Question: We’ve been renting for more than three years, and we’re trying to pick the best time to buy (we’ve saved nearly enough for a 35 per cent deposit on an ideal property for us: a £160,00 house near Newcastle upon Tyne), and now wonder if it’s the right moment to buy? It’s getting busier in our estate agents locally, and I saw that the Halifax reported rising prices last month. Do you think we're close to the bottom? ND, Middlesbrough
Answer: Ah, the $64,000 question! This poser is fast becoming the most popular query to ever land in the House Doctor inbox; elsewhere, it’s the debate that’s already busying hordes of economists, City analysts, property speculators, Government officials and housing-policy wonks.
They, like you, will have eagerly noted the seeming chinks of light that have recently pierced the gloom enveloping the UK housing market.
First it was the Halifax, the country’s largest lender, whose index indicated a 1.9 per cent rise in prices in January, the first time in a year that monthly price movements haven’t fallen, leaving the average price of a UK home standing at £163,966.
Then the Royal Institution of Chartered Surveyors pitched in, suggesting greater optimism among its member surveyors, who had spotted growing numbers of enquiries from new buyers.
And most recently, the property agent Primelocation.com’s index of asking prices in central London’s swishest quarters such as Chiswick and Hammersmith last week reported a rise for the third month in a row – 1.3 per cent in January – after a slide lasting half a year.
But these are all best considered as only early and – critically – isolated signs of any general improvements.
“Even the Halifax’s own chief economist points to the importance of not relying on a single month’s index result,” says David Hollingworth of the broker London & Country.
Sadly, as you might expect, the answer to the $64,000 question is impossible to unearth, since nobody really knows.
“Trying to pinpoint the exact bottom of the housing market is like trying to pin the tail on a donkey, drunk and blindfolded,” warns Andrew Montlake of the broker Cobalt Capital.
“At this stage in the market’s cycle, the actual bottom is unimportant, as we are undoubtedly in |the trough.”
But while mortgage rates are so low, the answer for somebody such as you, who has a decent deposit and an ideal property in their sights, is that now is probably as good a time to buy as any.
“It’s understandable that you don’t want to pay more than is absolutely necessary, but the key thing to ensure is that the purchase is affordable to you, which it sounds as though it is,” says Mark Harris at the broker Savills Private Finance.
L&C’s Hollingworth agrees, and stresses that it’s what suits you that matters more than the market.
“If you’re not overstretching yourself, are paying a reasonable price given the market conditions, and there are price falls of around 14 per cent from the peak of the market in 2007, then why not go for it?”
The best time to buy is when it suits you, he adds, “not what market conditions dictate”.
Stay put for several years at least, he adds, and history shows that prices are likely to rise over that period. “Take a long-term view – if you do, you won’t be disappointed by short-term market fluctuations.”