Last year me and my wife were looking to in the South East buy and had a small 5k deposit saved up. Appalled by the Dickensian mouldy shoeboxes we could afford we decided to do a lot of extra work, give up virtually everything besides food and get a 10%+ deposit together.
A friend in finance had told us that, give or take, with a 10%-15% deposit we can almsot borrow what we like. Obviously though, we don't want a mortgage that would stretch us too far.
Our financial situation isn't that typical. We both have full time jobs but are rather underemployed and have found landing jobs more suited to our qualifications and experience so difficult that we've stopped assuming we'll be earning a great deal more over the next few years. However, we both freelance in addition to our day jobs and some months this extra cash can be anything from a couple of hundred to almost half our day job salaries.
We also don't own a car and currently walk/cycle to work, have only one modest personal loan between us, no credit card balances, overdrafts, etc. Essentially, we're not that scared of a large mortgage to attain something that's more important to us than expensive holidays, consumer widgets, fancy restaurants, etc.
Unfortunately, now that we have a 16k and growing deposit that goal posts have moved once more. Last summer some friends bought a nice, modernised two bedroom terrance for 164k. Looking around now, we can't find anything of this quality around for less than £172. More affordable options are probably not really more affordable as a modest amount of 'work' usually needs doing at the very least.
What're more there's literally NOTHING to see. I've never seen Estate Agents with so few properties at ANY price. It's a strange kind of 'boom' that sees so few homes changing hands. Seems more like a log jam than a boom.
As there's barely anything on the market, it seems to be causing people to pay daft money (again) for quite skanky homes. The area contains thousands of suitable similarly-specced homes but none of them are up for sale just now, which makes us nervous of paying over the odds for a less than perfect place with so little to choose from.
Also, while homes in our price bracket are selling in a day or two, similiar properties available for rent are 'sticking around', sometimes for months. One or two of these are now up for sale. I'm wondering what might happen to the market if the first-time but-to-letters start panicking and start dumping their dodgy investments back onto the market.
Personally, I'm no expert, but i can't see house prices falling here anytime soon - but then what if... My town is becoming more and more part of greater london every week. The demographic is changing and becoming more yuppified. The population is rising. Any new home projects are never more than a drop in the ocean when it comes to meeting demand. This is true for most of the south.
In Spain, where incomes have always been low in relation to house prices, Spanish couples have traditionally coped by living with parents for 10 years and saving up huge deposits before buying - and home ownsership is even higher in Spain than the UK. Maybe with the so called 'boomerang generation', the UK will simply see a sociological shift in how people obtain homes, which will remain forever - and the idea of simply earning a home through working while renting won't be possible anymore.
So is it a good time to buy? Can anyone offer evidence of an impending crash? Are interest rates going to strangle us like they strangled my parents in the 80s?
d.