House buying – go for what's good enough or the best you can afford?

At what point do ‘over inflated house prices’ just become the norm, I.e. never returning to 3 x average salary?

For whatever reasons, the government (lab / condems) have held off a crash through this recession through close to zero interest rates, we haven’t seen the same number of repos that previous recessions have seen, which would usually trigger a crash.

Yesterday’s budget provided more stimulus for price rises, not a crash.

All this making money in house price growth etc is completely irrelevant unless at some point you want to sell out of the market. So what if my £100k house is now worth £275k. I’m not going to cash it in anytime soon. If I sell I’m going to buy back into the same market, so all the profit is recycled. It is a dangerous illusion of wealth that help overfuel the economy and led to unsustainable borrowing. Cmon, it’s only 4 years ago it all went tits up.

The real problem with property inflation is that it makes it increasingly difficult to get on the housing ladder for first time buyers. But eventually, the economics of supply (of lending) and demand (at over inflated prices) mean that this causes stagnation until lenders catch up with the market. The budget may help start the market again, depends how the flow of new property meshes with the supply of mortgage guarantees.

Tbh i think it’s a good time to buy if your job is secure/has prospects. My advice is, buy something you want to live in, not just for investment. Work out what you can afford and still be happy with your life, this may be significantly less than the banks will lend, or maybe not in the new world.

Mikesmith

so you are saying that you’d rather have a slightly niver house for 30 years and then pay rent for another 30 years through retirement. Over a slightly less nice house for 30 years followed by a free house for the rest of you life?

Your choice but it doesn’t sound like a no brainer

rents are as much as a mortgage, and often more.

The hurdle for most is the deposit not funding repayments

ampthill – Member
Mikesmith

so you are saying that you’d rather have a slightly niver house for 30 years and then pay rent for another 30 years through retirement. Over a slightly less nice house for 30 years followed by a free house for the rest of you life?
Not really, the overall cost of the mortgage, improvements, repairs etc vs the cost of renting for the 60 odd years I have left may be equivalent. As somebody who started work in 97 and watched houses hit escape velocity very quickly I have though about this.

With careful saving of the difference and investing in pensions etc I could be possible to have a more comfortable retirement without owning a home.

Whatever you think of the long term the figures still show housing vs income above the late 80’s levels. Wonder how long that can go on for?

I bought my house on the basis that it was a house I wanted to live in, in a place I liked – great for biking, climbing etc and has shops selling beer, cake, chocolate – and was within my range of affordability.

Ultimately you’re buying somewhere to live, you can agonise over the possible ups and downs of the housing market etc, but the baseline is that unless you view your life as a series of investment opportunities – which is why the country is going to hell in a handcart fwiw – you’re actually buying a home, somewhere to live.

What’s ‘affordable’ for you is one of those fluid things which depends a bit on your job stability, employability and how big a mortgage you feel is tolerable – I’d rather not have to pay out so much that I’m effectively locked into a particular high-earning job – I wish…

I blame Thatcherism for turning home-ownership into some sort of investment game/status wankfest. And if you can afford to buy a flat in London you could probably land a five-bedroom detached farmhouse with a whole barn to store your bikes in up here… 😉