In today’s housing market, the question of whether to buy a home now or wait is a tricky one. Especially as house prices are now relatively stable compared to recent years, and mortgage interest rates are starting to fall. So, does this mean that now might be a good time to buy? There’s lots to consider in this important decision, so let’s dive in.
How have house prices changed?
Until recently, the UK housing market had been experiencing rapid year-on-year growth – a 10% annual increase in house prices wasn’t unusual.¹ This growth was fuelled even further by the coronavirus pandemic. During this time, mortgage interest rates were lower than ever and the government also introduced stamp duty discounts – reducing one of the biggest upfront costs of buying a home. It worked – demand for houses and therefore house prices skyrocketed.
The housing market finally lost its momentum when inflation set in and peaked at record highs in October 2022. The Bank of England then sharply increased the ‘base rate’ of interest – their main tool to try and control it. As a result, mortgage interest rates became more expensive and this, coupled with the cost of living crisis, caused many buyers to reassess or postpone their plans. With less demand for housing, house prices began to fall and continued falling throughout 2023 – a trend we hadn’t seen in years.²
What will happen to house prices in 2024?
Some regions of the UK, especially those in the South, are still seeing an annual decline in house prices, but most regions are seeing relatively little change.³ This is a stark contrast to the growth we’re used to.
Analysts at Nationwide are forecasting that house prices will remain broadly flat over the remainder of 2024 and any price growth would be at a subdued pace.⁴ At the moment, it’s largely dependent on what happens to interest rates throughout the rest of the year. Now that the base rate has been cut to 5%, it’s hoped that mortgage interest rate cuts will follow. This could mean house prices increase again as buyer demand rises.
What’s the best time of year to buy a home?
Generally, the two busiest peaks in the housing market are spring and autumn. People like to buy homes in April and May before the summer gets into full swing, or get settled in September and October to avoid moving during the winter months. At these times, there are typically more homes on the market to choose from, as sellers try to capitalise on these seasonal peaks.
But, there are some key benefits to buying a home in the summer or winter. When the market is quieter, you’ll have less buyers to compete with and you might find that negotiating on price is easier as a result. The downside is that you might have less properties to choose from in the first place.
Is it better to rent or buy?
If you’re currently renting, you’ll also need to weigh up the benefits and disadvantages of renting compared to buying. Renting brings more flexibility and less financial responsibility. However, this can be a double-edged sword, as it also means you have less stability in your living arrangement.
The rental market is increasingly competitive and rents are continuing to rise. Owning a home brings more security and means your accommodation outgoings are paying off your own mortgage, helping you to build equity rather than your landlord.
In conclusion – should you buy a home now, or wait until 2025?
Buying any home, whether it’s your first or last, is a deeply personal decision. In an ideal world, you’d buy a home when both house prices and interest rates are low, but that’s rare – and notoriously difficult to time perfectly. It’s all about jumping into the market at a house price point and an interest rate that works for you.
Here’s what to consider:
- How long you want to stay in the property for. Buying a home is like any other investment. If you’ll be in your new home for longer than five years, you can probably ride out any temporary downturns in house prices and you’ll likely increase your equity over time.
- Your current and future affordability. If you were to apply for a mortgage today, could you comfortably afford the repayments? What about if interest rates increase again? If the answer to both questions is ‘yes’, there’s no reason to be concerned about current rates.
- Your life plans. Lifestyle changes that will affect your income or outgoings should play into the decision. Whether you’re starting a family, expecting a pay rise or changing careers, be sure to think about the effect on your affordability.
With house prices staying stable, and interest rates starting to fall, now could be a good time to start your search! Moneybox mortgage brokers can help secure the right mortgage for you, as they compare thousands of deals from over 90 lenders daily. Head in-app to Accounts > Mortgages to start your home-buying journey with expert help.
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¹ Statista: https://www.statista.com/statistics/751619/house-price-change-uk/
² Statista: https://www.statista.com/statistics/751619/house-price-change-uk/
³ Zoopla, House Price Index: July 2024
⁴ Nationwide, House Price Review and Forecast: https://www.nationwidehousepriceindex.co.uk/reports/nationwide-house-price-review-and-forecast-rapid-rebound-in-house-prices-unlikely-in-2024