UK Property Market Is On The Rise, But Is Now The Time To Be A First Time Buyer?

Although the housing market remains a little sluggish, to say the least, a report by the Royal Chartered Institute of Surveyors (RICS) suggests that 2013 is showing signs of a little movement in the right direction. If you're considering moving in a new direction yourself this year, what are the prospects and is 2013 a good year in which to become a homeowner for the first time?

The Big Deposit and the New Buy Scheme

For most first time buyers the biggest problem is finding the deposit. The government has introduced a number of schemes to help in recent months aimed at stimulating growth in both the housing and construction industries which are both considered vital to a more robust economic recovery. The additional help now available could make 2013 an excellent time in which to get your foot on that well-known ladder. The latest scheme, the New Buy Scheme, is designed to help those buying newly built homes. However, the terms of the scheme mean that not only will the property itself have to fit into the right category but you'll need to find a lender who is currently part of the scheme. Currently these include Nationwide, NatWest and Barclays, although more big names are due to join soon.

Who Does the Scheme Really Help?

You'll still need to be able to afford a five per cent deposit on the property and only homes up to a value of £500,000 will be eligible; some lenders have different criteria but this is the maximum. Effectively the government is offering a guarantee to lenders that allows them to offer ninety five per cent mortgages by underwriting the loan, should the purchaser not be able to keep up repayments and the home be repossessed. Many commentators have argued that the scheme benefits lenders far more than would-be homeowners and the important things you should consider before buying under the scheme remain the same as with any house purchase. What will happen if you lose your job, a family member dies, you divorce or will you be able to afford an interest rate rise? Interest rates are at a long term (and notoriously low) rate at the moment, but as we all know, they can very definitely go up, as well as down.

The Verdict

The New Buy Scheme is certainly a useful way to access a ninety five per cent mortgage but offers the lender more security than the buyer. Currently the housing market is sluggish and while prices may not fall much further (they're down by an average of eleven percent on 2008) there is no guarantee they'll rise anytime soon. Ensuring that you are confident that you can continue to make payments on a mortgage is the primary consideration to take if you're buying in 2013. The New Buy Scheme may help, but it doesn't mean you're getting a discount or special price on the property or that you aren't ultimately responsible for keeping up repayments. As with any house purchase, it seems that 'buyer beware' will continue to apply.