Buying a house is a dream for many. It gives you full control of your home, from choosing the colors of the walls to the fixtures attached inside and out. Real estate is also one of the smartest investments you can make. The value of your property appreciates over time, allowing you to sell it at a higher price in the future.
Purchasing a home, however, is a huge decision to make. There are several factors to consider to make sure you’re getting your money’s worth. A real estate agent can streamline the process and do most of the leg work for you. But other factors can affect your ability to buy.
Timing, for example, is a vital factor to consider when purchasing a home. You need to assess the housing market’s current situation to see if it is the right time to buy. The UK, for example, is experiencing a housing crisis. How will it affect home prices?
The Housing Crisis Drives Up Home Prices
The UK has been experiencing a housing crisis for decades, even before the pandemic. The National Housing Federation revealed approximately 8.4 million people in England live in “an unaffordable, insecure or unsuitable home,” BBC reported in 2019. The crisis affects all ages across the country.
Additionally, data show 2.5 million people can’t afford their rent or mortgage. Meanwhile, 400,000 are homeless or on the verge of being homeless, such as those living in homeless shelters, sofa-surfing, or temporary accommodation. Overcrowded homes are also common in 3.6 million people where children have to share a room with their parents or an adult shares a room with someone other than a partner.
The lack of houses being built is one reason there’s a housing crisis in the country. The housing market has 34 percent higher demand than pre-lockdown, but the supply remains low. Due to this situation, home prices have nowhere to go but up.
The current state of the market favors home sellers more than buyers. In the last 12 months, the average asking price of a property for sale went up by 2.7 percent, increasing the national average to £321,064.
Despite the scarcity of homes, the number of sales agreed in the first week of March remained 12 percent higher than the previous year. More properties are also being put up for sale, which can help ease the increasing house prices.
Should You Buy A Home Now?
There is no perfect timing in buying a home. Housing prices may be high now, but they can go higher in the coming years if the supply doesn’t meet the demand. The important question you should ask yourself is whether you can afford to buy a home in this market.
One way to finance your home is by using the Help to Buy Equity Loan scheme by the government. However, research shows first-time homebuyers in England are paying about 10 percent more than those who don’t use this scheme.
House prices have also risen faster than wages. Data show wages have increased on average by below three percent a year in over 20 years, while house prices have risen by five percent on average each year. As the high demand and low supply situation continues, house prices are less likely to go down.
For those who can afford to buy a home, this year is an ideal time. But it’s not the same for those who have been adversely affected by the health crisis. When buying a house, it’s essential to save up for a mortgage deposit of at least five percent of the property’s price. If you can wait longer, it will give you time to save up more so you can apply for mortgage deals with lower interest rates.
The amount of mortgage you can borrow depends on several factors, such as your deposit, credit score, and income. Apart from the property’s price, you should also consider the additional costs, including surveys, conveyancing, and stamp duty.
Properties often come onto the market in spring, making it the best time of the year to buy a home. Sellers usually take advantage of the warmer weather and more house-hunters. It is not ideal, however, to buy a house in August and December. Listings often resume in September and October. But homeowners choose to stay put at the end of the year for the holidays.
Buying your first home is an important milestone in your life. It is the beginning of a new chapter as a homeowner. But as the country continues to experience a housing crisis, purchasing a property is almost impossible due to increasing house prices. Before making a purchase, take time to research to ensure you’re making an informed decision.