Should first-time buyers purchase a property now?

first time buyer

For all you first-time buyers it’s the ultimate dilemma: should you buy when property prices are high?

This may sound like a no-brainer for your average investor who has a few properties and is looking to speculate; as buying at the top of the market is not a good idea.

However, what about the many people not yet on the property ladder who are concerned about missing out on getting a home? It’s all very well saying wait until the market drops, but nobody knows when or even if this will happen. Remember, there’s been speculation about this for over a decade now and house prices have continued to soar. In 2008, the market slowed down after the recession, but prices didn’t drop that far and since then property in Prime London especially has been in more demand than ever.

So what should those who don’t already have a property do? Wait and hope that prices go down considerably, or buy when prices are high? Well, at the moment there’s a consensus among experts that the market is slowing, at least in London. This doesn’t mean that they’ll be no more increases in value, but one firm of international estate agents has predicted that prices will only grow by 3% next year, compared with 15.5% this year. In other parts of the country, prices haven’t even reached post-2008 levels, although the South East is experiencing considerable growth as Londoners move out to seek larger family homes. Many are staying put in this part of the country and extending; hence pushing up prices as supply is low.

Even if the market does slow or even drop, it doesn’t mean that those without mortgages will be able to borrow easily. In the event of a serious falling of prices, easy credit could dry up, although rates may well stay low. So the only people to benefit in such a scenario would be those who have large amounts of capital to invest immediately.

The rental factor

One justifiable reason to buy is because at the very least you won’t be wasting money renting. After all, even if you’ve missed out on the recent boom, paying off the mortgage is like a savings account. Over the years, you’d be surprised at just how much money people throw away on rent; this can add up to hundreds of thousands. Instead you could be paying down a mortgage and in years to come cash in on that money by releasing it to invest in another property or to fund your retirement. As well as this, there are many schemes to help first-time buyers. These include Help-to-Buy and a scheme recently announced by David Cameron that will give those under 40 discounts on starter homes.

Renovation projects

If you’re very keen to make a solid investment and think you’ve missed out on the best of market gains, you could always focus on finding a really good renovation option. After all, if you get a good price you could walk away with a good return on your investment. If not, just a few improvements to the right property would help. There are lots of sites out there for those looking for land or property to invest in.

When it comes down to it, buying is nearly always better than renting. As long as you’re staying in an area for a while or you’re prepared to rent your property out if necessary, being a homeowner can be flexible and convenient.

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