Is this the best time to buy a property in London

[finace]

Like most novies (there are a lot of us), it's very confusing to decide on the best time to buy property. On one hand there have been reports that the house prices are falling down (one news article said that prices have fallen down to 2004 levels) but on the other hand if you ask any estate agent / developer they insist that the demad has not been greater so there is no reason for them to reduce the prices.

This gets even more funny with the mortgage providers throwing in tantrums about lending.

Can anyone tell me (the novices) on the best course of action.

On a rebound, does it make sense to go for repossed / foreclosed properties.

Thanks in advance for your advice

[Pigmy]

Hi,

Unfortunately there is no yes/no answer but there are a few things to explain what you are seeing.....

House prices are falling - if there is one bit of information that I generally believe it is the House Price Index. But treat it with a degree of caution - it is the average price of houses sold last month not the average value of houses last month (eg if the only property sold last month was a shed for £100 and the month before there was only a £1m mansion, then the price index would show a huge drop. So if the amount of property being sold is slowing as prices drop, then people won't sell and there is a lot of dross on the market. Hence there is a degree of downward spiral for a while which makes the figure looks worse than it actually is).

The value of property being sold is roughly the same as 03/04. You can check that out on the Land Registry website and it will depend upon the area you are looking at (I'm in Portsmouth).

Another thing to bear in mind is that estate agents will tell you anything. The industry is famous for it. They genuinely do have fewer properties on their books. The one I'm currently dealing with suggested that he has 15-20 at the minute whereas he usually has 50-60. So why is this? Basically I think that the main reason is that peple cannot afford to move. There are a lot of people who have owned their house for less than 5-6 years (ie since the 2003 figure I quote above) and these people would to have to sell their property at less than they paid for it. So their mortgage could easily be bigger than their property value - hence they are not moving. This therefore means that there is a very limited supply of new properties coming onto the market.

On the demand side, there are a lot of people now ready to buy. Prices have dropped something like 25% since the peak. There is some views within the press that past house price crashes went to 40% so there are plenty of journo's trying to talk us into another 15% drop. On the other hand, there are a lot of 1st time buyers who have been saving like billy-o for the last 5 years but watching prices increase quicker than their savings. They are now keen to pounce as their own home is now within their grasp.

Similarly there are investor buyers. There is still a lot of cash around in the market and it is still a very cheap commodity. So there are a lot of cash buyers ready to invest in property who are less keen on the actual property as opposed to getting their savings working for them. As a first time buyer you will face a lot of competition from these guys (sorry - me included) who can offer low risk deals (ie not subject to a mortgage, potential no survey, flexible tiemscale).

I've personally always stayed clear of repossessed properties, mainly as they tend to be sold through auction which can actually be a pretty time consuming and expensive way of buying a property. But if you have the time and inclination and are happy with the high risk involved, then go for it.

In conclusion - I'm in the market for a buy-to-let in Portmouth at present as I think the market is right to buy. Its 5 years since I last added to my portfolio. But it is a difficuly market, there is a lot of competition and little choice. So don't be forced into a deal you don't want but most importantly don't be disappointed when the first 3 houses you see, like and make an offer on, fail to materialise. Don't move in in your head and heart until you have the keys. Until then its a business deal!

Good luck - sorry for the ramblings (and poor spelling) but I've had a few beers!

[casualsurfer]

The situation appears to have bottomed out, though there are no guarantees. But my belief is that good properties in nice areas always gets snatched.

Repossessed properties are a bargain but you have to compromise on your choice and it depends on your luck as to whether you got yourself a good bargain.

[hsc-online]

I think property market getting stable last 2 months. so i think this is good time to buy because still buyers have bargaining power.

[brian]

The FSA stress test accounted for a 50% peak to trough fall in house prices.

We're nowhere near there yet!

[investment]

its the best time to buy a bargain in London