With House Prices Falling Again, Is This The Perfect Time To Buy?
The latest house price figures from Halifax show a 1.8% drop on last year’s average house prices for the third quarter (www.thisismoney.co.uk). As prices continue to fall, is this a good buyer’s market?
Price Crash
There has been a lot of speculation over the past few years about house prices and whether or not it is a good time to buy/sell/rent. This uncertainly has largely been caused by the sudden drop in prices in 2007, at a time where people had been buying with abandon. Many agree that it is unlikely that we will see prices rise to the same extent that they had done by 2007, but the ‘price crash’ caused by the financial crisis, was not quite as bad as the media would have had us believe.
Prices may have dropped somewhat suddenly, but they did not reach the low prices that were being paid before the sharp peak. The average house price according to the Halifax report in September 2011 is £161,132 – this is down 29.9% from July 2007, and once again level with the prices that we saw nine years ago in September 2002.
Click to enlarge the image taken from www.mountaininvestor.com/blog/?p=1020
We have once again seen a slight decrease over the past year, but prices still remain well above those of 2009, could this encourage more people to put their properties on the market?
To Buy or Not To Buy (rent), which is cheaper?
It is no secret that it is more difficult to get a mortgage agreed than it was in 2007, but as long as you are able to raise the money for a deposit, then banks are still lending. With rental prices increasing, many are finding that mortgage payments would in fact be more affordable, and with interest rates at 0.5% it is certainly a tempting option, but is it a realistic one if deposits cannot be raised? With the debt levels currently being experienced in the UK, how many people can actually raise the massive 20% deposit often required for a mortgage?
Many first time buyers are finding themselves stuck paying high rent prices without the option to get onto the property market for this very reason as the majority of their wages go out for rent each month, is there anything left over to save for a house?
Crisis Point
For those that can afford the deposit, it must be tempting to consider whether it is cheaper to move into their new purchased home, or to rent it out, with the potential monthly income of around £718 (the average cost of renting now-a-days). Many experts are saying that renting is ‘the new normal’ with many starting to believe there is no other option, but are the media influencing this with shocking headlines about the ‘property crisis’, and the country being at ‘crisis point’?
Action Needed by the Government
Everyone will have their own opinions on this matter, but a general consensus seems to be that action is needed by the Government to make secured borrowing easier in a climate where pay day loans seem to dominate, and to help those trying to get their feet on the property ladder. As a renter myself, I am personally happy to continue to do so for the time being, but knowing how much money I would need for a deposit eventually does make me worry about whether I should start saving up already.
Winning the lottery would be an ideal solution, but as someone who doesn’t play, my chances of winning are slightly reduced, so a more practical solution is required. How early do people need to start thinking about saving for a mortgage? And on the same note, when do we start educating individuals about the financial requirements and challenges that they will face after leaving full time education – be it school, college, or university?
Tags: buy, buy v rent, buyer, buyer's market, house prices, rent
This entry was posted on Monday, November 14th, 2011 at 11:29 am and is filed under Housing, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.