The future of house prices?

[bizzylizzy]

Now I know that none of us has a crystal ball. But we've been in rental for a while having sold our home at a time when house prices were supposed to have levelled out. They didn't, they kept on climbing and have gone up another 20% since we sold. I just want to take a straw poll really. If you were me, would you buy now and risk a fall in house prices or wait another six months to see if prices level or even start to fall. We don't want to make a second mistake by buying now and finding that the house we buy is worth a lot less in another few months. Just wondered what you lot out there would do. Thanks. bizzylizzy

[BenDToy]

Trying to make a paper profit by attempting to second guess house price movements is a game which can be very expensive, as you should have realised by now! Sorry to state the obvious, but the question you ask suggests that you are going to try to do it again. If you want a house to live in then you should find a property you like and buy it. The one likely thing is that, in the long term, house prices will rise.The other is that a fall in house prices does not cost you any money unless you sell, so don't! Obvious really. If you want to be a property speculator then do it properly, and get organised. Otherwise buy a home and live in it. Even if prices are level in 6 months, you are still better off, not having thrown away money on rent, and maybe you could have repaid some money on a fixed rate mortgage and rates are rising. Hope this helps, and good luck with whatever you decide.

[BadBob]

I used to live in London. Back in 2000 I got married and my wife and I decided to buy a house, despite the fact we have relatively high incomes we couldnt afford anything half decent even in the less fashionable are of London we had grown up in. At the time I was very tempted to wait for 6-12 months as at the time the general feeling was that the first time buyers had been priced out of the market and prices would lower. We decided to move much further out of London where we could afford a very good size house. In the last 4 years our house values has gone up by 75%, if we had have waited we would have been in a worse position. The underlying problem is the same and its not going to go away and that is this. 1. There are not enough houses to go round, 2. people, and sorry to be blunt here, like you see houses as a way to make money. Point one allows this to happen so unless there is a surplus of houses things won't change. My honest advice would be this, if you can afford (and I mean easily afford) to buy now then do it, if not don't stretch yourself trying to buy something. My opinion and its just that is that we will see some sort of mini slump in house prices in the next 2-3 years, because many first time buyers have pushed themselves to the limit a small rise in interest rates will see some people unable to keep up the payments.

[pmead]

Any financial adviser will tell you, don't take unnecessary risks with the roof over your head. As BenDtoy says if you are buying a property as your principle place of residence then even if prices fall you won't lose unless you sell. So as long as can afford the mortgage payments (factoring in that base rates may peak at close to 6% in this cycle) then you should be fine. Having said that NO market keeps on going up and there are lots of factors which indicate that if we're not at the top of the market yet, then we're pretty close to it. One major think tank predicts a 20% price correction by 2007. You'll notice all those people talking it up are mortgage lenders and estate agents. The BoE has an open remitt to cool the market. There are fewer first time buyers now than ever, the market is fueled by buy-to-let at the bottom end and interest rates are on the way up. If you're already renting I would personally stay as you are. People say it's 'dead money' but so is paying 300K interest on a 400K loan over 25 years !! Sit back and see what happens.

[bizzylizzy]

Hi everyone. Thanks for your honest responses. I think I must have struck the wrong tone with my question. We sold our house two years ago to release money to start a small business. The money we've spent on rental for the past two years plus the cost of the business has taken a very big slice of our capital. We're not talking about speculating on property, just the difference in the size of the mortgage we'll have to take out, which will be substantial I can assure you. We couldn't afford to buy the house we left two years, which is now back on the market. So you see, we're not trying to make a fast buck, just trying to afford an ordinary home. Thanks again everyone. bizzylizzy

[FTVS]

BL, if you are buying as your primary residence then buy. You only realise a fall in value when you come to move and if you don't need to move, well and good. .

[darth vader]

i saw an expert on TV last night predict house prices are yet to climb another 20% over the next year. This said they cannot climb forever - purchase power will dictate this and if (as they are doing) prices go out of range of purchasing limits then a crash will ensue. This is what FTbuyers are praying for. but my straw poll answer is buy now, or expect to wait at least 2 years to get the same/less price than now. btw there is an increasing tendency to purchase houses (especially in the city) as second homes for rental incomes and the surprising result is that house rental prices are going down as there is a "glut" of houses for rental income so expect monthly rental figures to go down in the next year or two. and finally, i am a developer and have no expert knowledge, only opinion, so don't hunt me down if i get it wrong.

[bizzylizzy]

Thanks one and all for your answers. It seems pretty clear, and confirmed more or less what I was thinking. All we have to do now is find a house. You're all invited to the house warming!!! bizzylizzy