Is It A Good Time For FTBs To Buy A Property?

July 21, 2022

House prices have been soaring over the last few years, leading experts to believe that it will not be long before the bubble will burst, and costs will come crashing down. For first-time buyers (FTBs) trying to get on the housing ladder, it can be confusing to know whether it is a good time to purchase a home or a bad one.

Rising house prices

The rate of house price growth has been in double digits since the start of the year, with Halifax reporting figures of between 10.5 and 11.2 per cent since February. As the average house price has now reached a record high of £289,099, this means they have gone up in value by around £28,000 since May 2021.

This has been a trend for the last few years, and property prices have actually risen by as much as 74 per cent since 2012, reaching 84.2 per cent in some areas.

Is the bubble about to burst?

As a result of surging house prices, many experts believe there will be a crash, causing property values to plummet. This is likely, as it is becoming increasingly difficult to afford to buy, particularly for FTBs, who have to raise their deposit from savings.

Home-movers, on the other hand, will benefit from the increased equity their current residence has earned over the last few years, which will go towards the next purchase. However, FTBs do not have this and have to simply keep building up their savings pot.

In addition to this, rising mortgage rates, the cost-of-living crisis, and a lack of houses on the market will mean fewer can buy and, eventually, prices will need to drop.

Russell Galley from Halifax stated: “The housing market has begun to show signs of cooling. Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow.”

FTBs who are worried about ending up in negative equity if their home falls in value after they buy it do not have to rush into purchasing. Safestyle Windows revealed that the average age of FTBs is now 28, with this rising to 29 in Greater London.

Is it a risk to buy now?

The more the media reports about a potential housing market crash, the more this deters buyers and means there will be an increase in the number of unsold houses for sale. Subsequently, vendors will lower their asking price to attract FTBs and home-movers, and the values will gradually decline.

However, personal finance expert Gemma Godfrey told Sky News: “There’s no guarantee that house prices will fall, especially in sought-after areas where there are more people looking to buy than sell.”

She also noted that FTBs could benefit from purchasing sooner rather than later, as mortgage rates are likely to continue increasing, particularly for those wanting a fixed-rate product.

Ms Godfrey also stated it could become more difficult to be accepted for a mortgage, as banks are making the criteria stricter.

The expert recognised that house buying is an “emotional” decision, concluding: “The risk of losing it to another buyer might outweigh the benefit of waiting for a possible drop in price.”

If you’re looking for advice on remortgaging after bankruptcy, get in touch with us today.

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