Allegedly…
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If previously cycles follow we will see a major crash in 2026. Inflation and raised interest rates should also mean prices come down due to more on the market in the next few years when people are forced to downsize. Basically everything says it’s plateaued and will level off, it’s speculated that it will eventually drop.
Of course though, no one can predict something like Covid.
There’s a lot of cash buyers who have made capital on their previous homes skewing the market currently. It also depends where you are, countryside prices have shot up, London prices not so. There’s ‘bargains’ to be had in cities.
You really don’t want to find yourself in negative equity. However, if you’re not planning so sell in the next 5-10 years you can ride out a drop. The value only matters if you’re selling.
How will you fund your purchase? If you need to borrow a lot, beware of increasing interest rates, use a mortgage calculator to see the effect of raises and if you can afford that.
Look at how much rent will be vs how much a house will be and what you’re likely to pay in mortgage payments/interest and what you can save.
To really simplify, ignoring fees and interest…. Let’s say you’re looking at spending £200k on a house or rent at £1000 a month. If you rented after 2 years you’ll have spent £24,000. That would be the same money wise as a drop in value on your £200k home of 12%. After 3 years renting, 18% and so on.
If we go back to pre-pandemic levels we’ll lose around max 10-20% depending on the area.
Of course if you buy you have upkeep costs that you don’t have with renting and if interest rates rise (if not on a fixed rate mortgage) it can be unpredictable whereas rent is pretty fixed.
Personally I’d probably buy rather than rent but definitely not go to my max available mortgage in this market due to increasing interest rates and the potential decrease in property value. You don’t want be moving often because it costs each time but in this market i’d probably either spend as little as possible or try to somehow future proof the property purchase.
If I could live at home for cheap or free though, I’d do that.
This is not advice, just my opinion based on reading various sources recently and may well be incorrect.