Benefits of Buying a House

When I bought a house in early 2005, there were many ‘housing experts’ predicting an imminent housing crash. In fact people have been predicting a house price crash since 2000. Yet, since 2003, house prices have doubled and since 2005, prices have risen by about 35%.

It may be that in the next 12 months house prices may fall by 10%, but, if I had put off a house price purchase waiting for ‘the crash’ to occur then I would not be able to afford a house now, or possibly never in the future.

If house prices do stagnate or even fall, it is not really a problem. I didn’t buy as speculation but bought to live. The rise in house price values is good, I could remortgage if I wanted to. But, the main thing about buying a house is that it insulates you against rising rents. I also see it as an investment for my future. When I retire, I will be able to live rent free (with mortgage paid off). If I continue to rent I would need to find alot of money to pay for rent. Of course, there are also additional benefits to owning a house such as the security of not having to move e.t.c.

Is Now A Good Time To Buy?

Yes,

House prices may fall a little, but, I expect them to recover in the long term. Long term interest rates are likely to remain relatively low. The cost of mortgage payments is unlikely to be significantly higher than renting. But, with buying a house you are making an effective investment. The UK still suffers from a shortage of supply in relation to demand.

Does It Matter if House prices Fall?

• It does matter if you are want to sell in a few years and switch to rented accomodation. If you want to sell to buy another house it doesn’t matter.
• Falling house prices is a problem if you take out a 100% mortgage in the hope that rising prices will give you equity.