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."

News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
Richard Dawkins dedicated his book 'The Greatest Show on Earth' to Josh Timonen
newsThat's Richard Dawkins on babies with Down Syndrome
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Extras
indybest
PROMOTED VIDEO
Travel
Dinosaurs Unleashed at the Eden Project
travel
Arts and Entertainment
music
Sport
football
Life and Style
This month marks the 20th anniversary of the first online sale
techDespite a host of other online auction sites and fierce competition from Amazon, eBay is still the most popular e-commerce site in the UK
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Quantitative Analyst (Financial Services, Graduate, SQL, VBA)

    £45000 per annum: Harrington Starr: Quantitative Analyst (Financial Services, ...

    Application Support Engineer (C++, .NET, VB, Perl, Bash, SQL)

    Negotiable: Harrington Starr: Application Support Engineer (C++, .NET, VB, Per...

    AIFMD Business Analyst / Consultant - Investment Management

    £450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...

    Business Analyst Solvency II SME (Pillar 1, 2 & 3) Insurance

    £450 - £600 per day: Harrington Starr: Business Analyst Solvency II SME (Pilla...

    Day In a Page

    Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

    We know all too much about the cruelty of Isis – but all too little about who they are

    Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
    Neanderthals lived alongside humans for centuries, latest study shows

    Final resting place of our Neanderthal neighbours revealed

    Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
    Scottish independence: The new Scots who hold fate of the UK in their hands

    The new Scots who hold fate of the UK in their hands

    Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
    Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

    Blight club: Britain's ugliest buildings

    Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
    eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

    eBay's enduring appeal

    The online auction site is still the UK's most popular e-commerce site
    Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

    'Lack of ethnic minority and black faces on TV is weird'

    Culture Minister Ed Vaizey calls for immediate action to address the problem
    Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

    Magic circles: Artist Olafur Eliasson

    Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
    Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

    Josephine Dickinson: 'How I discovered a new world of sound'

    After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
    Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

    Greggs gives lesson in crisis management

    After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
    Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

    Matthew McConaughey sings the praises of bumbags

    Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
    7 best quadcopters and drones

    Flying fun: 7 best quadcopters and drones

    From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
    Joey Barton: ‘I’ve been guilty of getting a bit irate’

    Joey Barton: ‘I’ve been guilty of getting a bit irate’

    The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
    Andy Murray: I quit while I’m ahead too often

    Andy Murray: I quit while I’m ahead too often

    British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
    Ferguson: In the heartlands of America, a descent into madness

    A descent into madness in America's heartlands

    David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
    BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

    BBC faces corruption allegation over its Sir Cliff police raid coverage

    Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home