The property market is Britain's main topic of interest but it's proving a hard market to call. Even with the whiff of a double dip in the air, house prices have managed to rise up to around 15pc of their peak and the latest figures show that the market is still rising, albeit slowly.The market is finely balanced, there are similar numbers of home buyers and sellers, and no one can say which way prices will go,the market has never been more interesting – in some areas it may be time to sell, in others the right time to buy.
So how can you navigate your way through this jungle?How can sellers pick the right time to put their property on the market, and how can buyers make sure that they pay the right price and don't find themselves burdened with debt that they cannot afford to repay?For most people, the key decision maker in whether now is the time to buy or sell is the all important direction of house prices.
The consensus among economists and housing experts is that the recovery is running out of steam, and that prices look set to stall at best and fall at worst. Such pessimism is fuelled by huge job losses within the public sector and the worry of Britain slipping back again into economic downturn.A typical first-time buyer at present requires 4.4 years' income before tax to even get a foot onto the property ladder. Nationwide's average price to earnings ratio since 1983 is just 3.3. By this measure of affordability, prices would have to fall by 28pc from their current level to reach the long-term average for first-time house buyers.
Another critical component, not only for their affordability of your mortgage but also a huge influence upon house prices are interest rates. A Reuters poll of 61 economists last month found that the majority expected no rise in rates this year, followed by an increase to .75pc by the end of the first quarter of 2011 and a further rise to 2pc by the end of the year. As soon as the bank rate edges up, lenders typically follow suit by increasing their mortgage rates.
LLoyd Davies from Conveylaw, a large nationwide firm of conveyancing solicitors states that ''Low interest rates should be supportive for house prices. But public sector job losses, tax rises and spending cuts will squeeze household incomes further, as well as denting confidence.What's more, the uncertain outlook for mortgage funding means that the availability of mortgage credit is unlikely to improve and could even be tightened again later this year.''
Potential sellers may find it quite a gamble staying put and anticipating that the housing market will continue to gain ground than to sell their home at present following a recovery in house prices and at a time of improved mortgage lending conditions.There has been an increase in the supply of property coming to the market post axing of home information packs, consequently the actual number of new instructions coming in to estate agents is now surpassing buyer interest.The advice to buyers is to drive a hard bargain.
The recovery has not brought the housing market back to the boom days and many sellers will be fearful of a housing slumpSome areas have oversupply, others have shortages, although sometimes only of particular types of property.
To actually gauge the market in the area in which you hope to purchase, you cannot actually be better informed than personally investigating that area. Do the legwork, visit the area at various times of the day.View as many properties as is possible, make offers,gauge the reactions from these offers. These reactions could be very informative.There is another reason why now might be the optimum time to dabble in the housing market – mortgage rates are at a seven-year low.You can avoid a nasty rise in your mortgage repayments when interest rates do rise by choosing a fixed-rate home loan. Although these mortgages tend to be more expensive than variable-rate trackers, you can pay less than 4pc for two-year fixes, while those who want certainty for longer could fix for 10 years at 4.99pc from Yorkshire Building Society, although you would need a 25pc deposit.
For now, the housing and mortgage markets are in as good health as they have been since the credit crunch took hold, but the outlook looks decidedly grim.Someone with access to funding who could cope with a rise in interest rates might be able to grab a bargain by choosing the area and property type carefully. Existing home owners whose finances are stretched to the limit might equally take the opportunity provided by the current resilience in prices to get out of the market before prices fall.