Will Leyland, 05 May 2022
Whilst a number of renters might be thinking of buying a house in the near future, could it actually be best to hang fire for now?
Many renters are quite happy renting their home, after all there’s plenty of benefits. Apart from not being responsible for maintenance costs, you’re in a much better position to be able to move around quickly and relatively easily, and the market has become much more professionalised in recent years.
Things like enormous deposits, elongated deposit disputes, huge fees and trouble getting things fixed are increasingly rare, especially if you go through a reputable estate agent or lettings company.
The improvements in the industry have resulted in a massive change in attitudes towards renting, including things like the average age and profile of UK renters. In fact, in a few years there will be more over 50’s renting in the UK than ever before.
That being said, a great number of renters are thinking of buying a house of their own in the longer term and are currently saving up for a house deposit - something that is a perfectly understandable and the aim for many people.
One question that gets asked a lot is when is the best time to buy a house? Considering that prices have been rising on average by around 10% per year since the pandemic, there’s understandable unease that the longer people wait the more they’ll have to save to have a chance of taking that first step onto the property ladder.
The short answer to anybody asking themselves that question is, if you’re looking to buy a home rather than an investment, then there isn’t really a bad time, it’s whatever is right for you.
Having said that, are there some other factors to consider about buying a house.
In the long term, and by that think about 10 year cycles, the answer is almost always yes. Certainly in the modern era, post-war, when mortgages became widely available, the price of houses does almost always increase.
They don’t, however, always increase at the same pace, and there will almost always be periods within that where prices either stagnate or drop. So the question may then be, when do we expect things to settle down a little?
An economist writing for Money Week suggests that we may be nearing this part of the cycle. Dominic Frisby wrote “Let me quickly explain how his thinking works. His idea – and it is more about land prices than it is house prices, though the two tend to rise and fall together – is that property tends to see 14 years of price growth, followed by four years of decline.
It is not perfect, but, like many cycles, it is a useful guide, and a scenario of higher prices going into 2025-2026, followed by a slump, is something I can very much envisage.
So if you’re looking to buy, start getting your finances in place now. If the slump is anything like 2008, you’ll have to move quickly. If it’s like 1990-1995 you’ll have plenty of time.”
If you’re renting then, could it be worth biding your time?
Again, there are no perfect or bullet proof answers to that. It may never happen and prices could continue at 10% per year for the next decade.
Ultimately, your own personal circumstances will dictate whether you should be buying now or waiting, however, if you’re in a position to top your deposit up a bit more and get a bigger mortgage, then the cycle mentioned above may mean that waiting could work.
If you are on the search for a new rental property, please don’t hesitate to contact us!
Will Leyland, 05 May 2022