House Buying - Advice?

UKworkshop.co.uk

Help Support UKworkshop.co.uk:

BearTricks

Established Member
Joined
6 Apr 2015
Messages
557
Reaction score
14
Location
Wigan
Hi.

We're currently house hunting (a big change from when I was making posts on here panicking about being unemployed and skint a few years ago) and we have put offers in on a few places but haven't managed to secure anything. Prices have shot up during COVID and while we're looking at places well within budget I'm struggling to justify offering so much on houses that were significantly cheaper 18 months ago and could end up significantly cheaper in the near future.

Most of the houses we're looking at also need a bit of work ranging from a new bathroom/kitchen to possible extensions or loft conversions so extra money on top of already expensive properties.

Most articles online are failing to give decent advice. I'm aware that's because they don't know what's going to happen. I'm wondering if anyone here has bought anything since the price rise and/or has experience of buying and selling in general, potentially through the building trade or property development, and might be able to help us hedge our bets or just settle my nerves.

As an extra bit of background the area we're living in was fine when we moved in back in 2017 but has gone downhill significantly in the last couple of years with developers turning big, cheap houses in to HMOs and moving criminals (to put it bluntly) in. We'd like to get out ASAP. We have been saving for a few years with the plan to buy this year, but we didn't anticipate the housing market going nuts.

It's a minefield at the moment and I'm in two minds whether to buy or wait so any sage advice or discussion would be appreciated.
 

doctor Bob

Established Member
Joined
22 Jun 2011
Messages
5,125
Reaction score
1,769
Location
Matching Green
It's a minefield at the moment and I'm in two minds whether to buy or wait so any sage advice or discussion would be appreciated.

That's the issue, no one knows. Beginning of pandemic it was doom and gloom on house prices. Now it's mental. It will continue for quite a while but will there be a crash. who knows.
I personally think there will be at somepoint but I know sweet fanny adams and it's just guess work. However at present I wouldn't believe an expert "house" person because they don't know.

Good luck, I'd still buy rather than rent.
 

AJB Temple

Finely figured
Joined
13 Oct 2015
Messages
3,621
Reaction score
870
Location
Tunbridge Wells
No one can forecast the future. What they can do is guess. What prices were 18 months ago or last week is irrelevant. What you think of prices is also irrelevant in a market sense as someone else will buy the house you would like. You are operating in todays market and you either accept the price and the risk of a future price fall, or you delay and keep paying rent and take the risk of further price rises.

Houses are primarily to live in. If you are buying one for that, as opposed to investment or churn, then take a long term view. Prices will fluctuate over time, but we are not making more land and the population is not declining. Cash is earning nothing in the bank and current inflation is therefore making your earnings and savings worth less as time passes.
 

Jacob

Pint of bass, porkpie, and packet of crisps please
Joined
7 Jul 2010
Messages
22,390
Reaction score
2,492
Location
Derbyshire
Yep. Nobody knows. Go for it now if that's what you want. You just have to make sure you are buying and selling signing same day if possible, so you don't get caught out by a sudden shift.
The good news (for owners at least) is that prices have gone steadily up since 1960s except for little blips. Might all change, we live in changeable times.
 

Spectric

Established Member
Joined
19 Feb 2015
Messages
3,835
Reaction score
2,021
Location
North Cumbria
As has been said are you buying a home or a house. With inflated prices you need to get it right, if the property raises any doubts in your mind then walk away, at least you are not in the home counties where prices are really insane. You need to do some homework to ensure the new area is not going to be a case of out the pan and into the fire so use your head and not the heart to base your choices. That is a busy looking part of the country, you do have Axminster at Warrington nearby which could be a bonus. You don't say how big an area you are looking at but a lot of areas that were once nice have gone down the pan, and employment is not so great if you go to far north of Lancaster.
 

Blackswanwood

Still Learning
Joined
17 Nov 2018
Messages
1,389
Reaction score
1,717
Location
North Yorkshire
I tend to agree that a house is somewhere to live with the added bonus that if you are in for the long term it's a pretty safe investment. Even if you don't make the absolute most that you could by buying at the bottom and selling at the top it doesn't matter as long as you can afford it and enjoy living in it.

Just as no one can really be certain what will happen with house prices they also cannot with interest rates but locking in on a fixed rate with some of the offers around at the moment may be a good move.

We bought our first house just before a "market correction" - I probably had some negative thoughts at the time but in the scheme of things it was irrelevant.

Good luck - there's a deal to be done on your new home out there waiting!
 

DrPhill

Cyber Heretic
Joined
15 Feb 2012
Messages
965
Reaction score
83
Location
West Somerset
If you are purchasing for the first time, or trading up, then high prices are a worry. If you are trading down, then they are a bonus.

I was told that the answer to the question 'is it a good time to buy my first house to live in?' is 'yes'. No ifs, no buts. What you might lose in depreciation will, over time, be dwarfed by what you save in rent.

If you are trading up by a modest amount then maybe you should take the same long term view. If you are planning to value-add then probably the same.

Remember that a "house price crash" is not as scarey as the papers will have you believe. A 'major correction' is not having your house go up in value. To put some perspective on it look at this graph note that if you had bought in 2007 before 'the crash' you could have lost ~15% of the value of the house. But 10 years later you would have been ahead again. We sold around 2008 - and it looked like a loss - but we traded up further than we might have done in the boom years. Did we lose or win? I haven't a clue, but I don't regret it.
 

profchris

Established Member
Joined
14 Jun 2015
Messages
945
Reaction score
162
Location
Suffolk
I bought my first house in 1987. When I sold it 6 years later, prices had crashed by 20%. But I had enough savings to make up the shortfall, and the bigger house I bought was also 20% cheaper, which meant I "saved" more than my loss on the house I sold. Still there, and now it's worth four times what I paid for it.

If it's a house to live in, the longer view makes paper losses pretty much irrelevant.

The short term issue is interest rates. From 1987-1991 my interest rate *tripled* - that would have put us under if I hadn't achieved a big promotion. Current interest rates are historically very low, so an increase is more likely than a further fall - factor that in! You need enough savings to withstand a year or two of increased mortgage repayments, or some strategy for finding that money if needed.
 

Daniel2

A Total Member !!
Joined
8 Jun 2020
Messages
763
Reaction score
492
Location
France
Hi.

We're currently house hunting (a big change from when I was making posts on here panicking about being unemployed and skint a few years ago) and we have put offers in on a few places but haven't managed to secure anything. Prices have shot up during COVID and while we're looking at places well within budget I'm struggling to justify offering so much on houses that were significantly cheaper 18 months ago and could end up significantly cheaper in the near future.

Most of the houses we're looking at also need a bit of work ranging from a new bathroom/kitchen to possible extensions or loft conversions so extra money on top of already expensive properties.

Most articles online are failing to give decent advice. I'm aware that's because they don't know what's going to happen. I'm wondering if anyone here has bought anything since the price rise and/or has experience of buying and selling in general, potentially through the building trade or property development, and might be able to help us hedge our bets or just settle my nerves.

As an extra bit of background the area we're living in was fine when we moved in back in 2017 but has gone downhill significantly in the last couple of years with developers turning big, cheap houses in to HMOs and moving criminals (to put it bluntly) in. We'd like to get out ASAP. We have been saving for a few years with the plan to buy this year, but we didn't anticipate the housing market going nuts.

It's a minefield at the moment and I'm in two minds whether to buy or wait so any sage advice or discussion would be appreciated.

Personally I would wait a bit.
As you have noticed, prices have gone crazy of late.
It is quite predictable that a slump will follow soon.
You don't want to be buying on the top of the market.
Bide your time and it will reward you.
 

Cabinetman

Established Member
Joined
5 Jan 2017
Messages
2,704
Reaction score
1,524
Location
lincolnshire Wolds
Apart from changes in market, the best way to move up the housing ladder is to buy a tired house and do it up as you suggested, the only other rule I can think of is never buy or spend to create the best house in the street.
I always think one of the questions that should be on the solicitors list that they send out is – is your neighbour a Christmas nutcase? I would hate to be illuminated and have hordes of people passing just to have a look at his eccentricity. Ian
 
Last edited:

Phil Pascoe

Established Member
Joined
29 Jan 2012
Messages
23,053
Reaction score
3,134
Location
Shaft City, Mid Cornish Desert
Current interest rates are historically very low, so an increase is more likely than a further fall - factor that in! You need enough savings to withstand a year or two of increased mortgage repayments, or some strategy for finding that money if needed.
My wife works for an up market bank - they have been warned to expect negative interest rates.
 

Woody2Shoes

Impressive Member
Joined
5 Jan 2015
Messages
2,133
Reaction score
405
Location
Sussex UK
My wife works for an up market bank - they have been warned to expect negative interest rates.
They already are negative for many/most of us:

Inflation (depending on what you're spending your money on oil, houses, timber, what-have-you...) = supposedly 3%

Interest rates (depending on what you're lending for and what your assessed ability to repay is) = say 0.5 %

Real (i.e. effective) interest rate = -2.5%
In many cases, real interest rates are a lot worse.

High inflation and low interest rates favour those who've overborrowed (governments, oil companies, that sort of thing...:cool:)
 

AJB Temple

Finely figured
Joined
13 Oct 2015
Messages
3,621
Reaction score
870
Location
Tunbridge Wells
I suspect Phil that negative rates referred to are for core deposits with central bank and interbank rather than for retail customers. There is no demand for cash in the interbank market as there is not much banks can do the sums needed to meet their liquidity requirement. It's nothing new: LIBOR is floating negative currently on Euro, Yen and Swiss franc and is near 0.09% positive on sterling and a tad lower on dollar.
 

Jameshow

Established Member
Joined
4 Oct 2020
Messages
2,837
Reaction score
1,591
Location
Bradford
I would be sure to have an offer on a house accepted at the same time as accepting an offer on your house.

If you don't you can end up with a fixed price on your current house and spiralling houses prices in houses you want to buy in weeks / months time. Happened by to my in-laws and sister.

Cheers James
 

AJB Temple

Finely figured
Joined
13 Oct 2015
Messages
3,621
Reaction score
870
Location
Tunbridge Wells
I would be sure to have an offer on a house accepted at the same time as accepting an offer on your house.

If you don't you can end up with a fixed price on your current house and spiralling houses prices in houses you want to buy in weeks / months time. Happened by to my in-laws and sister.

Cheers James
Based on this comment from OP: "We have been saving for a few years with the plan to buy this year, but we didn't anticipate the housing market going nuts". it would appear he is renting. Hence his is a single side transaction.
 

NikNak

Established Member
Joined
9 Aug 2008
Messages
786
Reaction score
38
Location
Southampton
Like the others have said, are you looking for a house or a home. Look for the area you want to live in and buy the cheapest you can find in that area... the only way from there is up.
And when you find your Shangri-La, with interest rates at historical lows... every month... over pay over pay over pay on your mortgage.
 

Cordy

Established Member
Joined
1 Dec 2014
Messages
1,138
Reaction score
420
Location
Wigan
@BearTricks
My advice is to buy into the market
Go for quality, it will perhaps mean sacrifices -- but buy !
Property prices are going up and will continue to rise
We need to pay billions to cover Covid issues; not discussed but the government will be
using the Quantitative Easing tool which can only spell inflation
Q/E is effectively the government printing money

Last year I offered to sell a property to a tenant for a fair price. He should have snatched my hand off !
Instead he waited 12 months then said he was interested.
By that time I had changed my mind. We both knew that property prices had rocketed in the interim.

Do your own research and Good Luck !
 

ian33a

Established Member
Joined
18 Mar 2021
Messages
235
Reaction score
257
Location
the centre of Devon
If you are currently renting, get into the market, certainly. Long term, its definitely a good investment.

If you already own something and are concerned about staying in the vicinity, definitely start looking seriously. Rightmove is an excellent resource.

Decide upon a new area and target property that you can add value to but which is placed in the best area that you can afford even if the house is the worst in the street. This gives you an opportunity to add value with much margin for gain.
If, instead, you buy the best house in an average area, you wont be able to add as much value because you will hit the ceiling price of the area.
To some degree, this is where we find ourselves at present, albeit, we've been in our house for 23 years and it has shot up in value over the years so we are less concerned about this.

Also remember, that negative equity aside, if you sell and buy, its all about the cost to change. If the market in the area where you buy and sell is hot, it will cost more to trade up. If the market is depressed, the cost to trade up is lower. This will always be the case so house price inflation and deflation isn't necessarily as bad as some think. We've tended to buy when the market is down as the differentials have worked in our favour.

If you live in an expensive area but can afford to move to a cheaper area, you will get better value. A cheaper area should be considered in the context of the resources you need (schools, railways, airports, hospitals, etc.) and not because it is rough and everyone is crossing their fingers for gentrification.

Moving is expensive so its wise to do it as infrequently as you can. Look for a house which meets your needs now and which should meet them for a good few years to come. So, think about a move which may stretch you a little more financially now but which will give you more growing room in the future. Better to pay more in mortgage and enjoy the benefits than pay several rounds of stamp duty and removal fees and see little for it.

Again, depending upon area, I think there will be some softening of prices in the coming months, perhaps year, and the stamp duty holiday has softened the market somewhat - but not as much as some think. There is a pent up demand to spend money as interest rates are low both for buying and saving. I'm told that it is very much a sellers market as there are far less properties than buyers. While this remains the case, prices will probably remain strong.

We are also considering a move but circumstances mean that a move wont take place until the spring of next year at the earliest.
 
Top