The last few years have been unprecedented, especially if you work within the NHS! The housing market has had its fair share of turbulence too. Average UK house prices increased by 9.8% in the 12 months to December 2022, down from 10.6% in November 20221.
Although this shows a slowing in the market, mostly due to the rise in interest rates and the overall cost of living crisis, it’s hard to predict where we will be by the end of this year with absolute certainty. 
The UK’s house buying spike in lockdown seems like a long time ago, with houses taking considerably longer to sell now than 6 months ago, as illustrated by the for sale boards no longer flying up and down on the street in a matter of days.
The pandemic price rise spike meant some first-time buyers could not get their first foothold on the property ladder, and this trend has continued with many struggling to battle the affordability requirements of mortgage companies to secure the necessary deposit to get started.
There have been additional regional property challenges during and since the pandemic. We see many making the most of remote working by escaping the cities and securing a more natural environment, hence pushing up pricing in rural areas, often pricing locals out of the market. Don’t even mention DFLs (Down From London) to anyone you know from Cornwall2.
After the mini-budget in October, we experienced exceptional levels of panic in the mortgage market with many lenders pulling their products. We have since seen some stability return to the market although not to previous levels.
Compared to recent years mortgage product rates have increased, so borrowing is more expensive and market experts predict a drop in house prices by as much as 15%3. It is likely an increase in interest rates will have an impact on house prices. If interest rates rise, the cost of that mortgage could become unachievable. With that, it’s likely there will be a drop in demand, which could lead to lower house prices.
All of this turbulence is leaving many people uncertain as to whether they should rent or buy a property right now.
Market trend
We are all seeing the cost of living crisis soar and the impact this has on our day-to-day lives. Monthly bills, goods and services are much higher than a year or two ago, leading many to postpone buying a house. This is especially the case for the first-time buyer.
The average age of a first-time buyer is 34, 6 years older than the average age of 28 in 2007, and 8 years older than the average age of 26 in 1997. In the 25-34 age group, 55% now rent, up from 35% in 19984.
Those postponing buying and remaining in rented accommodation are finding themselves at the mercy of Landlords who feel the need to increase rent based on increased mortgage rates and/or their own financial pressures.
The HomeLet Rental Index5 tells us the average rental price for a new tenancy in the UK was £1,172 in January 2023. That figure represents a decent mortgage repayment. It would pay for borrowing of £245,499 over 30 years paying 4% on an interest, capital and interest repayment basis. (Mortgage Calculator UK)
So, is now the time to stop renting and start buying?
The argument is and always has been that the money you are spending per month on rent could be going towards your own property instead of paying your landlord’s mortgage. This is true in a rising housing market but not necessarily in a flat or falling market. It is also worth remembering that the upkeep of a rented house is still the landlord’s responsibility.
Everyone’s position is individually unique, and there is no one size fits all approach to this. Some believe getting on the property ladder as soon as possible is advantageous. The flip side of the coin is that you need to expect to be in a house for the mid-term due to the costs associated with purchasing and selling. If your work is likely to require you to move, which can be typical in the early stages of your medical career, you may need to give some thought as to when is the best time to buy.
Traditionally early Spring has always been the good time of year to house hunt, with longer days, more time to view properties and most people wanting to buy and sell before the summer holidays. So, we wait with bated breath to see if this Spring follows this usual form. With house prices possibly falling, could now be a good time to think about moving from the rental market to ownership6 , making a small deposit go further?
If you are thinking of buying a property or you just want to chat through your options please do get in touch. We are highly experienced in dealing with mortgages for medics and dentists and the peculiarities they bring, so let us guide you.
Do also remember mortgages are a long-term commitment so you need to be able to afford them now and in the future. Your home may be repossessed if you do not keep up repayments on your mortgage.
Are you currently renting but looking to buy a house? What concerns might you have about buying a property now? Let us know by adding a comment below.
Sources
1UK House Price Index – Office for National Statistics (ons.gov.uk)
2Cornwall property: Are second homeowners pricing out Cornish locals? | Express.co.uk
4 First-time buyer statistic’s
5 HomeLet Rental Index | Average Rent UK |Rental Price Index 2020 | HomeLet Rental Index