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Should I Buy a House Now?

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The stamp duty holiday came to an end for those buying a property costing over £250,000 on June 30th, with a tapered end to September. House prices are high, along with demand, and the property market shows no sign of slowing down. So, the question on many people’s minds is ‘should I buy a house now?’ 

Let’s take a look to help you weigh things up. 

House prices – is it a good time to buy?

As of June 2021, annual house price growth rose to 13.4%, the highest level since November 2004, according to Nationwide. The average house price now sits at £245,432. All regions have seen an increase in their annual growth rate.

Jun ‘20Jun ‘21
Average house price216,403 245,432 
Average % change-0.1%13.4%
3 month on 3 month % change-0.1% 3.8%
Monthly % change (seasonally adjusted)-1.6% 0.7%

Are mortgages affordable?

For many, monthly mortgage payments remain affordable and rates are low, despite high house prices. In fact, HSBC recently launched Britain’s cheapest-ever mortgages, cutting the rate on its two-year fixed-rate deals to 0.94% to those with a 40% deposit. More mortgage deals with rates below 1% continue to hit the market too.

Having said this, saving for a deposit continues to be a struggle, particularly for first-time buyers. 

The government offered a lifeline to those with smaller deposits in the form of a backed 95% LTV mortgage scheme, which requires only a 5% deposit. 

However, it’s still recommended to save as high a deposit as possible (at least 10%) if you want to secure the best interest rates and more favourable monthly payments. 

To put this into context, 10% of £245,432 = £24,543, so it’s little wonder people are struggling to save, particularly if currently renting. 

Of course, house prices are higher in certain areas, such as London, where the average price sits at £509,935 in June 2021, according to Nationwide. 

House prices in Northern Ireland and Wales have also increased dramatically in the last year as people search for space; 14% and 13.4% respectively. 

Tapered stamp duty ending 

After 30th September, the stamp duty holiday will end, and normal rules of stamp duty will apply, i.e: 

Stamp duty %Property value
0%£0 – £125,000 
2%£125,001 – £250,000
5%£250,001 – £925,000
10%£925,001 – £1.5 million

First-time buyers don’t pay anything on the first £300,000. 

Will house prices drop in 2021? 

Currently, despite the start of the tapered end of the stamp duty holiday, the market shows no signs of slowing down. Back in May 2020, the Bank of England warned that house prices could fall by 16% as a result of the pandemic. However, since then, they have only continued to grow. 

So, the market isn’t exactly playing by the ‘rules’ right now, and is extremely difficult to predict!

Will house prices fall when the SDLT holiday ends?

Again, many predict the end of stamp duty will see an end to the frenzied market. According to Halifax, in June, the average house price dipped for the first time since January, as the tax break winds down. 

However, this trend may not continue. In fact, a lack of available properties is helping to push up house prices.

For this reason, a majority of Royal Institution of Chartered Surveyors (RICS) members think prices will continue to rise over the next year.

Why is demand so high? 

The stamp duty holiday hasn’t been the only factor responsible for the high levels of demand in the property market. Others play a part in fuelling demand, such as:

  • The market was busy before lockdown 1, this created pent-up demand 
  • The hunt for more space, e.g. bigger properties & gardens
  • Changes in personal circumstances e.g. career
  • The ability and long-term opportunity to work from home 
  • Rental price increases

Should I buy a house now or wait?

Truthfully, this depends on your individual circumstances also, including:

  • Can you afford a mortgage
    • Don’t just look at monthly repayments, but other expenses, such as the cost of running a home
  • Your personal circumstances e.g. is your employment stable?
  • Why are you looking to move? 
  • How long do you envisage living in this property?

Moving home isn’t something to be taken lightly, it’s complicated and costly – likely the biggest financial decision most of us will ever make. House prices have increased faster than wages, which is something to consider carefully. 

In short: the answer doesn’t depend on factors like house prices alone, but on your individual situation. 

But, if you’re itching to move, have your finances in order and are ready to progress, there’s no reason why now isn’t the right time to buy your dream home.

What if I have a house to sell? 

High house prices could work in your favour if you have a property to sell also. However, much of the same rules apply. The answer to ‘is it a good time to sell a house?’ depends largely on your personal circumstances. 

It can be tempting to strike while the iron’s hot, but you should pause and assess if it’s the right decision for you first. 

For example, the cost of moving house adds up, so are you sure you can afford it right now?

Tips for buyers

Think buying is the right option for you now? Things might be moving fast, but you need to be prepared, measured and organised. Particularly in a frenzied market, there are many things to consider. Some top tips include:

Get prepared 

Failing to plan is planning to fail! Give yourself the best chance of a successful property purchase by being organised from the start. 

For example, some would-be buyers have had issues securing a mortgage in this climate. Improve your chances by:

  1. Checking your credit score 
  2. Clearing any unpaid debts 
  3. Avoiding unique or ‘awkward’ properties (e.g. those above a shop)
  4. Having all documents prepared and ready to go
  5. Saving as high a deposit as you can 
  6. Paying all bills on time
  7. Registering to vote
Check Your Credit Score

What mortgage options are available to you? We can connect you with expert mortgage advisers who can help you find out. Get a mortgage quote below – it’s free to do and takes seconds!

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Don’t overpay in the rush

House prices are higher than last year, but don’t be pressured into paying more for a property than it’s worth. Estate agents may try to ramp up the pressure, but it’s important to be aware house prices might not always stay high, which could be a problem if you come to sell and your property is in negative equity.

Tip: if entered into a sealed bid situation, use an odd number!

Don’t cut corners 

It can be tempting to want to secure the deal as quickly as possible, particularly if you think you’ve found ‘the one’. However, this could cause problems in the long-run. 

For example, a survey will reveal any potential problems with a property that could be costly to fix later down the line. It’s recommended you get one after your offer has been accepted. 

We can connect you with our panel of local, RICS-qualified surveyors below – for free. Get a survey quote today!

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Be prepared for all outcomes

Demand is high, which means in some cases, you have multiple buyers competing for the same property. This has led to an increase in gazumping.

Reduce the risk of this by being responsive, organised and building a good relationship with the seller. But, you should also be prepared for the possibility you may not secure the property – even if your offer has been accepted. The sale isn’t legally binding until exchange! 

Get a good solicitor 

Don’t underestimate the importance of finding a solicitor – this is key to a smooth transaction. They’ll take on a number of essential tasks, including organising the deposit transfer. 

Need help finding a good one? We can connect you with a member of our approved panel – all who work on a ‘no sale, no fee’ basis. Get a conveyancing quote below, for free.

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Last Updated: July 16th, 2021