Buying a house

[ciphergoth]

I've decided to buy a house. Somewhere on the southern end of the Northern line, with two double bedrooms and gas central heating.

Flood me with advice!

For "house", read "living accommodation of some sort", by the way; in Edinburgh I'd write "flat" without thinking.

I was going to rent, so that spikeylady could get out of her Wimbledon place and to make sure we can live together happily before buying. But she is now moving in with ergotia and lilithmagna, so we're in no rush; and the mortgage payments would be something I could afford by myself if need be, so in the unlikely event that we can't live together happily it won't be a disaster. And it seems wisest to get out of paying rent to someone else and start paying it to myself as soon as possible. Plus it means we can choose our own fridge and suchlike - I really enjoyed that flexibility when we lived in Mir.

To forestall some advice:

• Yes, I'll go to a FIMBRA-regulated financial adviser
• Yes, I'll get a capital-and-interest repayment mortgage, not an endowment or interest-only

Comments

[narnee.livejournal.com]

That's ludicrious. But then, with the exceptions of foreclosed and repossessed properties, I think buying at an auction is ridiculous anyway, as one can be caught in the competitiveness and pay far more than intended.

I hear that you've given Paul some advice which made him decide not to buy at this time. Would you be willing to share that with me as well (if I was to buy property I'd be a first-time buyer looking for livable accomodation that doubles as an investment) regarding London and letting me know if the same would be true in Scotland or the north of England? I totally understand if you don't have the time for that, but I thought I'd ask. Thanks.

[babysimon]

I only just saw this.

As far as I'm concerned, this applies to the whole country, particularly now that investors from the SE have bid prices up so much in the north.

This is my reasoning, for what it's worth:

• The property market is cyclical. Real (inflation-adjusted) prices go up, then down. This has been going on for decades, but used to be obscured by high inflation.
• Property is currently very expensive - the ratio of average price to average earnings is the highest it's ever been.
• Property is a fad investment - people who talk about investing in property now sound to me like people investing in internet companies in 1999.
• People are scared that if they don't buy now they'll never be able to afford it. The last time this fear surfaced was in 1988, just before the last crash. People bought nasty flats in cheap locations because they were scared. Then negative equity happened and they were stuck there for years.
  

Reasons people say the housing market won't crash:

• There's a housing shortage. No there isn't - there's a shortage of affordable housing to buy. This is just another way of saying that house prices are very high. There's plenty to rent, and it's cheaper now than it was five years ago.
• Interest rates are low now, making monthly payments affordable. Yes, kinda, but rates are already rising slowly. Interest rates are currently low as an emergency measure to stave off a global recession. This will not be the case for the next 25 years. Or indeed the next two years, once Dubya has succeeded / failed at getting re-elected priorities will change.

OK, I've typed too much. Stopping now.

[narnee.livejournal.com]

Very, very interesting. I believe I will be pondering that for some time to come. Thanks so much for spending the time to respond.

One more question -- in your estimation, when you do believe will be the right time to buy again? Obviously you wouldn't be able to give me an exact timespan; what I mean is whether you think the conditions will be good again in one year, two years, five years, etc.

Thanks again! :>

[babysimon]

when you do believe will be the right time to buy again

Pick one of:

* When you can afford the property you want to live in, or

* When the accepted wisdom is that you'd be crazy to do so - don't you know how many people are in negative equity?

The first point is probably still on the downward slope but hopefully you won't care.

The second point is probably the bottom of the market.