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Is Now the Right Time to Buy a House? Everything You Need to Know

In recent decades, the escalation in home prices has surpassed the average increase in incomes. As of March 2021, the typical home cost 65 times more than the average UK home in January 1970, while wages have only risen by a factor of 35.8. Consequently, numerous renters are pondering whether they will ever attain the possibility of purchasing their own property.

In recent decades, the escalation in home prices has surpassed the average increase in incomes. As of March 2021, the typical home cost 65 times more than the average UK home in January 1970, while wages have only risen by a factor of 35.8. Consequently, numerous renters are pondering whether they will ever attain the possibility of purchasing their own property.

Nevertheless, a glimmer of optimism might be emerging. The latest statistics indicate that house prices in September 2023 were 0.5% lower than a year earlier, and there are prognostications suggesting a potential 5% decrease in house prices over the course of 2023 due to high mortgage rates and economic uncertainty. Should this materialise, prospective first-time homebuyers might encounter a slightly more accessible entry into the housing market.

However, does this indicate that the present is an opportune moment to invest in property? Explore whether purchasing a house now holds merit or if patience is advisable in this comprehensive guide.

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Table of Contents

Will house prices drop in 2024?

It has been projected that house prices would decrease by 5% in 2023, and further declines are anticipated in 2024. Presently, the most recent data indicates a deceleration in house price growth. In October 2023, house prices showed a decrease of -1.1% compared to a year earlier, with the average UK house now priced at £291,000. For many individuals, even a slight slowdown in the escalation of house prices would render the prospect of homeownership more affordable, making 2024 an opportune year to make a purchase. In fact, the average discount buyers are securing from asking prices has increased, now standing at 4.2%, equating to £12,125 off the original price. Hence, if you are contemplating whether it is the right moment to purchase, taking action now could potentially allow you to negotiate a reduced price.

Should you be contemplating the transition towards homeownership, it is prudent to engage with a mortgage broker to discover the most suitable option for your circumstances. Given that the majority of mortgage offers remain valid for only six months, it is essential to secure the best offer tailored to your needs. This approach will bolster your purchasing capacity and facilitate the finalisation of a deal. Failing to secure an optimal deal initially may potentially lead to renegotiating a new arrangement at a later stage, possibly entailing a higher interest rate.

When is the best time to buy a house?

Traditionally, spring and autumn stand as the most bustling seasons for house purchases, owing to the increased availability of properties and the eagerness of individuals to commence their homeownership journey if they have resolved to do so in the current year. Conversely, summer and winter typically witness a decline in activity, rendering these periods opportune for house acquisition due to a reduced number of prospective buyers. During times of decreased demand, you may discover the prospect of securing a bargain more feasible.

Amid periods of economic uncertainty, purchasing a house can evoke heightened apprehension, irrespective of the seasonal timing. Escalating inflation rates and increased mortgage interest rates might create the impression that the current juncture is unfavourable for house acquisition. Nevertheless, if you possess the financial means to secure a mortgage presently, it’s advisable not to be dissuaded by alarming headlines. At present, there exists reduced buyer competition due to a hesitancy among individuals to embark on this significant step. Coupled with the deceleration in house prices, this scenario could enable negotiations for a lower house price.

Should I buy a house now or wait until 2025?

The decision of whether to proceed with purchasing a house now or await 2025 hinges on the urgency of your desire to become a homeowner. Our forecast suggests that mortgage interest rates are anticipated to stabilise in 2023, reverting to a level reminiscent of pre-pandemic times, approximately within the range of 4% to 4.5%. Presently, there are signs of a shift, as although interest rates experienced an earlier upward trajectory in the year, they have gradually declined since the onset of August.

This pattern emerges due to the Bank of England (BoE) having increased its base rate on 14 consecutive occasions, leading lenders to adjust their mortgage interest rates accordingly. Although a continued decrease in mortgage rates is expected throughout 2024, there remains uncertainty surrounding the possibility of additional rate hikes. Therefore, if you are currently in a position to do so, initiating your journey towards homeownership might prove more beneficial sooner rather than postponing it until 2024.

Some homeowners, especially those who locked in a low fixed rate between 1-3% during the pandemic, might face difficulties when seeking to remortgage for a new deal or transitioning to another property. If you find yourself in this scenario, it’s recommended to consult with an affordability expert. They can offer advice on potential strategies to make your repayments more feasible and examine tailored options based on your specific circumstances.

Many lenders factor in expected future rate increases when determining the interest rate for a fixed-term mortgage product. As a result, changes to the base rate in 2023 do not automatically lead to an immediate rise in mortgage interest rates.

Although it might initially appear disheartening, the present time could actually be advantageous for buying a house. The decreased number of individuals currently seeking to purchase homes reduces the overall demand in the market. Consequently, this situation might potentially result in a decrease in house prices.

Whether you face difficulties in saving up for a house deposit or aim to make monthly repayments more feasible, We are here to help. Our distinguished team of mortgage specialists, recognised for their expertise with awards, is adept at identifying personalised solutions that suit your situation, improving your mortgage affordability. To begin, all you need to do is contact us. 

Should I buy a house now?

This present time might be an optimal period for contemplating the purchase of a house. Often, individuals allocate more funds towards rent than they would towards mortgage payments, hinting that homeownership could potentially lead to reduced monthly expenses, particularly if mortgage rates decrease in the future. Furthermore, if house prices continue to decline in 2024, it would mean a diminished need for borrowing in securing a mortgage. However, it’s crucial to act swiftly to take advantage of lower house prices. Additionally, a reduction in mortgage rates might escalate the demand for houses.

Owning a home offers enhanced stability, alleviating concerns about potential eviction by a landlord. Moreover, it provides the liberty to decorate your new residence in alignment with your preferences. Commencing the journey towards purchasing your own property at an earlier stage allows you to initiate mortgage repayments, contributing towards your own equity instead of your landlord’s. According to a report by the Intermediary Mortgage Lenders Association (IMLA), opting for mortgage payments rather than renting could potentially leave buyers approximately £352,500 better off on average over the subsequent 30 years, even in cases where house prices do not see an increase.

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Should I buy a house or wait for recession?

Postponing a house purchase in anticipation of a recession involves certain risks. Although there is a possibility that house prices might decrease, it’s crucial to consider potential fluctuations in your financial situation. Recessions frequently lead to job redundancies, which could hinder individuals from obtaining a mortgage, despite diligent savings. Additionally, there’s no guarantee that a recession will occur. Even if it does, its impact on property prices might not persist long enough to create an optimal window for purchasing a house.

Instead of waiting for a recession, there are practical options available to improve your mortgage affordability and increase your ability to purchase a house sooner. Our expert team of mortgage specialists collaborates with a network of over 100 mortgage lenders, excelling in assisting buyers to secure their own place, even amidst uncertain situations.

Should I rent or buy a house?

The argument between renting and buying lacks a clear-cut answer. It might stem from past unfavorable encounters with landlords or simply a longing for a completely owned home. Many people dream of having a place they can call their own. However, renting sometimes carries negative connotations, even though it might suit some individuals better than buying. The optimal choice for you depends on your goals and financial circumstances. Here are various factors to contemplate:

Reasons to buy a home:

Should I buy a house with my parents?

Entering the property market can present challenges without assistance from family, often referred to as the “Bank of Mum and Dad.” If you find yourself single, encountering obstacles in saving for a deposit, or managing a low income, you might consider the possibility of buying a house in conjunction with your parents.

Fortunately, it’s not necessary for your parents and grandparents to be millionaires ready to offer substantial sums of money. There exist several alternative methods to enter the property market, such as guarantor mortgages and family-assisted options. These include:

Income Boost

If you’ve succeeded in saving a house deposit but lenders are unwilling to provide a mortgage large enough to purchase your desired home, an “Income Boost” could be the solution to address all your concerns.

In essence, it entails including a parent’s income in the mortgage application alongside your own. This approach can simplify the process of meeting lenders’ mortgage affordability criteria and instil confidence in them to extend a larger loan offer to you.

Deposit Boost

If you’re facing challenges in saving a deposit, a “Deposit Boost” could be the solution you seek. To qualify for a Deposit Boost, you’ll require assistance from a friend or family member who owns a home and is willing to release equity from their property. This released equity will be contributed as a gift towards your deposit.

Family Springboard mortgages

A “family springboard mortgage” maximises the use of a relative’s savings without permanently removing their funds. Rather than offering the deposit as a gift, your family member will be required to secure their savings in an account managed by the lender for a predetermined duration.

By consistently making your monthly mortgage payments on schedule, the individual providing the boost will retrieve their savings (plus interest) at the culmination of the agreed-upon term. Refer to our guide on springboard mortgages to delve deeper into the details.

Dynamic Ownership

Through “Dynamic Ownership,” you and up to five others can collectively buy a property as co-owners. Each owner will possess individual equity in the home, and all contributions are monitored over time, ensuring transparency and fairness in each person’s share. This can serve as an excellent substitute for renting, especially if you and your friends or siblings are in similar stages of life.

Another option is co-buying with a parent. Through “Dynamic Income Boost,” similar to a standard Income Boost, your parent’s income will be included in the mortgage application. However, they will also participate in the monthly repayments in exchange for equity in the home. Additionally, they have the choice to provide a deposit for the property, referred to as “Deposit Loan,” once again in exchange for equity in the property.

We’ve created a guide that delves into possible reasons why credit scores could decrease and a strategy to maximise your chances of owning or investment.

  • What factors should I consider to determine if it's a good time to buy a house?

    Various factors impact the timing of buying a house. Consider the current interest rates, housing market trends, your financial stability, employment situation, and long-term housing needs. Consulting with a financial advisor or a mortgage broker like Active Mortgages can provide valuable insights.

  • Is the current housing market favourable for buyers?

    The housing market can fluctuate, influencing buyer opportunities. Factors such as inventory levels, housing demand, and pricing trends play a role. Keeping an eye on local market conditions, trends in property prices, and expert opinions from real estate professionals can help you make an informed decision.

  • How do interest rates affect the decision to buy a house?

    Interest rates significantly impact the affordability of a mortgage. Low-interest rates generally make borrowing cheaper, potentially reducing monthly mortgage payments. However, it's essential to consider how sustainable these rates are over the long term and how they fit within your financial plans.

  • What are the benefits of buying a house now versus waiting?

    Buying a house now might offer advantages like lower interest rates, a wider selection of available properties, and potential investment appreciation. However, waiting might allow for better financial preparedness, more savings for a larger down payment, or a more stable job situation. Balancing these factors is crucial in making the right decision.

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