Is Now a Good Time to Buy?

New build flats with for sale signs on their balconies
Author: Samuel Beckingham
Updated: Dec 06, 2023
3 minutes read

Current Market

Since interest rates have been sky high, the often pondered question is whether now is the right time to buy. With rents increasing, the cost of living sapping people’s pay packets and the availability of housing stock all being several factors affecting whether anyone can afford to buy a home, it’s come as no surprise.

It’s not only renters that are struggling with this decision either. Those who fixed in their mortgages at a low rate of 1–3% may be put off by the remortgaging options available in the market at the moment, which may be at least double their current amounts. With inflation settling and the Bank Rate stabilising, this could point to signs that mortgage rates will fall across the next year.

Lower Asking Prices

Despite the struggles currently facing buyers, sellers have been knocking off substantial amounts from their asking prices. Just over 4% is common to have taken off a home valuation, or around £12,000. According to Zoopla, 2024 is widely expected to see house prices fall even further.

Higher mortgage rates are causing buyers to reconsider how much they can afford. Should the Bank of England start to decrease interest rates by the summer, mortgage rates will fall and there will be an uplift in the housing market this time next year.

Opportunities for Buying

With falling house prices across the year, it could be beneficial to get in early, with the potential to remortgage at a lower rate in future. Alternatively, as house prices are never fast to climb, you may want to consider putting off the purchase until lower interest rates are introduced to the market again.

When considering your options, it’s pertinent to seek the advice of a mortgage broker. The offers on mortgages are only valid for 6 months, but this gives you plenty of time to seek alternative options. The benefit of this is that it could save you from higher interest rates at a later date. Once the lender makes an offer, it cannot be withdrawn, even if it’s no longer available for others.

Government Targets Not Met

The government put a target in place to build 300,000 new homes a year by the mid-2020s in its long outdated, pre-pandemic 2019 manifesto. It was announced last month that this year’s target has also not been met, but this milestone has never been reached. With fewer houses being built and available, this puts pressure on existing housing stock and is another barrier for anyone seeking to get out of the shackles of renting.

It’s not only private residences that have this effect either, as much more social housing is necessary to remove much of the demand on the private rental sector. Although it’s a legal requirement for developers to build a percentage of affordable housing on a new development, they can often get around this by simply paying the local authority instead. As the developer doesn’t deem it financially viable to build these affordable homes, fewer of them are being built.

Whether you’re thinking about purchasing soon or putting it off until next year, it’s really a question of how urgently you’d like to own your own home. Before you undertake any huge financial decision, you should consult independent advice.