Is now a good time to buy a house? What experts say about current UK house prices and what could happen next
With the latest figures from Nationwide showing that house prices fell at their fastest annual pace for nearly 14 years in May, prospective buyers may be wondering: Is now the time to strike?
Thanks to high interest rates and the associated difficulties of borrowing, prices are sliding. But nobody knows how much further they have left to fall, with some people even talking about the potential for a full-on crash.
So will buying right now get you a great deal, or shoulder you with an overpriced burden? Experts told i that nobody can predict 100 per cent accurately what happens next. But there are a number of factors you can consider when you are making that big decision: to buy or not to buy.
Mortgage rates
With higher interest rates feeding through to the mortgage market, fixed-rate deals have been creeping up, making borrowing less affordable. However, the consensus seems to be that these rates are set to stabilise.
“While you’d be forgiven for thinking that we’re living in precarious times, things are expected to get easier, with no further hikes expected and mortgages predicted to remain fairly stable moving forward,” says Colby Short, CEO and co-founder of estate agent comparison site GetAgent.
“Average fixed rates are falling on a week-by-week basis meaning mortgage rates across the board are also falling – making it that bit easier for buyers to secure the house of their dreams.”
Adrian Anderson of property finance specialists Anderson Harris, says that even if you have to take on a high fixed-rate for now, it may still be worth it. “It’s usually better to purchase a property at a lower purchase price with a more expensive mortgage in the short term than pay a higher price for a property and pay a cheaper mortgage in the short term.”
Expenses of renting
Part of weighing up whether to buy is considering the alternative. For some that will be staying put in a property they already own, but for others it means remaining subject to the equally turbulent rental market.
“Rents are also rising quickly as many landlords have sold their properties following changes to mortgage debt relief and stamp duty, meaning there are less properties available for rent,” says Rajan Lakhani, resident money expert at smart money app Plum. “And owning a home means you’re paying off your own mortgage rather than someone else’s.”
Investing in the right house
While they might all be subject to the whims of the market, not every property is alike.
“One strategy to protect yourself from potential price falls once you’ve purchased a new property is to consider homes with value-adding potential,” says Pete Mugleston, managing director and mortgage expert at onlinemortgageadvisor.co.uk. “By renovating and selling a ‘doer upper’ home, first-time buyers can secure a good deal and potentially increase their investment returns.”
He also suggests that those who need more space may find now a good time to upsize, since larger homes will be available for lower prices, even though you may also get a smaller amount for your existing property.
Getting the right price
Experts agreed that we are now in a buyer’s market. “There is now more choice for buyers and prices are subdued,” says Jonathan Rolande, from the National Association of Property Buyers. “What’s more, as competition has reduced, there is less pressure to decide quickly and bidding wars are consigned to history.”
Jonathan Hopper, CEO of Garrington Property Finders, says that those at the top end of the market, who tend to be less reliant on mortgage borrowing, are in a strong position.
“Proceedable buyers who have their finances already in place are often finding themselves in the enviable position of having sellers clamour for their attention and even agreeing to a sizeable discount just to get a deal done,” he said.
What happens next?
There is certainly room for prices to continue to go down, says Liam Ryan, co-founder of Assets for Life. “We are already starting to see prices fall in certain parts of the country so it’s possible that values may drop over the next two years,” he says.
“However, when you embark on property investment you have to be in it for the long-term, property will always bounce back and ultimately we see a lot of areas in the UK double in property price over 10 years – the average country-wide is 7 per cent.”
Mr Short of GetAgent agrees. “While prices have dipped for now, in the long-term they will inevitably rise again – so if you fall in love with a property, and are in the financial position to afford to move – now could be a great time to secure a good deal. In short, it’s always advisable to ignore the headlines and do the right thing for you and your financial situation.”
