There are many different views on when the correct time to buy a house for first home buyers is. Does building up a higher deposit or entering the market as soon as possible make more sense?
The general rule has been that the earlier you enter the market, the better, as prices have risen steadily in the recent past. This assumption may no longer hold water however, as for the first time in a decade, house prices have fallen in London.
A drop of £5,000 on average has been recorded for property in the capital, which is the first annual fall since September 2009 according to the Office for National Statistics and HM Land Registry.
The UK overall experienced growth in house prices in opposition to London, however it has been shown in the past that London predicts what will happen in the rest of the country to some extent.
Shaun Church of mortgage brokers Private Finance indicates that the lack of affordability of London property has imposed a cap on growth:
“It’s evident that house prices have reached a ceiling in many parts of the capital, and with the average house price in London still remaining over £470,000, a fall in prices would be a welcome change for many struggling potential buyers.”
Should you rent and wait for prices to fall further? It depends on the size of the drop that occurs. If the average home, valued at £471,986 fell by 1%, this would be a saving of £4,720. This does not compare favourably with the average London rent of £18,828 according to property firm HomeLet.
A drop of 4% would be necessary in order to make renting the preferable strategy according to Telegraph Money.
Dominick Lipnicki of Your Mortgage Decisions says that:
“Is this the right time to buy your first home?” he said. “There is no simple answer to this question as none of us can foresee the future. But I would suggest that you do not buy a property, thinking that, in the short term at least, you are guaranteed to make a profit.
“That said, we still have a chronic shortage of homes and this alone will ensure that property prices remain high, even if a slight downward adjustments occurs.”
Are you thinking of making a move this year? Our Mortgage team here at Westminster Wealth can ensure that you receive the most suitable mortgage for your personal circumstances, needs and objectives. Contact us today.
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House prices are falling – but here's why you shouldn't wait to buy a property