2015 Could Be the Perfect Time to Buy
The close of 2014 saw house prices in Britain begin to fall for the first time in a long time. This trend seemed to mark the end of the runaway housing market that had locked out so many potential first-time buyers.
This phenomenon has continued throughout 2015. For those looking to take their place on the property ladder, this event has been a long time coming. It is a promising indicator that price rises may finally have come to a head, and with new mortgage rules and the threat of rising interest rates on the horizon, it seems unlikely to experience any significant reversal in the near future. This means that, for the first time since 2011, the property market may finally be opening its doors to the young and the risky once more.
A Turning Point
The Centre for Economics and Business Research (CEBR) has described 2015 as a “turning point” for the housing market. Although growth began to slow towards the back end of 2014, statistics for the year as a whole still showed an increase in house prices. Come 2015, however, these are expected to decline by 0.8 per cent.
According to Scott Corfe, the head of macroeconomics at CEBR: “Tougher mortgage eligibility criteria, high deposit requirements and concerns about future rate rises are starting to take steam out of the UK housing market.”
In London, where a property bubble has seen price rises far in excess of national averages, the decline is expected to be even more significant. The latest estimates put the decline at around 2.6 per cent by December 2015.
Recently published figures support this view, indicating that national house prices are continuing to fall as we move towards the second quarter of the year.
A Good Time to Buy
With further falls seemingly on the horizon, many people who are looking to buy are tempted to put off their search until later in the year, in the hopes that prices will decline even further.
However, waiting is not always the wisest strategy. According to Alan Cleary, the managing director at Precise Mortgages, buying the right property is less about rationalising and adhering to a scientific formula, and more about gut feeling: “If you find a property you like and you can afford it, then there is no point waiting in the hope that house prices will fall because it might not happen.”
This is not to say that some times are not better for buying than others, only that we can never reliably predict the future of the housing market. However, on the balance of probabilities, buying now is likely to be a relatively sound financial decision. Prices look set to continue falling, which means that you’re likely to get a good deal on any properties that you’re interested in. One of the major upsides of this is that significant price rises are likely in the longer term, meaning that you can buy for less now, and sell for a profit later.
In terms of timescales for making such profits, the latest estimates suggest that by 2019, prices will have increased by around 30 per cent countrywide, with the greatest boom expected in the South East, where price rises of 37 per cent seem realistic. Although we cannot say that these housing market predictions will definitely come to fruition, what we can say is that demand is continuing to rise, and there is so sign of an increase in the supply of new homes in the near future. Such a combination will almost certainly catalyse house price increases in the medium to long term.
With the current fall in prices expected to amount to no more than a brief dip, 2015 could be the perfect time to grab a housing bargain.