Is now the time to buy?

[Munro-Price]

Many think now is the time to buy, with the property market crawling along the bottom. A little more availability of mortgages would help prices gently nudge up and confidence return, but do we have to wait until after the election?

[brian]

I think we're in a double dip recession, and once the economy slows again over the summer we're going to find ourselves in a new stage of the financial crisis.

Some people act like we've just had a normal recession and everything is otherwise normal - but the economy is still in intensive care. We're on record low interest rates, which still means debt is cheap to service - mortgage rates are on similar if not better terms than during the property boom itself! Because of them, people are taking "advantage" of the first falls to buy in, presuming all will suddenly become normal again. But when those interest rates start to rise, watch how badly those mortgage rates sour.

And even if we're not in a double dip, it will take years for the interest rates to rise without causing damage to the economy, which can only leave house prices relatively flat for the next few years at least.

I tend to take the bearish view, because historically in major financial crises, the first wave of doom is followed by a wave of unrealistic euphoria. I see that in all the indicators, not least property and stock markets.

By precedent, that means we're due a serious downtime to start this year.