Have you been wondering if 2024 is the best time to buy a house? With home prices experiencing an increase of over 18% nationwide in 2020 and 2021, you may worry you missed the boat.
While prices are rising, mortgage rates remain low. This combination of climbing values and affordable financing can make real estate an attractive investment. Still, the nationwide house price index and other experts warn the market could cool in the coming months as interest rates continue to rise.
This post will answer the question ‘is now a good time to buy a house in UK’ by examining the factors driving the red-hot housing market and whether opportunities still exist for savvy investors who time their property purchase correctly.
Short Summary
- The UK housing market shows a mix of trends with potential for slight price declines in 2024, making it a buyer’s market but requiring careful consideration of individual financial situations.
- Interest rates remain relatively low, offering favorable mortgage conditions, but buyers should evaluate their financial stability and long-term affordability.
- The North West and South West regions offer attractive investment opportunities due to lower property prices and strong growth potential.
- Recent updates to Stamp Duty Land Tax (SDLT) provide benefits, particularly for first-time buyers, potentially lowering the cost of purchasing a home.
Is Now a Good Time to Buy a House? (5 Factors to Consider)
Buying a house is a significant financial decision that requires careful consideration of several factors. As a prospective homebuyer in the UK, you must evaluate if you are in a stable financial position to afford the ongoing costs of homeownership, such as rental income expenses
Consider the following factors to make an informed decision:
- Financing options
- Your financial situation
- Ongoing costs
- Interest rates
- House prices
1. Financing Options
There are several options for financing a home purchase, including fixed-rate and adjustable-rate mortgages. Fixed-rate mortgages offer stability with interest rates and payments that remain the same for the life of the loan.
Adjustable-rate mortgages, on the other hand, often start with lower interest rates and payments but run the risk of increasing in the future if market rates rise.
Consider your financial situation and risk tolerance when choosing between different financing options. Work with a mortgage lender to determine which options you may qualify for based on your credit score and income.
2. Your Financial Situation
Before deciding to purchase a home, you should evaluate your financial situation to determine if you can afford how much is needed for an investment property. Consider your income, savings, and monthly expenses to estimate how much you can allocate towards the monthly repayments of your mortgage.
Meet with a property investment advisor to create a budget and determine how much you can borrow for a mortgage based on your financial situation. Make sure any property you’re considering purchasing fits comfortably within your budget.
3. Ongoing Costs
In addition to the mortgage, homeownership comes with other ongoing expenses like property taxes, homeowner’s insurance, utilities, , and maintenance costs. Make sure your income and savings can cover all ongoing costs of homeownership to avoid financial difficulties down the road.
4. Interest Rates
Interest rates heavily influence the cost of homeownership. When rates are low, mortgages are more affordable. Monitor interest rates and lock in a low rate when possible. Interest rates are expected to remain stable in 2024, so now could be an ideal time to secure an affordable mortgage.
5. House Prices
The average property price is projected to decrease slightly in 2024 before recovering in 2025. Lower house prices mean you can find more affordable properties.
However, no one can predict the housing market with certainty. Consider your financial situation and need to determine if buying during a potential small price dip in 2024 is right for you.
In summary, house prices and interest rates in 2024 could present an opportunity for buyers wondering if this is a good time to buy a house. However, you must evaluate how a home purchase fits into your financial situation before concluding now is the right time for you to buy a house.
Meet with property and mortgage experts to create a plan that allows you to purchase a property that you can comfortably afford for the long term. They’re in a better position to analyse the current trends in the housing market and assess your preparedness — more on the market conditions below!
Current UK Housing Market Conditions and Forecasts
The housing market is always changing, so it’s important to consider current conditions and expert forecasts before investing in property. According to a recent analysis, UK house prices will decline by 4.5% to £278,000 by Q3 2024. On the other hand, reports gathered by property experts, API Global, predict average house prices may rise by 3–4% next year
Let’s examine some of the key trends driving these UK house price predictions:
Declining Housing Demand
Housing demand has weakened significantly due to economic uncertainties from the recently increased interest rate. The unemployment rate rose to 4.2% in June 2024.
Also, consumer confidence fell to a forty-six-year low of -49 points in September 2022. These factors have deterred buyers from entering the housing market.
Oversupply of Properties
In the past years, house prices fell due to an oversupply of properties. According to recent reports, the number of properties coming onto the market rose by 15% in 2024 compared to a year ago. The high volume of new listings is outpacing demand, resulting in slower sales and price declines.
Interest Rates Looks Promising
On a positive note, interest rates remain low, providing support for the housing market. The Bank of England set the base rate to 5.25% in August 2023 to stimulate economic activity. Low-interest rates make mortgages more affordable, which could encourage some buyers to take advantage of lower borrowing costs despite uncertainties.
Overall Outlook
The current conditions point to a buyer’s market, meaning the long-term outlook for UK housing remains positive. Population growth continues to outpace new construction, and the property market has consistently generated solid returns over time.
For investors, current house prices drop mean it is a good idea to buy a house now, especially if the market stabilises and picks up over the next couple of years. However, economic uncertainty means some risks remain.
In summary, the UK housing market faces some headwinds but also maintains underlying strength. For buyers and investors, the statistics suggest it is wise to buy a house now, although it depends on individual goals and risk tolerance.
As always, expert advice from property investment experts can help determine the best course of action based on your unique financial situation. If you’re more concerned about the mortgage rates outlook and how it will impact house prices, check out the following section!
Mortgage Rates Outlook: How Affordable Are Houses Right Now?
The average 5-year mortgage rate in the UK has risen to 5.75% as of February 2024, up from 2.64% in December 2021. While mortgage interest rates may have increased over the past 3 years, they remain at relatively affordable levels for prospective homebuyers and investors.
Discussed below are the major trends and updates in the mortgage market:
Interest Rates Remain Historically Low
Although mortgage rates have edged up from their record lows in 2021, a 5.25% base interest rate range is still considered attractive from a historical perspective. Interest rates in the late 1970s, for example, were as high as 17%.
Today’s rates mean the cost of borrowing is still relatively cheap for those looking to purchase residential property. For investors, the affordable rates also mean better returns can be achieved on rental yields and capital appreciation, implying now is a good time to get a mortgage
Deposits and Loan-to-Value (LTV) Ratios
Most major lenders in the UK require a deposit of at least 20% of the property’s value to secure a mortgage. Some lenders will accept higher LTV ratios of up to 95% for select borrowers, but higher deposits of 25–40% are typically required to get the most competitive rates.
While higher deposits may be challenging to put together, they result in lower interest rates and monthly payments. The property investment experts at Baron & Cabot can help link you with lenders offering the most attractive terms for your unique financial situation.
House Price Growth Outlook
House prices in the UK increased by 2.5% in January 2024, continuing the steady growth trend seen over the past several years.
For buyers and investors, this suggests housing will remain an attractive asset class for wealth building over the long run, and that it is worth buying a house right now. However, affordability may be an ongoing challenge, especially for first-time buyers.
Overall, while interest rates and house prices have increased from their 2021 lows, mortgages remain relatively affordable and accessible for most buyers in the UK. Working with an experienced mortgage broker can help international investors navigate the buying process and find competitive rates, even with a 20% deposit. For those able to buy now, the prospect of steady, long-term home price growth provides an opportunity for both financial security and healthy returns on investment.
Still, it’s important to understand that there are other factors affecting the current housing market. For example, there have been some recent changes to UK stamp duty rules, and we’ll evaluate how this affects buyers in the next section.
How Do Changes to Stamp Duty Rules Impact Buyers?
The HM Land Registry has recently announced several revisions to the Stamp Duty Land Tax (SDLT) that aim to encourage homebuyers and stimulate housing market activity. Basically, this means a lower cost for first-time buyers. Continue reading for more details, how it affects you as a buyer, and what other leverages you have.
Lower Costs for First-Time Buyers
For first-time buyers, the SDLT zero-rate threshold has increased from £300,000 to £425,000. This means first-time buyers will pay no SDLT on the first £425,000 of a property’s purchase price.
For example, a first-time buyer purchasing a £500,000 home would now pay SDLT of £3,750 rather than the previous £10,000, resulting in a tax saving of £6,250.
The higher threshold provides meaningful savings for first-time buyers in London and the South East, where house prices are typically higher. This revision to SDLT should positively impact first-time buyer demand and enable more first-time buyers to get on the property ladder, especially in higher-priced areas of the country.
Higher Demand for Sub-£425,000 Properties
With the increased tax threshold, demand is likely to rise for properties valued up to £425,000 as more buyers can now afford to enter the market. This additional demand could place upward pressure on prices for homes in this price bracket.
As an investor, targeting properties in up-and-coming UK areas where strong demand from first-time buyers already exists may lead to healthy returns from capital appreciation over the medium term.
Refinancing Options for Existing Landlords
For existing property owners, the new SDLT rates may provide an opportunity to refinance and withdraw equity from your home. With an additional £125,000 of your property now exempt from SDLT, you may be able to remortgage, withdraw tax-free equity, and invest in additional property without incurring the previous tax liability. This strategy allows you to tap into your existing assets to expand your property portfolio
In summary, the recent changes to SDLT rates indicate positive news for both first-time buyers and existing homeowners. For investors, the amendments may provide opportunities to capitalise on increased demand and refinance existing properties.
Monitoring how the new rates impact the market, especially the sub-£425,000 sector, will help determine the optimal property investment strategy in the months ahead. Another factor to consider when evaluating whether now is the right time to buy a house is regional variations — let’s look into how house prices differ across regions in the next section.
Regional Variations: Where Are the Best Opportunities Right Now?
While property prices have risen in the past few years, significant regional variations exist. The northern regions, for example, continue to offer more affordable investment opportunities relative to the south. Properties in the North West and South West, in particular, present intriguing prospects.
The North West
The North West contains dynamic cities like Manchester, Liverpool, and Leeds, which have experienced substantial economic growth and regeneration in recent years. New infrastructure projects have strengthened connections within and between these cities, enhancing their attractiveness. Property prices in the North West are below the national average, with an average house price of £212,456 in Liverpool; this indicates future growth potential.
South West Region
The South West contains popular destinations like Bristol, Bath, and Exeter amid an idyllic rural setting. The natural beauty and vibrant cities have long attracted interest, with property prices growing over 15% from 2020 to 2024.
While properties here aren’t particularly affordable, demands remain high given it’s one of the most desirable regions to live in. For investors seeking passive income investments that generate steady rent, the South West’s tourism industry and university cities provide a stable tenant base.
London and Southeast
London and the Southeast, as expected, remain the most robust regions of the UK housing market. While property prices are higher than the national average, limited supply and steady demand in London have supported price appreciation in the last few years.
Top locations in the Southeast, like Bracknell, have experienced similar price growth due to their proximity to London and appeal as commuter towns. Although prices are highest in these regions, their stability and consistent performance justify the premium for most investors.
In summary, opportunities currently exist across the UK housing market, but significant regional variations persist. Investors must analyse the dynamics of each region carefully to find the locations and properties that best match their investment objectives and risk tolerance.
With the range of options available, suitable opportunities can be found regardless of an investor’s preferences for capital gains, rental income, or both — the key is conducting thorough due diligence to determine the best time to buy a house. We provide more on finding the best deals below!
6 Tips for Finding the Best Deals in Today’s Market
While UK house prices have increased by over 2.5% in the past year, there are several good deals to be found, especially if you know where to look.
By utilising the following strategies, you can uncover properties with strong growth potential at a reasonable price when house hunting:
- Work with property investment experts.
- Utilise property listing sites.
- Consider property auctions.
- Look for repossessions.
- Consider property redevelopment.
- Network to find off-market deals.
1. Work with property investment experts.
Having property investment experts like Baron and Cabot by your side when hunting for properties means you’re working with a wealth of knowledge. We’ve been in the game long enough to help you pick the right property suitable for your needs.
We’ll also give you access to properties in well-researched locations that may not be available to the general public. Whether you’re making your first investment or expanding your portfolio, we provide insights that can help maximise your returns. Contact B&C now!
2. Utilise property listing sites.
A staggering 100% of homebuyers now utilise websites like Zoopla, Rightmove and PrimeLocation when searching for their next home. These sites provide a convenient overview of properties currently on the market that match your specifications. Monitor these sites regularly for new listings and price changes to spot good deals.
3. Consider property auctions.
Property auctions are an ideal place to find a bargain, with some selling at up to 20–30% below market value. Do thorough research on any property before bidding to determine the maximum price you are willing to pay. Arrive at the auction early, set a firm budget and don’t get caught up in the excitement of bidding. Also, be prepared for additional fees like the auctioneer’s commission.
4. Look for repossessions.
When homeowners default on their mortgage payments, the property is repossessed by the lender. Lenders are often willing to sell repossessed properties at a lower price to recover their costs quickly. Check sites that allow you to filter specifically for repossessed properties. Work with an agent who has experience dealing with lenders and the legal processes involved in purchasing repossessed homes.
5. Consider property redevelopment.
Purchasing a run-down property with the intention to renovate and resell at a profit, known as property redevelopment, can yield high returns on investment. However, property redevelopment also carries risks like going over budget, failing to sell at a profit or running into legal issues.
Partner with an experienced developer to navigate the challenges. When done right, redeveloping and flipping distressed properties is one of the most lucrative paths to real estate wealth.
6. Network to find off-market deals.
Speaking to people within the industry is one of the best ways to find properties before they are officially listed. Let family, friends, and colleagues know you are on the hunt for property. Some of the best deals are found through word-of-mouth.
Attend local meetups and join online groups to make valuable connections in the real estate community. Partnering with Baron & Cabot means access to valuable off-market deals — which are usually under-priced to get more investors on board.
By taking a multi-pronged approach to your property search, utilising the services of a property investment expert, and acting quickly when an opportunity arises, you can find attractively priced investment properties even in a strong seller’s market.
While financial constraints may cast doubts as to whether now is a good time to buy houses or even consider alternatives like renting, data shows this is not always the best approach to property, as we will discover in the next section.
Alternatives to Buying: Renting vs. Buying Analysis
If you are considering renting properties in 2024 instead of buying, it’s important to be aware of the benefits each offers and how they compare before making a decision.
Renting offers more flexibility.
Compared to buying a property in 2024, renting offers more flexibility and mobility. As a renter, you’re not tied down to a mortgage and can move to another rental relatively easily if needed for work or personal reasons.
You also have more freedom to relocate to different cities or even countries without the burden of selling a property. For many young professionals in their 20s and 30s, the flexibility of renting is appealing as they navigate new jobs and relationships. However, buying offers more benefits.
Buying is cheaper than renting in the long run.
While renting may seem more affordable in the short term, buying a home is usually cheaper than renting in the long run. Buyers can lock in a low, fixed rate when mortgage rates fall and build equity in an asset. Rent, on the other hand, is likely to increase over time with inflation and demand. For those planning to stay in one place for at least 5–10 years, buying could save money.
Buying builds equity and wealth.
Purchasing a property is an investment. As you pay down your mortgage, you build equity in the home. You can then leverage that equity through a cash-out refinance to pay for home improvements, education, or other major life expenses.
When it’s time to sell, you can make a sizable profit, especially if you’ve owned the home for many years. Renting, on the other hand, provides no opportunity to build wealth through home equity or price appreciation.
In summary, whether buying or renting makes more sense depends on your priorities and timeline. If flexibility and affordability are most important, renting may be better in the short term. In the long run, buying offers financial benefits as an investment and a hedge against inflation when mortgage rates decline. The choice ultimately comes down to your needs and risk tolerance as an investor or homeowner. Reach out to Baron & Cabot today to further discuss your investment goals.
Should I buy a house now or wait until 2025 in the UK?
Deciding to buy a house now or waiting until 2025 in the UK depends on market timing. The Office for Budget Responsibility forecasts a dip in property as house prices fall. There is an expected average decrease of 7.6% between December 2024 and early 2025, suggesting potential benefits for those who can wait.
Is it a good time to buy a house now in the UK?
Deciding on the perfect time to buy a house in the UK can be challenging. With mixed forecasts for 2024—some experts predict a decline in house prices, while others anticipate a 3–4% increase—it all comes down to individual financial situations and market risk tolerance. Consider both scenarios before making a decision.
Will mortgages go down in 2024 in the UK?
In the UK, mortgage rates in 2024 could potentially decrease if the downward trend in inflation from 2023 continues. Industry insiders are hopeful that average mortgage rates might drop below 5% again, making it crucial for homebuyers to review deals carefully to find the best fit for their personal circumstances.
Do sellers prefer cash buyers?
Sellers often favour cash buyers, especially if there are property issues complicating mortgage acquisition. Cash transactions can be smoother and quicker. They’re particularly appealing to sellers seeking certainty or dealing with homes that require significant repairs.
How much less should you offer on a house when paying cash in the UK?
In the UK, cash buyers might have the leverage to offer 20 to 25% less than the asking price, given the current market conditions. This bargaining power stems from the attractiveness of a cash deal to sellers, who often value the speed and security it offers.
Are house prices going to drop drastically?
Current trends suggest a significant drop in average house price prices is unlikely, as the latest official figures indicate a year-on-year decrease with recent signs of resurgence. This points to a potential stabilisation or even an upturn in the near future rather than a drastic fall.
Conclusion
Ultimately, the current UK housing market presents a complex picture for potential buyers. While prices and mortgage rates remain relatively low, broader economic uncertainties persist. By carefully weighing your financial position and long-term goals against market indicators and expert projections, you can address the question, “is now a good time to buy a house” in the UK. Remember, the property investment experts at Baron & Cabot are always available to help you make the best investment decisions — contact us now to discuss your investment goals
Disclaimer: Any information provided by Baron & Cabot does not constitute financial advice and is for educational purposes only.
