For most of us, our homes are central to our lives as well as our largest financial asset, so we want to know we’re making the right decision when we buy and sell. And there’s a lot to consider at the moment. On the one hand we have a cost of living crisis and increased mortgage costs, while on the other hand we see house prices dropping. So, is now a good time to buy a house?
Is now a good time to buy a house summarised
Here are some of the key issues you’ll need to consider in order to decide is now a good time to buy a house:
- What’s happening with house prices?
- Will house prices fall in 2024?
- Should I buy a house now or wait?
- Is it worth waiting for mortgage rates to improve?
- Should I save a bigger deposit before buying a house?
What’s happening with house prices?
Nationwide’s House Price Index shows the average UK house price in December 2023 was £257,443. This is down 1.8% compared to December 2022, when it was £262,068. Read more in our monthly House Price Report.
The fall in house prices has been caused by many factors including increased interest rates which currently stand at 5.25%, higher mortgage costs and the increased cost of living. However, house prices are still higher than many analysts expected. While falls in mortgage rates in recent months and predictions interest rates may be cut earlier than previously predicted are welcomed by homeowners.
London house prices – What’s going on?
The average property sold in London has risen in value by just over 13% since 2016, from £472,000 to £535,000. While the typical London flat has increased only 6.5% from £416,000 to £443,000. This compares to an increase of 35% in the average UK house price over the same period, according to Land Registry figures.
Will house prices drop in 2024?
House prices are widely expected to drop further in 2024, with experts’ estimates ranging from falls of 1%-3%. For example, Zoopla forecasts that prices will drop by 2% over 2024. However, some experts predict prices will end the year higher than they started. Find out more in our guide UK house price forecast.
Mortgage rates are constantly changing at the moment. Find out how much you can borrow and how much this will cost with our partner L&C’s mortgage finder. You can start the process online or speak to a fee-free expert to look for you.
Should I buy a house now or wait until 2025?
If you’re deciding whether to buy a house now or wait until 2025, you may be tempted to hold off in the hope that house prices will fall and mortgage rates will improve.
1. Should I wait for house prices to fall before buying?
If you’re considering waiting to buy a house because you expect house prices to fall in 2024, it’s important to recognise that a house price forecast is just an estimation – and they can be wrong. For example, there were predictions that house prices would plummet by 20% in 2023 and this didn’t happen. In fact, some experts predict that while prices may dip in early 2024, they will recover as the year goes on and end the year higher than they started.
Also, if you’re planning to live in the property for a number of years, even if prices do dip in the short term, generally speaking property prices tend to rise over time so you’re likely to make a profit on any long-term investment.
2. Should I wait for mortgage rates to improve?
You may also want to wait in the hope that mortgage rates will improve. The best mortgage rates on fixed deals have been improving since mid 2023 and into January 2024 when a mortgage price war took hold. With speculation that the Bank of England may cut the base rate sooner than previously expected, possibly as early as March 2024, it’s reasonable to expect that mortgage rates may continue to improve.
But again, no one really knows what will happen in 2024. At the start of 2022, no one predicted that mortgage rates would go through the roof following the disastrous September 2022 mini-budget.
So in both cases, if you’re asking is now a good time to buy a house and you’ve found the right property and an affordable mortgage, the answer may be yes.
Mortgage rates are constantly changing at the moment. Find out how much you can borrow and how much this will cost with our partner L&C’s mortgage finder. You can start the process online or speak to a fee-free expert to look for you.
3. Can you get a bargain if you buy a house now?
Another factor to consider is whether you’ll be able to get a bargain by buying now. Homebuyers are in the strongest negotiating position for five years with an average £18,000 knocked off asking prices to land a deal, research from Zoopla found. So you may find it more likely your offer is accepted and that the seller is more willing to negotiate on price. Read our guide on Making an offer on a house and how to negotiate effectively.
Should I buy now or save for a bigger deposit?
You may be considering saving for a bigger deposit instead of buying now. Having a bigger deposit means you’ll have a wider choice of lenders to choose from and you’ll usually get a better rate.
But no one knows what will happen to mortgage rates in the next year. For example, no one can say with any accuracy that the mortgage rate available on a 90% LTV mortgage next year will be lower than the best mortgage rate on a 95% LTV mortgage this year.
So as a starting point, speak to a mortgage broker about what your options are based on your current circumstances and then you can decide what’s best for you. Many lenders offer 95% LTV mortgages and Skipton Building Society still offers a 100% mortgage for those with a proven ‘track record’ of paying rent.
Keep up to date with our Best Mortgage Rates report – it’s updated with the latest deals every month
What interest rates will I pay?
The mortgage interest rate you’ll be able to get access to will be driven by factors including:
- The size of your deposit: the larger your deposit the more deals you’ll usually get access to
- Your credit score: If your score is high, you’re more likely to get access to the best rates
However, in early January 2024, the average 2 year fixed mortgage rate was 5.93%, while the average 5 year fixed mortgage rate was 5.54%, according to figures from Moneyfacts. By comparison, the best mortgage rate on a 2 year fix was 4.49% and the best mortgage rate on a 5 year fix was 3.94%.
To find the best mortgage rates don’t just go to your bank, it’s vital to shop around. The quickest and easiest way to do this is to speak to a free-free mortgage broker.
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I’m a first time buyer: Is now a good time to buy a house?
If you’re a first time buyer, you’ll need to consider all the factors above when considering is now a good time to buy a house in the UK. But many first time buyers will also need to consider is access to mortgages, especially if you have a small deposit. High LTV mortgages are currently much more widely available following the government’s introduction of the mortgage guarantee scheme, which runs until June 2025.
While many lenders are offering high LTV mortgages without using the scheme, noone knows what will happen once the scheme ends. So if you’re asking is now a good time to buy a house in the UK and you can get a mortgage that you can afford on a property you want to live in long term the answer may be yes.
Get fee-free mortgage advice from the experts. Start online or give them a call today about your mortgage needs
What is negative equity?
However if you’re buying your first home with a small deposit and prices do drop sharply you may be at greater risk of negative equity until prices recover. Negative equity occurs when the market value of a house is below the outstanding mortgage secured on it. And if you’re in negative equity and you want to sell your home it’s a major concern. Find out more in our guide What can I do about negative equity.
When is the best time to buy a house – and the worst?
Spring is considered the best time to buy a house because there are more homes on the market. And while listings tend to tail off in the summer they generally pick up again during September, October and early November before tailing off for Christmas.
But when considering the question is now a good time to buy a house don’t get fixated on the best or worst times of the year to buy. If you’re house hunting, keep looking. Your dream home might come on the market in the depths of winter and if there are fewer buyers looking it boosts your chances of getting the property and at a good price.
Should I rent or buy a house?
To decide whether to rent or buy a house, you need to consider what’s happening in the rental market. According to the Homelet Rental Index, the average monthly rent in the UK was £1,279 in November 2023, an increase of 8.85% compared to the previous year.
If you’re paying a fortune on rent it may be tricky to save up enough to buy a house. But it is possible to buy a house with a small deposit. Read our guide on Government schemes to help you buy a home
Advantages of buying a house rather than renting
- More security and freedom: You’ll have the security of knowing that as long as you pay your mortgage, you’ll be able to live in your home for as long as you wish.
- It can be cheaper than renting: Paying a mortgage can me cheaper than renting, and also the money you spend will be paying off your mortgage, not your landlord’s.
- Owning your home can make you money: Paying a mortgage rather than renting could leave buyers on average £352,500 better off over the next 30 years, – even if house prices don’t rise, a report by the Intermediary Mortgage Lenders Association (IMLA) found.
The disadvantages of buying your own home?
- Buying a home is a big financial commitment: As well as needing to pay the mortgage there are additional costs to becoming a homeowner, not just buying the property, including insurance, maintenance and improvements. See The Costs of Buying and Owning a Property
- Risk of negative equity: Should prices fall, you might end up with “negative equity”, where your home is worth less than your mortgage, making it very difficult to move house or sell without declaring bankruptcy
- You cannot just give it all up and move elsewhere: If you are not sure where you want to be in a year’s time, or if your employment situation is uncertain, then you shouldn’t consider buying
Read more in our guide Buying vs renting: Benefits of buying
Is now a good time to buy a house with my parents?
If you’re struggling to buy a house on your own, buying a house with your parents might be the answer. There are a number of ways they can help you get on the property ladder, if they’re not able to give you a lump sum from the Bank of Mum and Dad to help with your deposit. Here are four options:
1. Guarantor mortgages
Guarantor mortgages are when someone – usually a family member like a parent – acts as a guarantor by putting up savings or their property as security. This can make it much easier to get a first time buyer to get a mortgage but the risks to the guarantor can be significant. Read more in our guide Guarantor mortgages explained.
2. Family Offset mortgages
With family offset mortgages, the amount of interest the borrower pays is reduced by linking their mortgage deal to a family member’s savings account. There are some drawbacks though, for example the parent won’t earn interest on their savings.
3. Getting a joint mortgage
By taking out a joint mortgage with your child, you will be equally liable for the repayment of the loan. The upside is that with your combined incomes, you may be able to afford to take on a larger loan. However, a major drawback is that you’ll need to pay the additional stamp duty rate if you already own a property, then your child’s new home would count as a second home. Plus if it is your second home and you are still on the mortgage when the property is sold, there may be capital gains tax (CGT) liabilities.
4. Joint borrower, sole proprietor mortgages
With these mortgages, you apply with someone who’s willing to accept joint responsibility for making mortgage payments without having a legal claim to the property. Find out more in our guide Joint borrow, sole proprietor mortgages explained.
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Is it the right time to buy a house?
The right time to buy a house is when you’ve found a property that you love and that you can afford. And you’ve weighed up whether buying a house is right for you.
Is now a good time to sell a house?
Yes. If you want to sell your house, whether that’s because you need to relocate or need to buy a bigger house, don’t let speculation about property prices put you off taking action. Even if you need to sell your house for less than you’d hoped, you will hopefully find the property you want to buy has also dropped in value. Read more in our guide Should I sell my house now?
Should I buy a house or save for retirement
Buying a house and saving for retirement at the same time can be difficult so you might be tempted to stop your pensions contributions until you buy your first home. But this may be something you end up regretting. You may find it useful to speak to an independent financial advisor about about your finances including your pension,
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Should I buy a house or wait for recession?
Deciding not to buy a house because you’re waiting for a recession is risky. Firstly, a recession may not happen. But if it does, house prices may fall but your financial situation may get worse as well and you may struggle to get a mortgage. So rather than waiting to see what might happen in the future, it’s a good idea to speak to a mortgage broker to find out what you can borrow on a mortgage based on your current sitation.
Should I buy a house or start a business?
If you want to start a business, bear in mind it can be more difficult to get a mortgage if you’re self-employed, until you can show at least two years worth of accounts. Find more information in our guide on self-employed mortgages.
Frequently asked questions
What are the fees when buying a house?
There are a number of fees when buying a home, including legal fees and a survey, which can add more than 10% to the total bill. So when you’re looking at is now a good time to buy a house make sure you can afford to cover all the costs you’ll need to pay. Find out more in our guide on The costs of buying a house.
What is the mortgage guarantee scheme?
What is the right to buy scheme?
The Right to Buy government scheme gives people the chance to buy the council house they are currently renting at a discounted rate. So if you’re asking is now a good time to buy a house and you’re eligible for the right to buy scheme it’s worth exploring further. And under new rules it will soon be extended to Housing Association tenants. Read more in our guide Right to Buy explained
What’s the best type of mortgage for a first time buyer?
April 15, 2024 
