Is Now The Time Buy A House?

The last six to ten months has seen the UK economy make significant recovery since the global financial melt-down last year. It is true that employment rates are not at their best but they seem to be holding, interest rates are still at all time lows and house prices seem stable, so is now a good time to buy UK property?

There is no definitive answer to that unfortunately. It really depends on how reliant you are on mortgage finance. If you are a saver, have funds available and are able to put down at least a 20% deposit the “yes”, now is a good time to buy. Well sort of.

On one hand, with interest rates at an all time low, and some 40,000 properties expected (RICS prediction in February) to suffer from mortgage arrears this year, and many more motivated house sellers needing to stop repossession fast, now is the time to pick-up a real bargain and fund the purchase with cheap finance.

On the other hand, the BoE had to spend it’s way out of the financial crisis. This seems to have worked but it does has consequences. The incoming government is now going to be forced into cut-backs. The Conservatives have hinted at job losses in the public sector, which may or may not be swallowed up by the private sector. If you work in the public sector I would certainly urge you to tread with caution if you are thinking about taking on a mortgage commitment.

The current wisdom dictates that no one that would be financially stretched by taking on a mortgage should attempt to do so within the next 12 months. The consensus of opinion is that interest rates will not be raised until at least next year, but no one knows for sure.

For anyone who doesn’t have at least a 20% deposit now is probably not a good time to buy. The ease of getting a mortgage may have improved, in that people are far more likely to get a mortgage with a 10% deposit, any loan given of more than 80% LTV will likely be an expensive one.

In general now may not be the best time to buy a property in the UK, because of the factors mentioned above. Though affordability improved during the crash, the increases since largely canceled that out, and, due to that and the requirement for a deposit homes continue to be unaffordable for the most part. Many industry experts imagine that this could combine with the mortgage situation along with the financial anxiety to bring a second correction, so now is probably not a good time for any of us to acquire a house or try to find property investment deals that can yield effectively in the short to medium term.

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