Is Now The Right Time To Think About Buying A House?

Is now the right time to buy a house?
From an ongoing global pandemic to the deepest recession on record, the societal issues we currently face have left the financial sector in a state of flux. 

Plus, on top of these problems, the contraction of interest rates, many households experiencing a dip in disposable income, and businesses feeling the strain of their extended hiatuses has left the current fiscal outlook seeming somewhat bleak. However, it’s not all bad news. 

For those of us looking to relocate to pastures new, current efforts to increase spending in the housing market could work in your favour, with many companies and even the government incentivising movers with a variety of deals. 

Coupled with falling house prices, these deals could provide the perfect opportunity for you to make the big move. But, with so many variables to consider, ‘could’ really is the keyword to think about. 

Join us as we run through some of the factors to consider when deciding if buying a property in this climate is the right choice for you.

House Prices Are Falling

The Halifax Index has confirmed that this year, for the first time in over a decade, house prices have fallen month-on-month for four consecutive months. This could be music to the ears of buyers, as it could offer a great opportunity to pick up a new property at a bargain price. 

Similarly, sellers may also be looking to take advantage of the current incentives, aiming to quickly offload any properties that may have been sitting on the market for a while.

As long as you’re willing to haggle, there are some pretty great deals out there in the current climate.

A word of caution, though – always do your due diligence on any property you are interested in. Make sure to look for signs of any underlying issues on viewings, e.g. rising damp, subsidence, and any potential domestic pest infestations, as these can quickly turn a bargain find into a much more expensive project.

Stamp Duty Has Been Waived

There is more good news for buyers as the Government announced back in July that Stamp Duty Land Tax would be reduced on residential purchases until the end of March 2021. In other words, if you buy a house less than £500,000, there will be no Stamp Duty to pay. 

The benefits don’t extend to everyone, however, as the three per cent higher rate for purchases of additional homes still applies on top of the current revised rates.

Therefore, if you were looking to add a holiday home to your property portfolio, it may be worth doing the maths first to see how much you’d save using the current incentive.

Mortgage Lenders Could Be More Nervous

Impact of Coronovirus on mortgages

With the economy shrinking by 20.4% between April and June – when compared with the first three months of the year – and the fact that one in three firms are expecting to make redundancies, mortgage lenders could now be a lot more apprehensive about lending money to prospective buyers. 

In fact, many lenders are now offering a much lower loan to value ratio on mortgages, meaning that movers may need to source a larger deposit to secure their dream home. 

That’s not to mention the potential issues for those people who were furloughed during the COVID-19 pandemic. Some lenders will only base your mortgage estimate off an 80% furlough salary, meaning you’d be able to borrow significantly less than you would have pre-pandemic. 

Likewise, those who took mortgage payment holidays may find that their credit score has been negatively affected, potentially impacting your ability to secure a new mortgage elsewhere. Therefore, before you get going with your property search, make sure to check the current stance of each individual lender, as they may differ from one another.

A Potentially Challenging Process

It’s easy to see how first time buyers could potentially benefit from all the incentives being put forward at the moment, but the story for existing homeowners is slightly different. 

Selling a house during a recession, when prices are falling and there is pressure on the market, could only put sellers in a difficult position. Many may be required to negotiate a lower price than they had hoped for, which could impact their ability to find a new home. 

Plus, any movers with an onward chain may encounter difficulties and significant delays to their moving process.

With nervous mortgage brokers taking longer to process applications than usual, as well as the general instability experienced by most over the past few months, the longer the chain is, the greater the likelihood it could fall through at any moment. 

Final Thoughts…

With one of the world’s worst recessions around the corner, choosing whether now is the right time to think about buying a house may feel like a slightly overwhelming decision.

However, if you’re dead set on it, the deals and incentives are out there for those willing to look for them.

The key thing to remember is to always carefully consider your personal circumstances before making any long-term financial decisions. And, by doing exactly that, you might just be able to land your dream home at a dream price.


  • Jason Taylor

    Jason is a former estate agent who now splits his time between managing his own property investment portfolio and writing for Property Road.

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