Why is it a good time to buy?
2nd May 2008
7 reasons to buy now
1. London is a little different to the rest of the country. According to the Mayor's Office there is a need for 30,000 new properties a year, and only some 15,000 to 20,000 are being built.
2. If people don't buy, they rent. Fundamentally we can see that there is a shortage of property and reasonably low interest costs.
3. Mortgages are available, but only in the same way that they were ten years ago. Then, you would go to your building society or bank, before you started looking, tell them how much you earned, they would do their credit checks and you would then get an 80% or 90% mortgage offer. You would then go out looking to buy and your purchase would only be subject to survey.
4. Are people right to try and play the market and wait? The only people who benefit and should most definitely wait before they sell at the moment, is the people looking to sell up and downsize. If they are not under financial pressures, it is without doubt in their interest to wait. The people who should be buying today, is anyone who is expecting to live in their new home for a minimum of three years. Since the war, during the 12 year cycle, property prices have doubled. And the time to buy any product is when the market is at the bottom. One of two things at the moment, the market is either at the bottom or it will drop a little bit more.
Let's take a £300,000 property and look at two scenarios.
Scenario 1 - The prices drop by a further 10% over the year
Scenario 2 - We are at the bottom and prices will stabilise.
The buyer who waits, notionally will save themselves £30,000 by holding off for a year, but to rent that same product will cost them approximately £300 per week or £15,000. So in truth, their gamble by waiting would save them only £15,000 and the money they paid in rent would have been used towards mortgage repayments on the loan.
5. I fundamentally do not believe that people should try and earn their money playing a market that they are not experts at. They should be focussing on their home, rather than on their investment and property should be viewed as that.
6. If you wish to speculate, don't do it with your home and your lifestyle, do it with your spare money.
7. If you are moving up now, it is definitely worth purchasing as you should fundamentally be focussing on the differential between the two properties.