Now's the time to buy property!

First time posting on this site. Very interesting comments above with one point missing. Apologies if I have missed it. Buying verses renting - in most circumstances there can be no competition. Whatever the circumstances of what it has cost you throught the years, if you rent you end up with nothing. If you buy, you eventually end up with property which you own and can pass onto your children/dependants.   We went through the 1989 price crash which was just as severe as the present one and lost one third of the value of the property we had purchased. In fact just as in these times the flat we purchased just wouldn't sell. People who had purchased studio flats were even worse off. The slump lasted 6 years. Now many years on, I don't regret the financial hardship we went through. People must accept in these times, you just forget about the holiday abroad, take the pain when you are young and you will come through it later in life. There is little doubt that if you can afford to buy at the moment, it is likely to be a good move long term.   Don't expect too much too soon and don't buy as an investment if you don't know what you are doing - if you fall into this category you deserve what you will no doubt get.      

SevenPillars Personally, I don't actually think our views of the situation are that different, I think we just approach the problem in different ways. Yes, Northern Rock went a little overboard with its lending, but it actually had one of the highest quality mortgage books in the country before being nationalised. At the end of 2007, only 3,492 of its accounts were in arrears. It was only after nationalisation and the collapse in the credit markets that its funding costs short up, and hence arrears rose. At the end of 2007, even after the initial nationalisation, they were only around 0.75% compared with the industry average of 1.88 per cent according to the Times.Which implies that even though Northern Rock lent a lot, it was lending to those who could afford to pay it. Indeed, their "125% mortgages" were actually 95% mortgages and an unsecured loan of up to 30% of the property of £25,000, and numerous banks were and still are willing to give large unsecured loans to people with no equity in their homes - Sainsburys will offer you a £25,000 loan today - you just have to have a Nectar card! So there are some areas of the market where active lending actually still is at the 2007 level. Regarding the self cert mortgages, mine wasn't actually a self cert - I lost my payslips in a fire before the application, so the lender never got to see them. I provided employment references so they were fine with it, but HR told me they didn't check the references. Yes, I am sure there will be some dodgy dealings, but the US is a bad example. The whole sub prime crisis started in the US specifically because brokers over there were offering Ninja loans - no income no job no assets. They encouraged people to apply when they knew they had no income or means to afford the repayments, and this has been proved. There have been accusations and insinuations in the UK market yes, but nothing has been proved on such a massive scale. That's why the arrears rate in the UK is still less that 2%, whilst in the US it's at 12%. I completely agree that the level of new lending is likely to be subdued for a while, whilst the wholesale markets completely unwind and people work out exactly how much they lost and where they lost it. And yes, a 66% fall in new mortgage lending from 2007 to 2009 sounds about right. However, I don't agree with your conclusion that this means sellers have to drop their prices. Remember that most sellers are also buyers, and with no available funds to buy a new place they can't sell their old one. Like I said, the only people trying to sell are house building firms and people who absolutely have to sell for one reason or another. Even those people are increasingly looking to rent their homes as they can't actually afford to sell with mortgages this hard to come by. That's why I think the market will completely stagnate for a while. The indices will rise a bit because the effect of all the house builders getting rid of all their stock has caused the market to overshoot - I've seen agents openly advertising new builds at a 35% discount to BTL investors for the last six months, so that has caused massive short term downward pressure on prices. Now the number of new housing starts has dropped right off, that pressure should ease and that will be reflected in the market indices, as is happening at the moment. Also, I'm not quite sure what you mean when you say there's a lack of affordability - property is still as affordable as it was in 2007 when the market was rising - if anything the typical interest rate is quite a bit lower. The only thing holding FTBs back is the need for a larger deposit. That's not something that's easily fixed with lower prices - if you don't have a lot of cash lying around then you don't have a lot of cash lying around! Ultimately, and unfortunately, I think most FTBS are going to be priced out of the market for a while, and will probably end up having to rent the exact same property that they would have bought if the mortgages were available. That's the problem with the argument that the market must fall - property prices behave in a sticky downward manner all over the world, and they generally need a significant force to push them downwards. Lack of new mortgage finance doesn't provide that force, as it simply takes buyers out of the market, and hence reduces the number of transactions. What's needed is either a big rise in interest rates making current mortgages unservicable (as happened in the 1990s); a massive increase in supply (as happened in the 1980s when Maggie sold off all the council houses dirt cheap); or a major fall in economic health and employment (as happened in the 1970s under Harold Wilson). We may yet get the first or last one of these, but it's by no means guaranteeed, and until we do there's not enough downward pressure to create a significant fall in the market. Oh, and peepobaby, I don't recommend that they try to get 25% off the price because of what the house price indices say. I recommend they try and get 25% off the price because they can given current market volumes! It's just like all the money saving articles - you don't make your own wine or use old clothes as toilet paper because you can't afford wine and loo roll, you do it because you can and because it saves you money. Exactly the same principle - at the moment there are very few buyers that qualify for mortgages, so if Chris and Rachael do then they should try and milk it for all its worth! The seller may refuse their offer, but they may turn out to be desperate to move and will accept it. That's nothing to do with anyone's predictions about the market, it's just common sense!

Seems that there are two groups. Those that think that house prices depend on mortgage availability and those that don't. Even Swarbs recommends that buyer should try and get 25% off asking. That says it all really.