It's high time for a first time

'We're not buying a house in order to make money'

Years of falling property prices are persuading would-be home owners to bide their time instead of getting on the housing ladder now.

Years of falling property prices are persuading would-be home owners to bide their time instead of getting on the housing ladder now.

Figures from the Council of Mortgage Lenders (CML) show that loans to first-time buyers, which generally account for about 45 per cent of all home loans, were down significantly last month to 29 per cent. Yet is holding off the right strategy or will waiting just make it even harder to get into the market?

Hometrack's latest survey reveals that the average house price hasn't increased this month, with prices even falling slightly in some areas. However, analysts do not foresee widespread declines.

"We do still expect the market to increase this year, although we're not expecting much of a rise in London and the South-east – only 2 or 3 per cent," says Martin Ellis, chief economist at the Halifax.

In the north of England, it's a different story, with prices booming, and Mr Ellis expects the market here to remain strong. So anyone postponing a purchase now in the hope that they'll get a better deal later on in the year could be disappointed. Indeed, they risk being priced out of the market the longer they wait – something that could already be happening.

"If you asked a first-time buyer who took a similar view this time last year, they may say they regret holding off," says David Hollingworth at mortgage broker London & Country. "Throughout the year they just saw prices get higher and higher."

One of the main problems for many potential new buyers at the moment is lack of confidence. "The people who are still buying tend to be existing home owners who have gone through the process before and know what to expect," says Mark Harris, director at mortgage broker Savills Private Finance. "But first-time buyers are more nervous because they are unsure how it all works."

Additionally, those trying to get on the property ladder for the first time tend to have smaller deposits than someone who is selling one house to buy another. This increases the worry of negative equity, particularly at a time when there is some uncertainty in the market anyway. But first-time buyers are being urged not to let this fear get out of proportion.

"The smaller the deposit, the less of a cushion you have against negative equity, but I don't think this is an issue to get too concerned about," says Mr Harris. "If prices do fall, it's unlikely many first-time buyers will be affected, as the overheated areas, such as Kensington and Chelsea [in London], aren't typically where they would buy."

Ray Boulger, senior technical manager at mortgage broker Charcol, agrees: "Although the top end of the market is quite weak, the first-time buyer part, even in London, remains strong."

Even so, if you are looking to purchase your first home, consider where you are buying carefully, particularly if you want to live in a fashionable area. If prices there have risen considerably over the last few years, you may be better off in a slightly less popular area where you will get more for your money and be less exposed to the risk of the bubble bursting on inflated prices.

This doesn't necessarily mean you'll have to live in a completely different area; quite often, you'll only need to go a mile or so away to find a cheaper property.

Mr Boulger believes that events have swung in favour of the first-time buyer. One of the main reasons for the sharp price rises of last year was a severe shortage of properties. As a result, in order to secure a home, many people found they had to offer more than the asking price. In addition, with some properties selling in a matter of hours and buyers under pressure to put in an offer immediately in order not to miss out, there was no time to think about whether this was the place you really wanted to buy.

Now, however, supply has increased, placing the buyer in a much stronger position.

"The last three months have been the first time that buyers have been in control [for quite some time]," says David Bitner, head of product operations at the MarketPlace at Bradford & Bingley. "What you should be doing is putting in a cheeky offer and then working up if needs be. Some properties have been on the market for four or five months so if vendors are desperate, they'll sell."

Undeterred by the current uncertainty in the property market, Kate Westbrook and Stephen Steele have just completed on their first house in Swindon, Wiltshire. They opted for a two-year fixed-rate mortgage from the Nationwide, following advice from mortgage broker London & Country.

They had been thinking about buying for the past year but decided to hold off as Kate was then a trainee solicitor and had been unsure whether she would be kept on by her employer after she qualified.

Once her job was secure, the couple decided to bite the bullet and buy a property of their own.

"We've seen house prices increase by about 10 per cent over the past year in our area, and, yes, the market may be about to crash. But it might simply level off," says Kate.

"You just don't know, and had we waited any longer, prices could have gone up even more. So we thought we might as well go and do it.

"We're not buying a house to make money. Of course it's an investment, but the main reason we're doing it is that we don't want to keep pumping £630 a month into a landlord's pocket."

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little