After years of renting and pretty much throwing away money, I'd like to buy a property in London next year. I don't want to stretch myself too much in case of interest rate rises, but I'm terrified that in a few years there will be an almightly crash and I'll lose my money. How likely is this?
2006-10-31 21:44:52 · 8 answers · asked by sciencechick 2 in Business & Finance ➔ Renting & Real Estate
Interest Rates will rise. That being said this will not cause a market crash unless they rise quickly, which is unlikly. A rates rise will see the market steady, or potentially drop slightly, but I don't see the market plummeting.
However, remember, once you are in the market, it doesn't particularly matter so much, as the netire market drops. So as long as you are prepared to stay in the market then you won't be affected so much.
Say you buy a flat, and in 5 years property prices drop. At that stage you want to move into a house. Well the price of the house will also have dropped as well. You need to avoid negative equity but as long as you hit your mortgage hard, you can avoid that.
2006-10-31 21:55:44 · answer #1 · answered by murray_fortescue 3 · 0⤊ 0⤋
I think you are right to worry about this, but no-one can give you a quantified answer to your question.
The purchase cost to rental ratio is at a historical high in the UK, and the cyclical history of this ratio suggests to me the likelihood of a reversal over the next few years. So, if you buy now there is a good chance you are buying in near the top of the market.
On your point about throwing away money, I would say look at what the real difference is between renting the property and renting the money to buy the property. Firstly, if you own you are less restricted in what you can physically do with the property, but it's harder and more expensive to move. Secondly, through the leverage effect of a mortgage you are very exposed financially to the behaviour of the property market, which can go down as well as up (as we know from the late 80s/early 90s).
I would not advise anyone to go into the UK property market for the first time over the next year or two, unless they have particular non-financial, lifestyle reasons for doing so.
2006-10-31 22:33:24 · answer #2 · answered by Sangmo 5 · 0⤊ 0⤋
Fewer people can afford to buy these days - so it's inevitable that at some point prices will fall. But with the news today that Abbey are going to start offering mortgages of 5 times salary I can see the bank making loads of money when the bottom does fall out of the market.
I'd be cautious.
2006-10-31 21:48:42 · answer #3 · answered by mark 7 · 0⤊ 1⤋
Why ought to there be ? properly, it relatively is available that the transforming into expenses of activity and lack of ability to enhance rents will push the a number of 'purchase to allow' proprietors into advertising up at any fee . and a few Banks/development Societies to repossess .. .. yet there remains great call for on the instant fee from 'first time shoppers' ... so, i circulate to advise, domicile costs will stay intense ..
2016-11-26 21:36:00 · answer #4 · answered by Anonymous · 0⤊ 0⤋
As much chance as 5 pigs landing in your back garden
2006-10-31 21:52:42 · answer #5 · answered by Anonymous · 0⤊ 0⤋
well,my dear,every rise has a fall. considering technical charts and matching it with discreet probability, there is every liklyhood that there will be a crashbetween 9.5.2009 and 27.11.2011
2006-10-31 22:00:44 · answer #6 · answered by nsk 2 · 0⤊ 0⤋
DONT GET AN INTREST ONLY MORTGAGES IT IS GONNA CRASH - EVERY CAN TELL!
2006-10-31 21:53:42 · answer #7 · answered by Anonymous · 0⤊ 0⤋
very unlikley as from today,since more people can borrow more on their mortgages
2006-10-31 21:49:40 · answer #8 · answered by dumplingmuffin 7 · 0⤊ 1⤋