Is Buying a Home in the UK Worth it?

Is Buying a Home in the UK Worth It?

In the UK, it is not a very good decision to buy a home if you plan to sell it within five to ten years. When you own a home, you don’t have to pay rent but like most buyers, you may overlook added costs of owning a home. The added costs include building insurance and the maintenance costs of the property.

In fact, renting has financial benefits and many buyers underestimate the benefits. You will need to wait for a decade to reap the benefits of being a homeowner. So, if you buy a home and sell it within a few years, most likely you will run the risk of financial loss.

Conventional wisdom is wrong

Conventional wisdom says that it a good idea to buy a home than renting one. But if you are planning to own a house for less than a decade, the opposite seems to be true.

If you relocate within a few years, you will find it difficult to regain the costs associated with the transaction. It may also reduce your equity because you will not deal easily with middle length term prices. This problem is much more acute for households under strict financial constraints.

Prolonged periods of deflation has not only affected Britain but also many other countries. In Britain, Brexit will certainly affect the housing market. Some experts say that the prices of new homes will go down because of Brexit. It may be a great thing for new buyers, but if you plan to sell the home later on, you may run a financial risk. If you make a rash decision now, you may regret later.

Making a decision

One study conducted by Dr. Isaac Tabner of Stirling University clearly suggests that when deflation or zero inflation hits, people who live in rented homes enjoy more financial benefits than those who live in their own home.

If you now buy a home without a mortgage and the deflation is just one percent a year, you will lose 50% of the value of your home after 45 years. People who are first time buyers will not find this prediction pleasant at all.

So it is a good idea to buy a house only if you have sufficient capital to manage a mortgage payment (read more about this here). Otherwise, you should wait until you have that financial solvency.

If you have not yet decided whether to rent or buy a house, you should take your individual circumstances and market conditions into consideration. Dr. Tabner’s research will certainly help you to make an informed decision.

If you really want to buy a house, observe the property market and speak to your estate agent. Experienced chartered surveyors can also help you make a good choice.

UK Housing Market Predictions for 2018