Should i sell my house

[neilclem]

With all the evidence of a slow in, and possible decline of, the houseing market, would it be prudent for me to sell my house now. That way, I can invest the profit that I have made on it. I can continue to save some money too. That way, if the market crashes, I can buy and if it steadies out, I can also buy. So, either way, Im not losing out. The only problem is that I am risking potential profit if the market doesnt steady for a good few months - I have already made 20k in 6months on the house! Does anyone else see sense in my prudence?

[Oneeyedvic]

Firstly, you have not made �20,000 if you haven't sold it yet. An estate agent may have valued it at �20k more, but you have to sell it. You will then probably have to take an offer of �5k less than asking price. With solicitors fees and maybe a redemption on your mortgage you lose another �1000. Then if the market "steadies" you need to buy another property. Legal fees, mortgage arrangements, land searches etc PLUS stamp duty and you have lost another �4000. So now you have possibly made �10,000 (not quite the same as �20,000 but still a decent amount) Secondly, four years ago, I was about to sell my house, put �90,000 in the bank and go into rented for a year whilst the market crashed around me. Thank God I didn't. Two years later I sold it for �133,000 and purchased another property. If you want to take the risk, good luck, but I am not convinced. And if prices continue going up, you are priced out of the market completely.

[BenDToy]

Sounds like a sure way of losing money, or your position on the housing ladder. I second everything that Oneeyedvic says. I would also add that you are assuming that you are better equipped to guess the top and bottom of the market, than most people. Have you ever heard the expression "Never try to catch a falling knife"? You have not "made" any money on your house. 1) Because you haven't sold it and 2) Because unless you are going to emigrate, or live in a cave, you will need that money to buy somewhere else to live. If that house is further up the chain than the one you are in, then the gap between what you have and what you want is even larger. And meantime you are paying rent and living in a house that isn't what you want to live in. Think very carefully. And �20k doesn't go very far in the housing market as Oneeyedvic suggests.

[Phantaxus]

The housing market always weakens as winter approaches. Wait till spring if house prices are still on the way down then you could make money but if you get it wrong you will lose big.

[Gooby]

Unless you need to move, you should hold on to your property. I agree with all above messages. Nationwide just said the housing prices were still going up in September. Who do you believe? It seems the spin on the media is designed to frighten consumers into staying put so that the BoE doesn't have to increase the rate again and further slow the economy. If there is an increase in November, it will not cause a crash, since employment is good and people can afford their mortgages. Prices MAY not move much over the winter, but then again, they may move slowly. If you're renting, you're buying a property for someone else. Hold on until Spring and then make a decision. I'm a firm believer that the market will move again in Spring.

[Oneeyedvic]

I think that the market will crash late next year (probably around this sort of time). Rates are currently 4.75%. I think that if rates were to go above 6% thiswould crash the market. That is one of the reasons that the BOE is trying to scare people - it doesn't want to have to increase rates but it doesn't want the housing market to spiral out of control. Although in theory the BOE controls interest rates the government have a big say it the matter. The Labour party will not go into an election with people getting repossessed. (Bear in mind that people fixed for a few years when rates were at their lowest (3.75) - these people may not be able to keep on paying their mortgages. Also, with regard employment, although the figures look good, I do wonder how much of this is Labour Spin - Norwich Union, P&O, both making / made redundancies of over 1000 people. With all the outsourcing of call centres and manufacturing dying (look at Jaguar) not sure that the economy is in good shape. Well thats my two bits worth. But as I said, i thought a crash was going to happen 4 years ago (though to be fair I now work in the finance industry and have a better knowledge now)

[neilclem]

Thank you all for your advice. I have taken on board everything that has been said. I think it would be good to wait out the winter and see what happens next year. I am in the Army and either way, am due for posting in July next year, so will be selling around then. Once again, many thanks to you all.

[johnjbloomfi]

where you gonna live? What happens if the housing market keeps shooting up and you couldn't even afford to buy you old house in a year?

[slimfandango]

I can offer some guaranteed advice from my experience of the housing market: you will not really find profitable information in the press. That's the one thing I can say for sure! "House prices set to rise!!!">well, it tends to be a company (like a building soc) doling out that kind of info. "Market about to crash!!!!">tends to be a paper trying to sensationalize for a little increase in readership. It's a very hard call to know where the market will go. This is to some extent independent of the decision to sell your home. Renting sucks. The market will come back at some stage anyway. Where else are you going to put your money at 5% for cash and a slightly dodgy equities market?

I play a lot of poker and see a lot of parallels between it and your current decision. You never have hard and fast information to act on: e.g. "prices will rise/fall." But you will probably lose money in the long term if you make decisions ill-informed of the odds. For example, I have 400K in cash (say), and I want to put it all in property. I do. Prices go up in a year by 10%. Was I right? No, I wasn't. They did go up, but the odds were against a rise.

I'd remember a couple of things before putting a ton of cash into the UK property market at the moment:

-UK average household non-mortgage debt is at �40K. Yes, that's �40K non-mortgage.

-The IMF, yes, THE IMF, has put the UK on a credit risk watch warning over the overinflated housing market. Watch out!

[stitsevol]

I have just sold at the top of the market and the interest on the �300.000 I will now invest in a high interest account will cover the rent on a nice house and will also give me a profit each month until I buy when the market is well down which is what I did last time buying for �67,500 8 yrs ago and selling for �300.000 now and I am certain it is due for a good fall.

[sparx]

Why not try thinking of your house as a home, a bolt hole, a haven of tranquility, your place, your space. It's very unlikely you will lose equity in the longer term and the return on your investment will be much better and more tax efficient than the 4 or 5% obtainable in an investment account.

[GWR71]

As others have pointed out, you haven't made anything on your house until you've actually sold it.

On the subject of a possible crash, well... it's a fact that house prices have increased out of all proportion to salaries, and more people than the mortgage lenders would ever want to admit have only been able to afford houses by taking out self-certification mortgages of perhaps six or seven times their actual earnings (with a self-cert mortgage you don't have to provide any proof of your income, so you just take the amount of money you need to borrow and divide it by three to get the salary figure that you put down on the application form).

This kind of technique only works while rates are low. When you've over-borrowed to the tune of five, six, seven times your real income, you don't have any breathing space if/when interest rates rise - and it can only take a small increase to tip you over the edge.

Sadly, these over-borrowers are largely the people who have been fuelling the ludicrous increases in house prices over the last few years. Unless salaries start rising rapidly (and there's no evidence that that is going to happen), my feeling is that, at best, prices will rise much more slowly than they have done recently. Stagnation seems more likely than big rises or a crash, at least in the short term.

[Marsh]

Not mentioned so far is that profit on the sale of your main residence is tax free.  When you invest money, the interest is taxed. 
If the Army is going to house you during your new posting, consider renting your house out.  You get a three-year period of grace after leaving before capital gains tax kicks in and there are tax concessions for landlords, I have been told � ask an accountant on that one.