The last year has seen lots of doom and gloom in the property market. On the one hand, high inflation has squeezed the incomes of many would-be buyers, the Bank of England (incorrectly) forecasted the UK would spend most of 2023 in recession and interest rates have pushed up mortgage costs.
All that might make it seem like now isn’t the best time to buy a home or seek mortgage advice. But if you have the income to do so, now may offer some very good reasons to go into the market.
Firstly, there is the matter of house prices. New data from the Office for National Statistics (ONS) has revealed that the UK has just seen prices fall over a 12-month period for the first time in over a decade. The year to September saw a dip of 0.1 per cent, while revised figures for August indicate a 0.8 per cent decline.
There were some variations between different parts of the UK, with prices actually up 2.5 per cent in Scotland and 2.1 per cent in Northern Ireland, but down in England (0.5 per cent) and Wales (2.7 per cent).
Similarly, prices in different English regions varied, from a rise of 1.6 per cent in the north east to a drop of 1.6 per cent in the south west. This reflected the fact that the four regions witnessing falls were all to the south of the Severn-Wash line.
Falling house prices are a symptom of a weaker market, usually affected by wider economic circumstances. Some potential buyers are put off by fears that these may jeopardise their jobs. But if you are in secure employment, now could be a great time to grab a bargain, especially for those living in the south, where prices are traditionally higher.
Indeed, there are further reasons to support such a step. One is that if you currently rent, this is becoming increasingly expensive at an alarming rate.
Further new ONS data has revealed rents are now rising at a rate of 6.1 per cent a year. This is the highest on record, albeit for a data set that has only been collected since 2016. Overall, England’s rate was slightly below the UK average at six per cent, with London seeing the highest increase at 6.8 per cent.
These soaring costs may be partly caused by the rising cost of buy-to-let mortgages as interest rates have increased, but expensive renting also counterbalances the consideration that mortgage borrowing is costlier than it was.
In addition, a further factor that can make now a good time to buy is the increasing likelihood that rate rises have peaked. After 14 successive rate hikes to 5.25 per cent, the Monetary Policy Committee (MPC) recently held the base rate for the second month running.
That alone does not guarantee that rates will not rise again and still less that any cut is imminent, as the minutes of the November meeting stressed, but with the consumer prices index rate of inflation plunging from 6.7 per cent in September to 4.6 per cent in October, the latest signs are very promising.
Indeed, it may be that the housing market could pick up again sooner than expected, which means now could be the optimal time to see a mortgage advisor.
Interestingly, Halifax has just seen an increase in its house price index this month (November) and, although annual figures are down, house prices climbed by 20 per cent during the pandemic, so the index is still higher than expected and it hasn’t completely course corrected for this rise.