So that provides a reason for temporarily avoiding purchases when the prices are inflated and/or mortgage deals are bad.
See purchasing as a hedge. "Worst case" your property becomes worthless, and you're left with nothing when the mortgage is paid down and may have paid more per month on average until them (but if so, while you may have lost vs. renting, properties are now ludicrously cheap, so who cares?). Meanwhile, if prices skyrocket, your equity likely rises at roughly the same rate.
In the long run even those you know who are now seriously underwater are likely to do just fine as long as they can afford to sit tight. Of course people can "play the market" and do a good job timing when it's better to rent and buy again later, but as with anything it's very easy to mistime.
It's extremely hard to come out badly if you are prepared to hold a property long term, though, as long as you don't overstretch, and can afford to sit tight for a few years if you go under water early on.
Even if you end up paying more per month for a mortgage initially (I never did), chances are you'll be able to remortgage and bring the rates down to below rental costs within a couple of years once you've built up a bit of equity, and from then on save money every month on top of repaying the capital on the mortgage and be left living "rent free" apart from maintenance costs and insurance at the end of it.
I'll never go back to renting - if I'd bought as soon as I could, I'd had roughly about 200k pounds more equity today, and would have had roughly the same monthly costs for most of that time. As it is, I'm now paying half as much on a mortgage as I would to rent the same size property, and my debt is dropping in absolute terms, and my interest rate is below inflation, so in real terms I'm getting fantastic value.
"It's extremely hard to come out badly if you are prepared to hold a property long term"
You seem to equate some appreciation in house value with "not coming out badly". Well, if that's all you want, then fine. You can consider things as not having come out badly.
However, if your definition of "not coming out badly" is actually more like, "having done better financially than renting" then it's a much more complicated question. Renting can leave you with better financial outcome even in cases where a hypothetical purchased house appreciates greatly. Not always, of course, but appreciation in value of the house is just one among many factors in the rent vs. own equation.
See purchasing as a hedge. "Worst case" your property becomes worthless, and you're left with nothing when the mortgage is paid down and may have paid more per month on average until them (but if so, while you may have lost vs. renting, properties are now ludicrously cheap, so who cares?). Meanwhile, if prices skyrocket, your equity likely rises at roughly the same rate.
In the long run even those you know who are now seriously underwater are likely to do just fine as long as they can afford to sit tight. Of course people can "play the market" and do a good job timing when it's better to rent and buy again later, but as with anything it's very easy to mistime.
It's extremely hard to come out badly if you are prepared to hold a property long term, though, as long as you don't overstretch, and can afford to sit tight for a few years if you go under water early on.
Even if you end up paying more per month for a mortgage initially (I never did), chances are you'll be able to remortgage and bring the rates down to below rental costs within a couple of years once you've built up a bit of equity, and from then on save money every month on top of repaying the capital on the mortgage and be left living "rent free" apart from maintenance costs and insurance at the end of it.
I'll never go back to renting - if I'd bought as soon as I could, I'd had roughly about 200k pounds more equity today, and would have had roughly the same monthly costs for most of that time. As it is, I'm now paying half as much on a mortgage as I would to rent the same size property, and my debt is dropping in absolute terms, and my interest rate is below inflation, so in real terms I'm getting fantastic value.