances are you have another 38-40 years to work (state pension). You'll probably see multiple job and perhaps career changes before you reach state pension age, if it's even a thing then. I would spend a bit of time and see the world. I did and I never regretted it. I own a house and have a family, I love to travel but even with the money it's harder to do now. Get it out of your system now. 

Cheers 2buyornot2buy. That's true, I feel I would regret it if I didn't go. Hopefully travelling will be allowed soon. Do you know if it's legal to rent your house out to a friend /family member while paying a home owner mortgage? I have a feeling it's not legal but I'm sure it goes on all the time. Could be an option for me. If not I'll rent for another year , go travelling and then buy when I get back

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2 minutes ago, JoeDavola said:

I think prices are insane now.

But I also understand the desire to have the 'security' of owning somewhere.

I'd say; don't feel rushed into buying something and end up with something your not happy with.

And also, don't spend so much on shelter that it prevents you having enough money to enjoy life; whatever that means for you.

I'm 37 and when I was your age I had no interest in buying as I was paying cheap rent on a flat and going on plenty of holidays. In retrospect that was a big mistake because prices shot up, but regardless of what happens I'm glad I got out there and saw the bits of the world that I wanted to.

If you are wanting to travel, are there any friends or family members you could move back in with? I'm considering moving back in with the parents this summer after 10 years of renting.

Cheers for the advice Joe. Yeah I could move back in with parents after also.

I agree that prices are insane but I don't see a crash happening. Too many rich people have a stake in seeing that the house prices are propped up.

That's good that you got out and travelled a fair bit. I tend to take the attitude that things generally work out well in the long term but it is a bit of a crossroads I'm at now

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57 minutes ago, 2buyornot2buy said:

Get it out of your system now

Couldnt agree more, personally. 

image.thumb.png.6dca2893c4574020af34e1ac48502754.png

Belfast prices ripping and bucks 'race for space' trend, as shown by London, Bham, Manchester and other major cities.

Biggest sell off, or lowest price increase [depends which way you look at it] is in flats. People wanting more space and garden. Could offer some short term value there? Would a property let out wash its face ie the rent cover the mortgage?

Do you want an 'investment' or somewhere to live. You mention travelling im assuming then a mixture of both. In terms of opportunity lost, if you didnt buy and prices rise 10%, thats the opportunity lost [short term]. However in terms of deposit, if you have a 10% deposit youd have to add 1k to that, [if you still had the affordability in a years time in terms of a mortgage] opportunity cost of travelling therefore could be valued at 1k GBP.  

Could be another way to get exposure to the housing market to avoid the fear that ''you've missed out'' - buy a REIT. Buy a real estate investment trust with your deposit money. Value goes up if HPs go up and down if HPs go down. Its still a risk, the housing market, is just that, a market- like the stock market, commodities market but we all have to live somewhere...

Best of luck

Dave

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There is no issue with renting a room in your gaff, up to £7000 per year is allowed under the rent a room scheme.  If you can buy a house under £150k and get a room rented its a no brainer.  My feeling is there will be no travel this year anyway so its not a bad time to bite the bullet and then have a few quid saved for summer 2022.  The only issue is the prices, I would argue that prices are nuts but NI is still relatively cheap.  That said I cant see prices increasing but I can see them dropping.  The reason being that unemployment is going up, even if we get a decent post lockdown bounce tax is going up.  However, I have been consistently wrong about drops in price as the government and banks continue to find new ways to keep the prices going up.  

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Well only see the real impact on the housing market 6-12months after furlough ends. I can’t believe my eyes when I see the graphs of house price inflation...during a pandemic...when the government are supporting a big chunk of the workforce. That people, other than civil servants/teachers etc, would chose now to sign up to a mortgage blows my mind. 
 

Government spending will stop this year, and then the bubble will burst soon after.

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20 hours ago, Data Dave said:

Couldnt agree more, personally. 

image.thumb.png.6dca2893c4574020af34e1ac48502754.png

Belfast prices ripping and bucks 'race for space' trend, as shown by London, Bham, Manchester and other major cities.

Biggest sell off, or lowest price increase [depends which way you look at it] is in flats. People wanting more space and garden. Could offer some short term value there? Would a property let out wash its face ie the rent cover the mortgage?

Do you want an 'investment' or somewhere to live. You mention travelling im assuming then a mixture of both. In terms of opportunity lost, if you didnt buy and prices rise 10%, thats the opportunity lost [short term]. However in terms of deposit, if you have a 10% deposit youd have to add 1k to that, [if you still had the affordability in a years time in terms of a mortgage] opportunity cost of travelling therefore could be valued at 1k GBP.  

Could be another way to get exposure to the housing market to avoid the fear that ''you've missed out'' - buy a REIT. Buy a real estate investment trust with your deposit money. Value goes up if HPs go up and down if HPs go down. Its still a risk, the housing market, is just that, a market- like the stock market, commodities market but we all have to live somewhere...

Best of luck

Dave

Thanks Dave! More looking for somewhere to live/get on the housing ladder rather than to make an investment. Though obviously I do want it to be a good investment.

 

That's interesting about the REIT, I'll look into it. 

 

I Ihink I'll stay away from the purchase of a flat- too many management fees, unknown future bills etc for my liking

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19 hours ago, satsuma said:

There is no issue with renting a room in your gaff, up to £7000 per year is allowed under the rent a room scheme.  If you can buy a house under £150k and get a room rented its a no brainer.  My feeling is there will be no travel this year anyway so its not a bad time to bite the bullet and then have a few quid saved for summer 2022.  The only issue is the prices, I would argue that prices are nuts but NI is still relatively cheap.  That said I cant see prices increasing but I can see them dropping.  The reason being that unemployment is going up, even if we get a decent post lockdown bounce tax is going up.  However, I have been consistently wrong about drops in price as the government and banks continue to find new ways to keep the prices going up.  

Cheers Satsuma. Regarding the rent a room scheme, I hear that it is only allowed if you as the landlord continue to live in the house? Otherwise you have to tell the mortgage lender and they can choose to accept or not/change your mortgage to a buy to let?

I may have the option to rent out to some cousins who would be of university age- I could ask them to pay me in cash in hand when I come back which would not attract any suspicions from the mortgage lender

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17 hours ago, nigooner said:

Well only see the real impact on the housing market 6-12months after furlough ends. I can’t believe my eyes when I see the graphs of house price inflation...during a pandemic...when the government are supporting a big chunk of the workforce. That people, other than civil servants/teachers etc, would chose now to sign up to a mortgage blows my mind. 
 

Government spending will stop this year, and then the bubble will burst soon after.

I think there may be a hesitancy to buy as people are waiting for the big crash that may never come. I have heard of a few people selling and renting out in anticipation of a crash but I expected more people to do this to be honest.

A coronavirus awareness marketing ad campaign has been put out to tender and contracted to an ad agency- the as campaign is due to last until 2023 so expect 2 more years of this pandemic to come

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2 minutes ago, Bluto Bites said:

Cheers Satsuma. Regarding the rent a room scheme, I hear that it is only allowed if you as the landlord continue to live in the house? Otherwise you have to tell the mortgage lender and they can choose to accept or not/change your mortgage to a buy to let?

I may have the option to rent out to some cousins who would be of university age- I could ask them to pay me in cash in hand when I come back which would not attract any suspicions from the mortgage lender

I think you should keep it simple, if you buy a house rent one room and stay under the 7k.  That way you never need to worry about paying back taxes or people talking about you in the pub and getting reported to HMRC.  If you are travelling I cant see it being an issue so long as you are within the allowance of the scheme.  

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3 hours ago, Bluto Bites said:

A coronavirus awareness marketing ad campaign has been put out to tender and contracted to an ad agency- the as campaign is due to last until 2023 so expect 2 more years of this pandemic to come

Who is paying for this? Is this an NI local government thing?

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