According to the UK House Price Index, the average price for a house in the UK has risen by 8.9% since April 2020, with a high of 11% in March 2021. New research by NAEA Propertymark found one in six properties sold for more than their asking price in March – the highest proportion recorded in seven years. In the same month, a third of properties sold for below their asking price, the lowest proportion since NAEA started keeping records. The pandemic has meant that a lot of homeowners living in built-up areas are beginning to reprioritise where they want to live, this is likely due to working from home becoming the ‘new normal’, and many businesses embracing remote working on an increasingly more permanent basis. Greater demand has resulted in higher prices, especially for buyers moving up the property ladder to larger and more expensive homes.
Despite this, the height of summer when people are away or Christmas when people are busier than usual tend to be the best times of year to buy. With less demand, there's less competition meaning prices should usually be lower. You’re also much less likely to end up in a ‘bidding war’ with other prospective buyers, as fewer people are looking to buy. Therefore, we may begin seeing a steady decrease in the average house price.
So, is now a good time to buy a house in terms of property prices?
It’s difficult to give a yes or no answer, as property prices fluctuate and it’s almost impossible to predict what will happen next. Whilst buyers are in a better position now as opposed to March, there is no telling what might happen to property prices in the near future.
If you were already planning on buying, and you’d benefit from the Stamp Duty holiday, then now’s probably a good time to buy. Just remember, not everyone will benefit from the relief. The full Stamp Duty holiday ends at the end of June, so it’s likely if you’re looking to buy a home now, you won’t quite catch this, but there is still a saving to be had before October 2021. From July to September, the threshold is up to £250,000 in England and Northern Ireland, and £180,000 in Wales, so there are still big savings to be made before it returns to the regular threshold of £125,000 at the start of October.
However - it's worth considering that when the Stamp Duty holiday ends, it could lead to house prices decreasing, as demand should go down, but as we have previously mentioned; it’s difficult to predict this accurately.
So, is now a good time to buy a house in terms of the Stamp Duty holiday?
The simple answer is - if you’re looking at homes under £250,000 yes, and if you’re looking at homes over that threshold and/ or if the Stamp Duty holiday doesn’t apply to you as a buyer, it might be worth waiting until the stamp duty holiday has ended completely.
Earlier in the pandemic, mortgage lenders started requiring larger deposits for house purchases for added security. Deposit prices were upped to around 15%, and many found it hard to move on the property ladder. The government is now backing lenders, with the 95% Mortgage Scheme. Many banks have signed up for this scheme, including:
This government scheme is extremely helpful for buyers that may struggle to raise a large deposit, or those who wish to put down a smaller deposit so that they have more money to use on refurbishing their house purchase, for example.
It is very important to note that interest rates on low deposit schemes may be considerably higher, so do make sure you look into these rates before making any decisions, as this may not be feasible for you in the long run.
So, is now a good time to buy a house in terms of 5% deposits?
The answer to this question very much depends on your personal financial situation. If you would benefit from a lower deposit and are happy with the interest rates then yes, now is the time to consider buying a property.
We hope that this blog has helped you consider some of the factors contributing to the question ‘is now a good time to buy a house?’
If you are still unsure, contact one of our helpful team members for advice, or speak to your mortgage advisor. Happy house hunting!
