Is Now a Good Time to Buy a House? (2021)

16 November 2021, by Matt Stevens

You might have saved a healthy deposit, built up a strong credit score, and started looking for the property of your dreams. But, there’s so much noise surrounding the housing market at the moment that you might still be wondering whether right now is a good time to buy a house.

There are a lot of different factors you need to take into account, and the answer won’t be the same for every homebuyer. Here, we’re going to outline what you need to consider if you’re thinking about purchasing a home at the moment and provide you with an idea of what the housing market is likely to look like from now until the end of 2021. We’ll cover:

Read on to find all of the information you’ll need to make an informed decision.

What to consider when deciding whether now is the best time to buy a house

If you’re currently in a strong financial position, you might be wondering “should I buy a house now?”. There’s no one-size-fits-all answer to that question, but there are a variety of factors every prospective homebuyer should consider before deciding to take the plunge. For instance, a lot has changed in the real estate space over the last few months due to a wide range of events, such as the coronavirus pandemic and Brexit. So, it’s wise to consider the impact of these developments ahead of starting the house buying process.

If you’re thinking about buying right now, here’s what you’ll need to keep in mind.

The Mortgage Guarantee Scheme is still in place

If you have a small deposit of 5–9%, now could be a good time to buy, as the government’s Mortgage Guarantee Scheme is still in place. Introduced on 19 April 2021, the scheme reduces the risks for lenders who offer 95% mortgages, which means a lot of mortgage providers are now more comfortable with accepting 5% deposits.

The scheme can be used for properties worth up to £600,000, and it isn’t restricted to first-time buyers or new-build homes. Well-known lenders including NatWest, Barclays, HSBC, Lloyds, Santander, and Virgin Money have signed up to the scheme, and it’s set to last until the end of 2022.

There are also a number of other support schemes you may be able to benefit from, depending on your situation. These include Lifetime and Help to Buy ISAs, as well as Help to Buy Equity Loans. Check out our guide to Help to Buy schemes for more information.

Mortgage interest rates are at a record low

It may also be a good time for you to buy at the moment because mortgage interest rates are currently at a record low. And, while the most competitive rates, which are as low as less than 1%, are available to those with a deposit of at least 40%, most buyers will benefit.

Just keep in mind that the interest rate you’re offered will depend on a range of factors, including, but not necessarily limited to:

  • The size of your deposit
  • Your credit score
  • The type of loan you choose
  • The length of your mortgage deal
  • How you choose to pay your mortgage fees

Here at The Mortgage Genie, we’re experts in helping our clients to get the best mortgage deals. So, if you would like help with getting the best interest rate when buying your first or next home, we’re here to assist you.

House prices have risen over the last year

In May 2020, the Bank of England predicted that house prices could potentially drop by 16% as a result of the ongoing COVID-19 crisis. But, we’ve actually seen a huge surge in the asking prices of properties. This is down to a number of factors, including:

  • A rise in demand
  • Increased desire for more indoor and outdoor space
  • Low mortgage rates
  • The stamp duty holiday

The rise has been significant. In fact, according to the most recent Halifax House Price Index, house prices in September 2021 were 7.4% higher than in the same month of 2020. It is quite likely that the surge will die down throughout the last quarter of 2021, though, as the stamp duty holiday has now ended (more on that later), which means there could be less of a rush over the next few months — especially as people generally like to stay put around Christmas time, anyway.

The rise in house prices may work in your favour if you already own a home and are looking to sell and purchase a new one. This is going to be particularly beneficial if you’re planning to downsize or buy property in a more affordable area. But, if you’re a first-time buyer, it may be wise to monitor the market over the next couple of months to see if prices begin to fall — especially if that means you’ll be able to save a larger mortgage deposit for when you do come to buy.

The stamp duty holiday has ended

If you’re looking to buy a home in the final quarter of 2021, you will have missed out on the stamp duty holiday that was introduced in July of 2020. This was designed to give the UK property market a much-needed boost during the COVID-19 pandemic.

On 1 July 2021, the stamp duty holiday started to be tapered off, as the property price threshold was lowered from £500,000 to £250,000. Then, on 1 October, the stamp duty holiday officially came to an end.

This means standard stamp duty rates now apply. Nobody will pay any stamp duty on a house worth £125,000 or less, but you will have to pay stamp duty on anything over this.

However, if you are buying your very first home in England, Wales, or Northern Ireland, you will benefit from stamp duty relief. This means you won’t pay any stamp duty for a property with a value of £300,000 or less, as long as it’s going to be your main home. If your home costs more than £300,000, you’ll pay 5% on any value between £300,001 and £500,000, and then standard rates above that.

Is it a good time to buy a house after Brexit?

Finally, you may be wondering how the housing market has been affected by Brexit and whether you need to factor the impact into your plans.

House prices did initially stagnate following the 2016 referendum, although that was fairly standard for the time of year, as the vote was held in June. Prices tend to rise in spring and plateau for a few months after, so this didn’t come as too much of a surprise. There was a lot of uncertainty around Brexit in late 2018 and early 2019, and we saw house prices fall as a result, but then they began to rise steadily again ahead of the 2019 election.

In 2020, the COVID-19 outbreak had a bigger impact on house prices, as demand grew and the surge was bolstered by the government’s introduction of the stamp duty holiday, which has since come to an end. The effects of the crisis have almost eclipsed those of Brexit, so it’s difficult to determine how leaving the EU has truly affected the UK’s housing market.

According to research conducted by Which?, experts are generally optimistic about how the property market is weathering the post-Brexit storm and, so far, it hasn’t had a huge impact — especially compared to the coronavirus pandemic.

What is the best time of year to buy a house?

The beginning of spring tends to be a very fruitful time to look for a new property. This is usually when a lot of properties are put on the market, and a combination of warmer weather and thriving gardens allows sellers to show off their homes in all their glory. Sunnier days also tend to put everyone in a better mood, which can make property hunting a more enjoyable experience.

June and July tend to be quieter on the property market, as people are usually planning or enjoying their summer holidays. Similarly, November and December are typically slow because people don’t like to move house over the Christmas period. Sellers thinking about putting their homes on the market tend to wait until the new year to do so.

Property prices are usually at their lowest at the beginning of the year, as sellers might be looking to offload their homes quickly for a new start. So, this is likely to be a great time to buy if you want your budget to stretch as far as possible.

If you can hold out until the height of summer, you could also find a good deal, as others take time off from looking for a new property, but the market tends to ramp up again around August. Again, this is when the landscape can get more competitive and prices will creep up.

What is the best month to buy a house?

The months of spring — March, April, and May — are traditionally great for prospective homebuyers. This is typically when you’ll have the most choice, as a lot of sellers tend to put their homes on the market as winter comes to an end. Prices can be higher, though, as there can also be more competition among buyers.

If you’re on a strict budget and are willing to compromise with fewer options, July and August, along with November, December, and January are likely to provide you with the best deals. There tend to be fewer buyers at these times, and sellers are often looking to make a quick sale to start the new year strong, so you’re more likely to have a lower offer accepted.

When is the best time to buy a house in the UK?

While we can give you lots of advice based on our extensive experience working alongside the property market, the best time to buy a house will truly depend on your situation.

The ideal time to buy a house is when:

  • You’ve saved a healthy deposit
  • You’ve earned a strong credit score
  • You’re in a strong financial position
  • You can afford a mortgage that will buy you a house you love (use our mortgage calculator to determine how much you can expect to borrow)
  • You’re confident you can get a good deal

Of course, it’s a good idea to take external factors into account, but every buyer’s situation is different and you’ll understand your needs best.

Is now a good time to sell a house?

Finally, if you own an existing property and are looking to move somewhere new, you’ll also want to consider whether now is a good time to sell up. And, as we mentioned previously, house prices have risen significantly over the last year, so it’s very much a seller’s market at the moment.

If you know your current home has become more valuable in recent months, it might be tempting to cash in and use your equity to make your next purchase. Whether this is a wise idea or not will depend on the new property you’re looking at. You’ll be buying in the same market you’re selling in, so it’s likely the price of any new house you’re considering will have also risen significantly throughout 2020 and 2021. This means that the uplift in the value of your current home might not go as far as you would like.

You should also keep in mind that, with such high demand, a lot of properties are selling for more than their asking prices at the moment. So, it’s important to take your time, do your research, and carefully consider what is going to be the best move for you — don’t make the decision exclusively based on the current value of the home you’re looking to sell. Always look at the bigger picture, too.

Here at The Mortgage Genie, we’re here to help you through the process of buying a new home, whether you’re a first-time buyer or have an existing home to sell. Whatever the time of year, we can help you to find the best mortgage and home insurance deals to suit your situation, so you can buy your next home in confidence.

If you would like our support throughout the process, get in touch today — our team of experts will be more than happy to help you. 

Your online mortgage broker
With access to 90+ online lenders we ensure you always get the best deal
Buy a Home
Remortgage
Insurance
DIY Mortgage!