I'm considering buying a 3 bed house in Bristol, my sister would go halves on the mortgage and i would live in and act as landlord to rent out 2 bedrooms. I've done all the calculations so i'm pretty sure we can cope with interest rate increases or downturns in the rental market in bristol, but the killer in deciding whether its worth it or not, is the possibility of a house price crash
flash movie on the subject
my general feeling on it is that there must be some limit on how high house prices can go and given that its getting really hard for first time buyers then it must be close to that limit. Also the number of insolvenices each year is rocketing and loads of people are taking all the equity out of their houses to fund their debts (and this keeps the economy buoyant), plus lots of people expect interest rates to creep up over the next several quarters so i'm thinking theres bound to be a recession/house price drop some time soon and houses won't be worth the same for about ten years.
But then i look at the graphs and for the last house price crash, house prices didn't actually fall much, instead it was just that house prices dropped a little and inflation/interest rates were really high so the real value of the houses crashed but in terms of number of pounds they didn't. Also i would be renting out 2 rooms and i don't think rental rates change as rapidly or as much as house prices so it shouldn't affect me so much.
Anyone got any advice?