Money is the talk of the town at the minute. The cost of the weekly shop is increasing, the cost of energy and house bills are increasing and people are seeing their monthly rent or mortgage payments rise without an end in sight. Those who want to buy a house may be put off from doing so.

It’s all being driven by inflation and rising interest rates which, if you aren’t accustomed to economic jargon, basically means that things are getting more expensive and the financial institutions are trying to slow this rise by making the cost of borrowing (and therefore spending) money more expensive.

This puts homeowners and prospective homeowners are in a tricky position. There is much uncertainty around whether now is the right time to move, sell or buy – so this article will try to break down the main factors that you might want to consider whilst making your decision.

What factors should I be considering?

The main factors that are fundamental if you’re deciding whether to buy or move house right now are interest rates, inflation, stamp duty and the general housing market.

As of September 2022, the Bank of England base interest rate is 2.25% but this could increase further if inflation doesn’t fall. This is the highest it’s been for over a decade and this influences wider interest rates which are often a lot higher.

Inflation rates are currently nearing 10% which means that the average cost of living is around 10% more than what it was at the same point last year. This is significant not in direct relation to buying a property itself but because your disposable income and ability to save for a deposit or moving fees is probably much less. Although inflation can impact general property prices, this is typically an independent market.

Stamp duty regulations were recently changed by the government in an attempt to benefit house buyers. The new policy will see the minimum house price on which someone has to pay stamp duty increase, which is now in effect.

It is important to note that stamp duty is not exclusively a residential property need, commercial properties such as shops, offices, and agricultural land, also have stamp duty applied to them. This is a good understanding to have, as you may need this information in the future, as there will be some differences from when you buy a home. A commercial stamp duty calculator will be able to assist you when needed, so that you are well aware of what is coming, just like when you bought your home.

The housing market in general has been rampant since the pandemic largely because of suppressed demand in the early stages of the outbreak and subsequent market-stimulating policies in the following months and years. House prices have been increasing with inflation but there are signs that market growth is starting to slow.

But what does this all mean if you’re deciding whether to buy now or in the future?

The case for buying now

All factors considered, it’s not a particularly strong case for those arguing that buying now is the way to go. High-interest rates, the likes of which haven’t been seen in decades, mean that you’ll be locking yourself into a mortgage paying more every month or risking even further rises with a variable rate mortgage.

There is the possibility that interest rates could rise even further in the future and so could property prices, so waiting might not do you any good. However, current rates of inflation are unsustainable and experts are pointing to an eventual drop-off in inflation and property prices.

The guaranteed benefit of buying or moving now is to take advantage of the stamp duty changes which could save you a few thousand if you’re already a homeowner. If you’re currently renting and seeing your monthly rates rise, then you might consider getting on the property ladder as a better alternative because you’ll probably be paying similar amounts each month and you’ll be building equity. Overall, it’s going to be ideal to reach out to a mortgage broker and discuss this with them, as they’re going to be able to give the best advice thanks to their insight. 

The case for waiting

The argument for waiting to buy or move is a much stronger one. Interest rates are currently increased at the base rate to control the rate of inflation, but once this calms down, interest rates should return to more buyer-friendly levels. This will make borrowing more affordable again and you could be able to secure a much better deal on a mortgage – the only issue is when it happens and how long you could be waiting. But if you can be patient, you could get a much better deal on one of the new homes around the country in the next few years.

The current levels of inflation and interest rates are probably going to dampen demand for property which is likely to slow the housing market down in the short term. This could lead to property prices falling, therefore giving you more options in line with your budget.

No one can convincingly predict or guarantee these changes in the property market because even in a seller-friendly environment, a lack of available housing to move into can limit the supply of available properties – leading to bidding wars on a select few where prices remain high or still increase. However, if you hedge your bets on the long term you could be able to strike a better deal than you would now.

Please note that this is a contributed post. Views and opinions may not necessarily be my own. Please seek independent advice as appropriate.