...or perhaps not buying a house after all

[ciphergoth]

...at least for a while.

Met up with babysimon at BU last night. He made a *very* persuasive case that now is not a good time to buy. Various folk made the opposite case, but his was backed up with detailed quantative historical data. I'm sore about it, but I'm convinced. It's sad but at least it means I'll be able to get a rather better property for the same money when the crash comes.

Just spoke to an investment advisor, who said if I was only investing for a year or so and then hoping to buy property, I should put my deposit in bonds. I'll also of course put the maximum I can into an ISA. It'll keep 'till I need it.

So I guess I'm looking to rent once again... but we're not in a hurry.

Comments

The blip of 1988-89 ...

[autopope.livejournal.com]

I got out of my first flat just in time in 1989, about one month before the market (in Leeds) stalled. Interest rates had gone up 3% in about six months, and my mortgage repayments had doubled in the 15 months since I bought the bloody place. As it is, I count myself lucky -- blind luck, as I had no idea then what was coming next. I later knew one couple, in London, who'd bought around the time I was selling, a four bedroom family home. They had a quarter million in negative equity, then she lost her job in the recession that coincided with the bubble bursting (can't think why that might have happened) ...

This is the wrong time to buy in the south east, where the average age of first-time buyers has just hit 34, where couples with a combined income over 40K can't get a mortgage on anywhere habitable, and so on. In Edinburgh, prices apparently rose >25% last year, so there's still some slack to be taken up -- but I think we're heading for a major crisis.

My project for the next couple of years is making capital repayments on my endowment mortgage as fast as I can (thank you, Standard Life, for crapping all over the policy that was due to pay off the mortgage in another 16 years -- luckily I was conservative when I bought the flat, and I can now afford to dig my way out of the trouble caused by the investment industry's slow-mo collapse). Then, if I can keep the habit up, I intend to start buying a new place in about, oh, 2-4 years' time, when they're about 20% cheaper than they are now.

(If they're not 20% cheaper, I'm going to be in real trouble with the book collection. Anyone know how much it costs to rent a small walk-in library?)

PS ...

[autopope.livejournal.com]

The four horsemen of Nigel Lawson's Apocalypse in 1989 were:

* Lots of buyers lying in order to mortgage themselves to the max

* A prolonged period of house price inflation (driven by enthusiastic buyers coming on the market for the first time, expecting to make a killing)

* Interest rates going up sharply after a long period of gentle decline

* Home-owners at full stretch going into default on their payments, combined with new buyers being unable to enter the market, causing prices to stall and then fall (reposessed houses go cheap), leading to more people going into negative equity and handing the keys back, causing more houses to come on the market for knock-down prices, leading to ...

Does this picture sound familiar? It's fifteen years since the last time in the barrel; I reckon we're about ready for another session.

Re: PS ...

[sqferryman.livejournal.com]

The only thing missing this time round is a financial pundit saying that there are going to be two types of people in the future, those who are living of the wealth in their homes and all the rest who didn't buy in time. Well look how accurate that turned out to be.

Don't forget that this time round the crash will probably be a lot harder. Any mortgage lender with a reposessed property on their books will dump it as quickly as possible to avoid the glut that happened last time round. And the buy-to-let punters are barely making any return on capital at the moment from rents. If prices go south and returns follow them then a lot of these properties will end up on the market at the same time.

Like the autopope, I'm staying where I am and hoping that the bust washes over me. Buying know looks like suicidal insanity.