Is it a good time to buy a house?

2010 was earmarked by many experts as the year that would kick off the start of recovery in the moribund mortgage and housing markets. And, with just three weeks of the year under our belts, indicators are suggesting this could indeed be the case.

So is it time for buyers who’ve been waiting in the wings during the downturn to finally make their move?

Signs of life

Well, the mortgage market is looking up. According to the latest data from, the number of individual deals available has smashed the 2,500 mark for the first time since May last year – and marks the third consecutive monthly increase.

While the number of mortgages available is still a far cry from the staggering 30,000 that were up for grabs in the pre-crunch days of 2007, things are at least heading in the right direction. Hannah-Mercedes Skenfield, mortgage channel manager at, said: “This is good news for buyers as more mortgage choice means more mortgage competition.”

Evidence of this can already be witnessed with the likes of Woolwich edging down the cost of its lifetime tracker mortgages this week by up to 0.20 percentage points. This is in spite of the fact that the Bank of England base rate has remained frozen since March last year.

Woolwich was hot on the heels of a spate of lenders – including Halifax, HSBC, Coventry and Nationwide – that also slashed the cost of their fixed rate deals as the year got underway.

House prices up from the floor

The housing market is looking rosier too. According to Nationwide – which reported average price hikes of 0.4% in December – property values are now 8.9% up from the floor of February 2009.

Halifax also reported an upward trend of 1% in December – the sixth consecutive monthly rise. And according to its data, average house prices are up an even greater 9.4% from their trough recorded in April 2009.

Not out of the woods…

But while this may instil renewed confidence among those waiting to make their debut on the property ladder, they are not clear of the woods yet.

Firstly, despite one of the worst housing crashes in history, the cost of the average home is still hovering between £160,000 and £169,000 according to both house price indices. And with mortgage lenders still insisting on a minimum10% deposit, that’s a hefty £16,500 first-timers will have to find – without factoring in buying fees.

What’s more, forecasts for the future of the 2010 housing market are still not clear. According to a poll published this week from Reuters, which averages out predictions from around 30 key market commentators, house prices will increase by 1.6% in 2010 and 2.5% during 2011.

Yet some of the most recognised indices such as from Halifax, Nationwide and property website Rightmove, forecast no movement at all for house prices this year, putting first-time buyers on an even keel. Martin Gahbauer, chief economist at Nationwide, warned: "The experience of 2009 demonstrates how unpredictable the market is … and that one should always be prepared for the UK housing market to surprise.”


Confusingly, other commentators are far more pessimistic. Jonathan Davis, chartered financial planner at IFA Armstrong Davis, reckons that 2010 will see a further 10 to 15% wiped off the value of property – with the second half of the year showing higher falls than the first.

Ultimately though, no one has a crystal ball and – in the very long term at least – property has proved to be a fruitful investment. A Halifax report published to coincide with the start of the new decade, shows that the average UK house price has increased in real terms by 273% over the past 50 years, at an average annual rate of 2.7%. This is faster than the 2% average annual rise in real earnings over the same period.

Time to jump?

Having weighed up the pros and cons, if you opt to take the plunge in 2010 as a first-time buyer, here are some top tips that will smooth the journey:

Save hard: You’ll need to save a deposit of at least 10% of the property’s value in order to qualify for a mortgage but the more you can save the better. Choice is still limited if you need to borrow 90% though, with the most competitive mortgages only available to those with deposits of  at least 25% - in some cases you need to have 40% or more to put down.

Get a mortgage ‘agreed in principal’: Before you start looking for a home find out if – and how much – a bank or building society will be prepared to lend to you with a mortgage Agreement in Principal. An AIP is not legally-binding but it’s useful as you at least know how much you’ll be able to borrow. There’s nothing worse than finding the house of your dreams only to then discover you can’t afford to buy it. An AIP also shows estate agents and sellers that you are a serious buyer.

Get ahead by checking your credit score:  When you apply for a mortgage, the lender will do a credit search on you. If you don’t have a good credit score, you have little chance of your application being accepted.

It’s therefore well worth getting hold of a copy of your credit report and checking that all the information on there is correct. If there are any discrepancies you can get them resolved before making your mortgage application.

Visit’s credit checking channel to apply for a copy of your credit report.

Get a survey: When you have been granted a mortgage and found the home you want to buy, get a survey carried out on it. Don’t mistake this for a lender’s valuation which – although is typically paid for by you – only serves to demonstrate to the lender that the property is adequate security for the loan. A valuation alone won’t expose any defects such as damp or subsidence.

It’s therefore advisable to get a Homebuyer’s Report or full structural survey done, just in case any horrors are hiding.

Play hard ball: The property market is still a world away from its heyday and in many instances it’s still a buyer’s market so you may find there is room to negotiate on the price. If you’re a first-time or cash buyer, or are currently in rented accommodation then don’t underestimate your position – the fact any offer you make on a property isn’t dependent on you having to sell your existing home will be very attractive to many sellers and puts you in a strong bargaining position.

Please note: Any rates or deals mentioned in this article were available at the time of writing.

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