Why NOW Is The Right Time To Buy Property
Buy or Wait, That Is The Question
Recommended by Tony Booth
As an estate agent, property investor and author of books on buying and selling, I am often asked whether now is the most lucrative time to buy property or whether it is best to wait until prices hit rock bottom. The answer, my friends, is to buy now or pay the penalty of investing later.
Most media commentators and those in-the-know, as it were, are currently suggesting that homeowners and serious property investors should hang on until at least the middle of next year before embarking on any house purchase. Their reasons for this vary, though many are saying prices will not hit the bottom until that time. Some are also suggesting prices won’t bottom until 2012 and recovery won’t start properly until 2015.
One of the problems with these predictions is that they are largely based on the statistics that are available now and forecasting that relies on trends, cycles and historic patterns. In reality, there has never been a worldwide property crash quite like this one, so nothing truly compares, which makes any forecast little more than a stab in the dark. Yes, we can calculate when financial markets might start to improve. Yes, we can dare to hope there is a sign of some price-rise light glimmering at the end of this very dark and very long tunnel. But cold statistics don’t take account of how the interaction of human beings will perhaps be the major ‘recovery’ influence in the short term.
In the UK, house prices have fallen dramatically.
While the earlier falls were undoubtedly caused by a stagnating market and lack of finance, we are now in a phase where confidence is so low, it is keeping an artificial downward pressure on values. Demand is rising and mortgage availability is improving, so (in theory) prices should recover as active buyers start to compete against each other. That scenario has yet to happen, but I believe it will happen within the next few months – and when it starts, it could easily become a pricerise rollercoaster that gains momentum rapidly.
Buyers that leave it too late to invest could miss the opportunity of bagging the best chance for a bargain this generation will ever see. The point is, once recovery begins, all those potential buyers that have been waiting and waiting and waiting even more for the right time to buy, will climb onto the rollercoaster and head off to market. This will cause the marketplace to buzz with frenzied and overheated activity. Prices will rise quickly, because the competition amongst buyers will have increased over and above the norm. In short, a situation will develop where there will be more buyers than sellers, which in turn will cause the rules of supply and demand to come into play – and prices will hurtle upwards, albeit for a temporary period.
Some are calling this scenario the ‘bounceback’, suggesting the harder prices fall (and let’s face it, they have all fallen really hard), the faster, harder and higher the bounceback will be.
Whether the bounceback theory will come to fruition is perhaps debatable, but I do believe the marketplace is going to get crowded very quickly – and as we all know, the more people there are around a market stall, the faster products sell and the harder it becomes to find the right product at a competitive price. For now, there are lots of keenly priced properties on the market and sellers can pick and choose at their leisure. Values may fall a few percentage points more over the coming months, but the longer you leave it to take the plunge, the bigger the risk will be that prices will start to climb and the choice of suitable properties will become that much more restricted.
Where and what to buy and how to finance the purchase, may be much bigger and more complicated questions, but generally speaking I do believe the most lucrative and profit-packed-potential time to buy is now.
What do you think?