The Best Time to Buy a House in the UK

The average UK house price stood at £289,824 in July 2023.

Despite drastically high mortgage interest rates, average property prices in the UK have fallen since their steep rise in the autumn of 2022, but prices are still higher than they were this time last year.

On the whole, house prices have only increased by 0.1% since last year, making 2023 the slowest year for annual house price growth since 2012.

Why are house prices dropping?

High mortgage interest rates make buying a house more expensive, thus making potential buyers hold off on purchasing new homes, reducing the demand for houses. This reduced demand increases the competition between sellers and encourages them to decrease their asking prices to encourage a sale.

High mortgage rates have also skewed the desire for renters to buy their first home. As mortgage prices have made it cheaper to rent a house than make monthly mortgage payments, fewer renters are making the leap to purchasing their first home, and are instead waiting for the market rates to cool. But whether this will happen soon is up for debate.

It’s hard to predict exactly what will happen to mortgage rates, but the average rate should continue decreasing gradually and stabilise in line with the base rate of interest. It’s becoming far less likely that the base rate of interest will reach the feared 6.5% predicted in June, so mortgage rates should keep falling to reflect this.

However, many things impact the mortgage rates banks will offer, including your credit history, your deposit amount, and the length of your mortgage.

Like all commerce, mortgage rates are also impacted by the relationship between supply and demand. If fewer people are purchasing houses at the current high rates, it’s likely some mortgage providers will reduce their rates to encourage buyers to purchase through them, rather than their competitors.

There are lots of things to consider here. These are some of the key pros and cons of buying your first home now:

Essentially, you’ll need to consider all these factors, combined with your own financial situation, when deciding whether to buy your first home.

According to the figures, now isn’t a particularly great time to sell, but it could get considerably worse in the near future. According to Rightmove’s house price index, property asking prices are in a downward spiral, with just over 36% of properties on the market having their asking price cut in August 2023.

While average house prices have seen a modest increase since March 2023, house prices are still below the record-high levels seen in autumn 2022, and the average amount of house sales agreed dropped by 18% compared with August 2019.

As usual, it all comes down to your individual circumstances. If the property you’re looking to buy is likely to cost less in the current market conditions, and you’re looking to stay there for the longer term, it might make sense to sell and make the purchase.

On the other hand, selling and buying a property can take as long as a year in some cases, so you may find making the sale now means you end up selling your property just as the market rates improve.

Generally speaking, the housing market tends to follow a cycle of four stages:

1. Expansion

2. Hyper-supply

3. Recession

4. Recovery

Understanding this cycle is very important if you want to time your property purchases and sales to make a profit, but these events can all have very unpredictable durations, and they can have external impacts on your own finances.

Expansion – Good time to sell

The expansion stage is when the markets see house price growth due to an improving economy. This is a good time for sellers as there is an increased demand for housing, and potential buyers have more money to spend on higher-value properties. If you’re buying in this phase, consider buying early before the prices increase too much.

Hyper-Supply – Sell early, or hold on to your assets

The substantial increase in the number of properties available on the market, caused by the low-cost financing available in the expansion stage, leads to a higher supply of properties than demand. This causes declines in property value.

It’s during this phase that the market turns more in the favour of buyers. Property investors often hold on to their assets at this stage as sale prices will be typically low, but a worse time for sellers is approaching.

Recession – Good time to buy, if you can afford it

During the recession phase, the supply of housing far exceeds demand, so sales prices often drastically reduce. This is a good time for buyers as house prices are lower than at any other time during the cycle. However, the economic hardship will impact your buying power too, which may mean you have less to spend on the property you’re after.

Recovery – Good time to buy

This is the hardest stage to spot, as market conditions will still be reeling from the effects of the recession. Property prices will remain low, but the outlook will improve for sellers with the dawn of the expansion phase.

This is the perfect time to buy, as more properties will be available below their market value, and you’ll be able to sell these for a profit in the expansion phase. Sellers will begin increasing their prices slowly at this stage, which will lead the market back around to expansion.

If you’re trying to work out when to buy a house, a good starting point is recent market history. Take a look at the house prices in your area over the last 10 to 15 years. You should see noticeable swings in the market every two to three years.

These swings should give you hints about what the markets are doing at the moment, whether prices are currently higher or lower than average, and whether they’re likely to increase or decrease in the near future.

Note, however, that a historical swing in one direction doesn’t guarantee the market will go the same way in the future.

Understanding supply and demand is key to finding the best deal when making a purchase. It’s based on two key economic laws devised by the philosopher and economist Adam Smith. If the supply of a good or service is higher than the demand for it, prices will fall. If demand exceeds supply, prices will rise.

The supply and demand theory can be used to determine the direction of property prices. If demand is high, property prices will likely increase as sales increase and houses become harder to find. If consumer demand is low, you may get a better deal on the property you’re after as prices will be lower to increase competition.

Supply and demand aren’t just impacted by the economy. Smaller, more predictable things can affect it, like the time of year. Take a look at our full rundown of the housing market throughout the year.

Winter

Winter is usually a quiet period for the housing market. Most consumers spend winter preparing and recovering from Christmas, so large expenses like house buying aren’t usually their top priority.

This reduction in demand results in a flooded market and lower house prices, making winter a good time to purchase a property, possibly for less than the asking price.

However, you’re likely to be very busy around this time of year, and the mortgage brokers and solicitors required to get a mortgage will take time off for the holidays. You’ll also find you have less choice of properties, as the majority of sellers will have pushed to get sales closed by the end of autumn.

Spring

The property business is booming in spring. Demand is high, but so are property prices. Sales tend to pick up at the end of February into March after the market hangover over Christmas.

The nicer weather also has an impact on successful sales. Spring is a popular time for sellers to showcase the full grounds of their properties, and the positive mood of buyers encourages exploration into the added benefits of the local area.

While you’re more likely to find an appropriate property in the spring, you’re also likely to come across higher prices. In the last ten years, average house prices in May have been consistently higher than the winter months of the same year, with the exception of 2020 and 2021, where prices were skewed by the coronavirus lockdowns.

Buying will be a more convenient and attractive proposition in spring, but sellers will have the upper hand.

Summer

House prices tend to continue rising from spring to the first half of summer, but traditionally fall in August. July and August are peak holiday season, when few buyers will be looking to purchase a house and are instead spending more on their summer holidays.

Purchasing in early summer could be a mistake, as prices will still be riding high off the back of a productive spring, but they tend to peak in mid-July at the start of the holidays.

As demand falls over the summer, so do prices, so if you’re looking to buy a house and you’re not going away for the summer, you might find a good deal.

Autumn

This is one of the most popular times of year to find a new house. It’s a time of new beginnings with the start of the academic year, and the weather is usually still holding out from the summer.

The rise of house buying seen in autumn is recognised by sellers, and you’re likely to see house prices rise again after a relative dip in summer. However, by mid-November, sellers tend to get more nervous that they might not sell their properties by Christmas. This could make them more open to accepting lower offers before the winter holidays.

The Four Seasons Compared

There are pros and cons to buying in any season of the year, it all depends on your personal circumstances and priorities. We’ve created the summary table below to give you a basic overview.

On the whole, house prices are lowest when it’s less convenient to buy; around Christmas and summer holidays. At peak buying time, when the weather is nice in spring, early summer, and autumn, prices are usually higher.

The UK housing market is notoriously volatile, and even expert market analysts struggle to predict changes.

The main issue with timing the housing market is defining what your priorities are. Often the first thought when buying a house is the cost, which is understandable, as a house is usually the most expensive thing you’ll purchase in your lifetime. But timing the markets based on cost alone could leave you searching through a much smaller pool of properties.

Likewise, timing your purchase for when there are more properties on the market will give you more choice of what to buy, but you may find the cost considerably higher than at other times of year. It’s important to strike the right balance between your property wishlist and the market prices to make sure you get the best deal for you.

It may sound obvious, but it’s important to research properties before you put in an offer. Make sure you browse property listings, view the properties you like, and check your credit score before deciding on a budget.

The best season for cheaper properties is winter, but you’re more likely to find a property that matches your wishlist in spring or autumn. Note, however, that prices start rising in spring and early summer.

It’s a good idea to contact your bank and discuss mortgages before you consider making an offer on a property. This will help you decide your budget. Most people won’t be able to purchase a property outright because of how expensive they are, so mortgages are a way for banks and brokers to lend you the money to buy a house.

There are several types of mortgage you can get, each with its own benefits, including fixed-rate, repayment, interest-only, and more. You should take the time to shop around for the best mortgage broker, as your bank may not offer you the best deal.

It’s important not to get carried away when house hunting. If this is your first property and you’re used to renting, remember that houses come with additional costs after the purchase, including insurance and house repairs.

There are also lots of other costs involved in purchasing a house and getting a mortgage, like your initial deposit, valuation, surveyors, and legal fees. So make sure you’re not blasting your budget in one hit with a big mortgage loan on a house you can’t really afford.

It’s vital that you view a property before you buy it. There are all kinds of factors to consider when buying a house that you can only really discover when you visit it in person. This includes things like:

• Size of the property

• Storage space

• Defects

• Location of power sockets

• Garden space

• Parking

• The local area

Finding the right house takes time, but it’s important to stay positive and be patient with the process. Some stages can be frustrating at times, like surveying and conveyancing.

You might want to consider booking your own surveyor to look at the property before making an offer. While this will cost money, it could save you more down the line if there are any issues with the property. And if you’d still like to make an offer, the owner may be prepared to accept a lower one on account of any issues.

When arranging conveyancing searches, it’s always good to opt for a solicitor with a good reputation. Ask people you trust if they know a good solicitor local to your property, and check online reviews where they’re available to make sure you’re hiring the right person.

Conveyancing delays can be very frustrating, so hiring a solicitor who knows what they’re doing and responds to your queries quickly will avoid any unnecessary stress.

Gazumping can also be a problem for buyers, whereby a seller accepts a higher offer on the property after you’ve paid for searches and legal fees. When your offer has been accepted, request that the property be removed from the market to reduce the likelihood of alternative offers being made while you’re handling the details.

Above all, make sure you keep calm. Buying a house can be stressful, but the process will all seem worth it on move-in day.