...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

1/2 p more

[karmicnull.livejournal.com]

When I was wokring down in Ipswich, I knew a whole bunch of people who had negative equity. Their problem wasn't that they couldn't pay, just that they couldn't move.
As long as you avoid negative equity, and can make your repayments, once you are on the housing ladder, it (grossly speaking) doesn't matter whether prices go up and down. We may have to move soon. If there is no crash, then the houses we target will be astonishingly expensive, but ours is worth commensurately more. If there is a crash, then our house will plummet in value, but so will those we are targetting.

If you are looking to up-size, then a post-crash environment is good as the cash difference between houses is smaller. If you are looking to downsize, then do it pre-crash, and release more money into your pocket.

Your situation is different. You have a sizeable deposit. You have to make a bet on house price futures. Will they be the best way to invest your money in the short term, or is it better to hold off 12-18 months, during which time you'll get a better rate of return from a bond, or other short term investment (eg money markets)?

Perhaps there's another question. What do you get in terms of improved quality of living from it being your own house? Certainly that's the clincher for us - even if house prices were to drop below the purchase price for our place tomorrow, I would view the enjoyment I've derived from our house to be easily worth it.

One last thing - ergotia cites some wise rules of thumb to ensure that you are protected against downturns of fortune - in particular the employment slump that might accompany a housing crash. Whilst completely endorsing those observations, I would note that in our industry the crash has already happened (as I know to my continuing pain), and we are now labouring slowly up the shallow slopes of recovery.