Should You Buy A House In 2013?


Well the New Year is upon us and many first time buyers might be asking themselves a very important question right now, ‘Should I Buy A House In 2013’? The last few years have been turbulent in the UK housing market, but not as turbulent as you might think given the state of the economy. Does this mean that the economic dust has finally settled and it’s now safe to jump on to the much coveted housing ladder? I’m reluctant to give a firm yes or no answer to this question but here are a few important points to consider before making the leap!

Interest Rates

I recently had a chat with a mortgage advisor and he informed me that first time buyers can currently get a two year fixed rate mortgage at a rate of 3.99% with a 10% deposit & no set up fee, if you want a 5 year fixed rate it’s more like 4.59%. These rates are still extremely low when you consider the mortgage rates of past decades and are well worth consideration. Although interest rates have been low for a long time now, there are no guarantees they will stay that way. Inflation is still running above target and market confidence in the UK economy could change overnight.

Mortgage Availability

The banks have been surviving on cheap credit and handouts for a long time now. I know bank lending criteria is tight at the moment. with many banks cherry picking only the most credit worthy borrowers, but this doesn’t mean things can’t get worse. If the cheap credit and money printing were to stop, we might see banks once again withdrawing the best mortgage rates and tightening lending criteria further.

There are two ways you can view this information. If you desperately want to get on the property ladder it might be wise to take advantage of the low rates and get a mortgage while you still can. On the other hand, if mortgage availability does dry up and rates do increase, this could negatively affect house prices and you might find yourself wishing you’d waited that bit longer but then you might not then be able to get a mortgage if you do decide to wait.

If I were thinking of buying a house in 2013 I would be asking myself the following questions

1) Am I happy to stay put for at least the next 5 years? ~ The Economy is still in a precarious position and the next few years could well throw up some shocks. If house prices were to drop suddenly you might find yourself trapped in a house you can’t sell due to negative equity. If you’re happy where you live and don’t see any reason to leave the area in the near future, then buying a property might be worth the investment when you consider the dead money you’d be paying out in rent.

2) Do I Feel Secure In My Job? ~ Some major names on the UK high street are really feeling the heat at the moment. The first quarter of 2013 could see more retail casualties with other sectors suffering as a result. If you were to lose your newly purchased home due to a job loss, you might well regret the purchase and wish you’d protected your credit rating to buy a house at a later date.

3) Could The House I Want To Buy Accommodate A Family? ~ You might not be planning a family right now but life does have a tendency to throw up surprises! In an uncertain economy with future house prices in the balance, it’s always best to plan for the unexpected if it’s within your budget.

4) What Would I Regret More? ~ If the affordability & availability of mortgages were to take a turn for the worse in 2013, what would you regret more? Buying a house and seeing it’s value temporarily drop (When you take into account long term house price trends), or not buying a house while you had the chance?

Think Long Term

If you’re buying a house with a short term view then it’s always a game of chance, sometimes the market will go for you and sometimes against. If you buy a house in 2013 with a long term view, you’re more likely to be happy with your decision, though as we’ve mentioned life does have a tendency to throw up surprises.

2 Responses to Should You Buy A House In 2013?

  1. We won’t be buying a house in 2013 as we are already living in one. I would likely ask myself all the questions you would ask yourself. It is a big commitment to own a home and one that comes with risk (what doesn’t though). If I didn’t own a home I would not buy one in 2013 with the state the economy is in I would wait. Homes in Canada I think are way overpriced and at some point they are bound to retract and come back down to reality. That’s when I would likely start looking. Mr.CBB

  2. Matt says:

    Personally, I think house prices are still too high. The average house price is £250,000, and the average wage is £26,500, so the average joint wage could be up to double this. That means the average house price is still nearly 5 times the joint average wage. When you consider rates are at an all time low, when they move, they’re only going to go in one direction, and that’s upwards. Given that first time buyers will opt for as much house as they can afford, (well you would wouldn;t you?), I think FTB’s buying now might be in for a nasty shock.

    Having said that, I’m not sure prices are going to fall for some time because people rarely sell a house for less than they bought it for unless they really have to, maybe because everyone assumes property prices will always go up. Certainly that’s been the case overall for a century now, but that isn’t something sustainable surely??

Leave a Reply

Your email address will not be published. Required fields are marked *