What a time to be a first-time buyer: With mortgage rates high and house prices falling, should you delay your plans or is it a good time to haggle?

- Advertisement -

  • Most analysts expect house prices to fall next year.
  • What was a sellers’ market quickly turned into a buyers’ market.
  • We debate whether now is a good or bad time for new buyers to climb the ladder.
  • They will need to make sure they can afford higher mortgage rates.
  • If they can, price cuts and motivated salespeople can benefit them.
  • They also need to be aware of the risk of negative equity.

- Advertisement -

First-time buyers may have thought they already faced the difficult task of climbing the real estate ladder.

- Advertisement -

Two years of double-digit house price increases and 40 years of high inflation have led many to think it couldn’t get any worse.

But on top of that, new buyers are now facing some of the highest mortgage rates recorded since the financial crisis, coupled with the expectation that home prices will fall in the near future.

- Advertisement -

Are real estate prices about to fall? High mortgage rates are leading some to believe that prices are about to start falling.

The average two-year fixed rate peaked at 6.65% on October 20, according to Moneyfacts. Although this figure has declined over the past couple of weeks and is now at 6.28%, it is still well above the typical level before the ill-fated mini-budget of September 23, which was 4.74%.

This time last year, the average transaction price was 2.29%, which means home buyers will pay hundreds of pounds more every month compared to those who bought a home last year.

In addition to much higher mortgage costs, new buyers will fear that the country could be on the verge of a housing collapse, raising the risk of negative equity for those who buy with small deposits.

In fact, house prices fell 0.4% in October, the third drop in four months, according to the latest Halifax House Price Index.

According to the latest Rics report on the housing market, market commentators are warning of falling prices and most real estate agents currently expect prices to fall next year.

Some novice buyers will put their plans on hold until mortgage rates come down, or at least until home prices improve.

But waiting and buying a home now can have its benefits if they can still afford higher mortgage rates.

You can check the latest mortgage rates for your deposit size using our tool

Current market conditions may result in fewer buyers competing with each other, allowing more opportunities for negotiation with sellers.

Glue or twist?  Many buyers decide to put their plans on hold, but for those who can afford it, buying a home now can have some benefits.

Glue or twist? Many buyers decide to put their plans on hold, but for those who can afford it, buying a home now can have some benefits.

Jeremy Leaf, a north London real estate agent and former chairman of RICS, says: “Maybe now is the time to buy your first home because some prices are coming down.

“We found that sellers are generally more receptive and open to negotiation than they have been in the past few months.

“But of course it could be that lending criteria become more stringent and employment prospects worsen, which could otherwise convince the first buyer to hold off until the market is more stable.”

According to Rob Bence, co-founder of the real estate forum Property Hub, what used to be a sellers’ market has quickly turned into a buyers’ market.

This is a marked change from the property market over the past two years, when prices soared and competition flared red-hot after the country emerged from the first Covid lockdowns.

Bence says: “Try to remember how crazy the first half of this year was. People bid on houses blindly, begging and cajoling real estate agents in every way they could to secure a viewing.

“And properties were selling for much more than the asking price – that was the norm, not the exception.

“Now, with the general consensus that property prices could fall and market changes are worrisome, it will be much easier for first-time buyers to close deals.”

Why is now the right time to buy your first home?

It is important to remember that sellers, like buyers, decide that now is not the right time to make transactions. According to RICS, sellers are also leaving the market.

However, while this may help counteract any supply/demand imbalance between buyers and sellers, it also means that those who put their homes up for sale now are likely to do so because they absolutely have to.

Take the plunge?  After spending years accumulating a deposit, first-time buyers now face the prospect of much higher mortgage costs and falling home prices.

Take the plunge? After spending years accumulating a deposit, first-time buyers now face the prospect of much higher mortgage costs and falling home prices.

“There are many potential sellers who choose not to put their properties up for sale while they wait to see what happens on the market,” Bence adds.

“This means that those listed for sale are likely to be highly motivated sellers, meaning that bids below the asking price are expected to be placed.

“I think buyers need to be bold with their offerings – the lack of competition is really strengthening their position right now. However, in high-demand areas, they may not get the cheeky discount they’re after.”

How does a first-time buyer identify a bargain?

It can be difficult to decide when it is appropriate to offer less than the asking price, especially for new buyers who are not good at negotiating.

One situation where such an offer has a good chance of being accepted is when there are several houses in the area that are trying to sell.

the cost of living

In this scenario, the buyer may feel more confident offering significantly less than the asking price without offending the seller.

This means that new buyers should do their research and spend some time on real estate portals like Rightmove and Zoopla to understand the typical home prices in a given area and whether sellers are discounting them after a failed sale.


Credit: www.thisismoney.co.uk /

- Advertisement -

Recent Articles

Related Stories