Someone on this forum just bought his first house (me :D )

[Leepox]

at first glance i thought this thread said

"Someone in this forum has just bought me my first house" Lmao! I was rushing to see what the thing is all about, to my dismay when i read the title again I realised...

[Nick]

Oh Rave, Rave, Rave, RAVE...

Sure, property prices are increasing dramatically and yes, there's going to be a time when they'll either slow and level off or even start to sip again but you really do need to get up to speed on the 'borrowing boom'.

According to the latest reports, we Britons have actually started to curb our spending on credit.

Though the Christmas spending was still MASSIVE, credit card companies have reported a comparative DROP in borrowing over the same period.

And as for a house price crash leaving people destitute, lenders are far more selective on how much you can borrow against the equity in your house. They learnt their lesson last time, having to shift thousands of reposessed house in a dead market, they lost millions.

Long gone are the days of 100% mortgages at 7 times the joint income.

And sure, I might well have nearly doubled the value of my house since I bought it, but I'm actually no better off as every other house has done the same, so I don't really have any extra cash... it's not like I can use the equity to pay off my mortgage, is it?

Yes, house prices are stupidly high, but that's driven by the market itself... it's not like there's an MRRP on a house now is it? It's just what folks are willing to pay that sets the price.

Yes, getting a foot on the ladder is far more costly and difficult than it was ten years ago but I'd still recommend it as an investment, provided you don't over-stretch your finances and buy sensibly. (That is, buy a house that will have widespread appeal come time to sell). Or if you're looking at staying in one place long term.

Sure, if I was upping and moving every couple of years I'd rent, perhaps even if it was every 4 years or so, but otherwise I'd buy providing I could afford it...

The only thing I'd make sure is that any 'financial adviser' who mentions the words 'Endowment' or 'managed funds' would have his balls nailed to a for sale sign before the agreement had rolled off his printer...

[Steve B]

me and my girlfriend are having a wee look just now, but everythings too expensive :-(

[TheAnimus]

Rave most people are saying there will be an american like soft landing.... these aren't optomists, these are people selling hedging.

House prices might slide, hell if you only had a 5% deposite you could find yourself in negative equity. But most mortgages are 25 years duration, heck take 10 years when the bubbles burst its still worth more, and if you'd been renting, you would of lost all that money.

Odds are on a 25 year mortgage house prices will suffer two major re-adjustment. Who cares because you've still got an asset that in dkmech's case he wants to use as the first rung. The distance between the other rungs dosen't generally change *that* much.

Congrats dkmech!

[tiggerai]

Having bought my house recently, and being on a shared ownership scheme... I'm quite hoping there will be a drop in house prices... as at that point I can buy the rest of my flat outright for a lot less than I can now. (70% of 170k is a lot more han 70% of *insert house price crash price here*)

It's sort of a win-win situation for me at the moment. (although I haven't thought this one through totally at the moment so it may have big holes in it)

[JPreston]

Congratulations on your new home

As everyone (except Rave) says, don't worry about the odd drop in prices or the doom-mongers as you'll perhaps be paying off one mortgage or another for the rest of your working life now. I'm in the happy situation of having more disposable income than I would ever spend and it's difficult to find anything to do with it that is 'safe' - funds and equities haven't been doing nearly as well as property and property comes with the bonus of being a real bricks-and-mortar asset that I can keep my stuff in .

You have done the right thing WITHOUT A DOUBT over anything other then the shortest of short terms so just get on with decorating and furnishing!

[Rave]

Oh Rave, Rave, Rave, RAVE...

Nick my dear chap. Is this post ironical? It's always hard to tell with you. I'll rise to the bait anyway at the risk of looking foolish.

According to the latest reports, we Britons have actually started to curb our spending on credit.

Oh, so according to the news reports we've 'started to curb' our spending. What that actually means is that the rate at which Britons are taking on new debt is decreasing- but that doesn't mean that they aren't still taking on new debt, far from it- the total including mortgages is now at something like £1.15 Trillion and rising.

Though the Christmas spending was still MASSIVE, credit card companies have reported a comparative DROP in borrowing over the same period.

See above. What matters is the amount borrowed vs. the amount paid back, and I can assure you that the amount borrowed is the larger.

And as for a house price crash leaving people destitute, lenders are far more selective on how much you can borrow against the equity in your house. They learnt their lesson last time, having to shift thousands of reposessed house in a dead market, they lost millions.

Ho Ho Ho. For a start, financial people rarely learn, because they're largely motivated by greed. Short term profit is always what they're interested in. For a second, if you think a 125% mortgage is selective and well considered lending, I hate to think how far things would have to go before you thought lenders were being irresponsible!

Long gone are the days of 100% mortgages at 7 times the joint income.

Yeah? Missed those adverts on the telly for an Abbey 5x mortgage did you? How long do you think it'll be before that goes to 6x and then 7x? On the contrary, I think those days are nearly here again.

And sure, I might well have nearly doubled the value of my house since I bought it, but I'm actually no better off as every other house has done the same, so I don't really have any extra cash... it's not like I can use the equity to pay off my mortgage, is it?

Quite. Unfortunately there have been a hell of a lot of people who saw the "house prices rocket!" headlines in the Daily Express and thought "I'm rich now! Better buy a BMW X5 immediately!". Mortgage Equity Withdrawal (MEW) has made up as much as 8% of the money spent by consumers. Without that we would have been very close to, or even in, a recession. Eventually, rising interest rates and debt saturation will mean that this source of spending money will dry up. Can you guess what's going to happen then?

Yes, house prices are stupidly high, but that's driven by the market itself... it's not like there's an MRRP on a house now is it? It's just what folks are willing to pay that sets the price.

Yes. And when people can't afford to pay stupid prices any more, the market price of a house is going to drop.

Yes, getting a foot on the ladder is far more costly and difficult than it was ten years ago but I'd still recommend it as an investment, provided you don't over-stretch your finances and buy sensibly.

Yeah, but why? I just don't understand. The housing market is obviously cyclical- it has been for hundreds of years. Property prices go up, then they drop, then they go up again and so on ad-infinitum. It's clearly and transparently obvious that if you buy a house in one of the dips rather than at one of the peaks that you're going to be much better off. You'll end your days in a bigger house and with more money in your pocket, all else being equal. Buying at the top of a bubble is simply irrational. Trouble is, rationality goes out of the window when it comes to property. OH MY GOD! I MUST DO EVERYTHING I CAN TO BUY RIGHT NOW OTHERWISE I'LL SPEND THE REST OF MY LIFE IN A RENTED HELLHOLE WHILE MY RACHMANESQUE LANDLORD LIVES IT UP IN DUBAI AT MY EXPENSE! THE HORROR! THE HORROR! QUICK, PASS ME THE SELF-CERTIFICATION MORTGAGE FORMS!

But history and logic says that's not what's going to happen. Prices will come down, and in a few years you'll be able to buy a nicer house for less money. That's the long and the short of it.

Sure, if I was upping and moving every couple of years I'd rent, perhaps even if it was every 4 years or so, but otherwise I'd buy providing I could afford it...

Assuming my landlord doesn't go broke, I could quite happily see myself living here for 5 years or more, it's all the house we need now and into the foreseeable future. When I buy, I plan to buy the house I'm going to stay in for a long time. It so happens that the way the market has swung during my adult lifetime has made "climbing the property ladder" expensive and pointless. C'est La Vie- I've adapted.

Rave most people are saying there will be an american like soft landing.... these aren't optomists, these are people selling hedging.

Oh, American-style soft landing eh? Like 9.7% in one year? That's not just soft, it's a feather bed</sarcasm>.

The very fact that the hedge fund guys are predicting that makes me all the more certain that a crash is looming high on the horizon. Hedge funds are financial gambling at it's most insane- sure they make mental money when the going's good, but they'll all be wiped out when times change. I expect an utter bloodbath.

[IBM]

Got to agree with Rave on this one....Everyone seems to hope that the guys in charge have figured out how to avoid the boom and bust cycle, but they haven't. Economics change so rapidly these days, with so many new factors, that booms and busts are generated by dozens of different sources, all of which are new and unknown.

My personal favourite at the moment is that China's going to pull all of the money it's put into foreign exchange reserves, specifically US dollars, thus crashing the US ecomony and putting the whole world into a massive recession.

But, back to houses, there's a lot of money being pumped into the UK ecomony by very very rich foreign people, typically Russian and Middle Eastern. Primarily targetted within London, but increasingly spread throughout the UK. They're not looking for short term return, they're looking for very long term investment. They'll keep buying as long as there's property to buy. I know it's not enough to keep the market afloat, but it's certainly been a contributing factor to the current house price nightmare.

On a side note, I bought my house about three years ago. It's now worth &#163;150K more than I paid for it. I just hope that I get an excuse to move overseas before the whole thing crashes.

[redlight]

Well put Rave. I will stay in my council house now housing association until I peg it and it will then be passed down to one of my children. No hassles no repair bills upgrades for free and can customise as I wish. Redundancy or long term sickness(not that I would wish that on anyone) I can get help. If you think you own your own house slip behind with your mortgage for a few months and you will see who owns it and its not you. I was around during the last recession and seen so many friends in despair and some ending up homeless that it put me off ever even thinking about a mortgage.

In the end it is each to his own and dkmech I wish you a long,happy and prosperous future in your new home. Or as us Scots say when we move in to a new house(or at new year) Lang Mey Yer Lum Reek.

[TheAnimus]

Oh, American-style soft landing eh? Like 9.7% in one year? That's not just soft, it's a feather bed</sarcasm>.

The very fact that the hedge fund guys are predicting that makes me all the more certain that a crash is looming high on the horizon. Hedge funds are financial gambling at it's most insane- sure they make mental money when the going's good, but they'll all be wiped out when times change. I expect an utter bloodbath.

9.7 isn't that bad, it wont put people who aren't gamblers in the red.

Take me, i'm looking at buying a flat with a friend, my share will be about 200k. Now because she's got a masters are credit score is great, we've been offered one that 0.5% below base! Now the one i'm looking at is only 0.25% below base, but i'm only locked in for 2 years, tracking below base.

Now, we're talking about 4 times basic salery + 1 bonus. By the end of year one, if i don't overpay (why would i at that), i'll own 12%. Enough for a soft landing to happen without been in negative equity that year. Savings could be offset, or invested elsewhere, that depends on tax intrests.

This money is the amount i'd be throwing away anyway, plus about £1.5k each year, now thats not bad for having the freedom of not been in rented accomodation!

Hedging is not gambling at all, its people buying market analysis and sharing that risk, its no riskier than any form of trading. I have contents insurance yet i've never been robbed.

[JPreston]

I'd dread a 9.7% fall. It would set the value of my house back six, maybe seven months! Oh, the humanity...

[Elmo]

we've just bought our house - our first house. We're buying it off the boy's dad's girlfriend (still with me?...good) who has just moved in with his dad. It's working out to be CHEAPER to buy it than it is for us to rent it just now! the thing with buying it straight off her means that we're not bidding for it or putting offers in for it, we're paying the price it was valued at, which means even if we sell it tomorrow, we're still guaranteed a profit this make finola a happy bunny.

[dkmech]

Spent today picking some free furniture and a washing machine. My parents' house is now stuffed to the gills with stuff for my house .

As for prices - it would cost me about my share of the mortgage payments to rent something similar (my parents will be helping me pay because its only a short term (14 years) mortgage and they'd be a bit high for me otherwise). True, I need to put money in to do it up, but my dad is a builder so its a lot easier. At the end of the day some of the interest is taken by inflation anyway. We've also put down a sizable deposit so should be alright, although obviously there's always an element of risk.

Will see if I have any strength left to go there in the evenings and do some work this week.

Oh, and thanks for all the congratulations

[Kezzer]

Good job

I guess this is the first step into old age

To be honest though I'm already planning out our house-buy with my partner although two salaries will be going towards the mortgage. Unfortunately the average house price from where I'm from is roughly &#163;350-400k for a 2-bedroom semi-detached place which isn't as good as I would've hoped for the amount. Plus, the mortgage rates are just crazy. My 'rents pay something like &#163;15k a year towards their mortgage and &#163;5k goes towards the actual house and the other &#163;10k goes on interest.

[b0redom]

Rave, do you know anyone who's had a place for 20 years who currently has negative equity?

Sure there may be partial collapses, but if you're in for the long term, they won't effect you.

Sure you could wait for a collapse, which may happen, but people have been saying "It's about to happen" for years, and all that's happened is that they've burned money renting instead.

Renting is good for some people, but if you _can_ afford something, IMHO you'd be a bit daft to keep on renting....

[mark19632]

Congratulation on your house . I brought my first place 3 years ago and loved it, even the endless decorating!

When we brought our first place there was lots of talk about a house price crash then and that was 3 years ago, still hasn't happened though.