Is there a house-price crash on the way – and should I wait before buying?

In our bi-weekly series, readers can email in with any questions about property to be answered by our expert, Jonathan Rolande. Jonathan is a professional property-buyer and housing commentator who has bought and sold over 1,000 properties. If you have a question for him, email us at money@theipaper.com. Question: I currently rent a three-bedroom property with my family. I’ve been putting off buying for a year or so as I’m worried about buying just before a massive crash! As silly as it sounds, I feel like people have been warning about this and I’m worried I’ll be caught out. Should I wait, or just go for it? We’d probably opt for another three bed and the cost would be around £400,000. Answer: It’s fair to say that property hasn’t performed well in the last few years, especially compared to the returns out there on other investments. But no – I don’t see a crash coming, and waiting rarely pays off. Shorts Growth has slowed. Zoopla puts the current rate of price increases at 1.3 per cent, down from 1.7 per cent last year, as higher mortgage costs make buyers pause and affordability has been hit. But a slowdown isn’t a crash. Zoopla’s own data shows UK prices have risen in 25 of the past 30 years. Now to your rent question, because you’re right to think it through. Say you borrow £300,000 of that £400,000 at 4.5 per cent. The interest alone comes to around £13,500 a year. Rent on a similar three-bed often costs close to that. You’ll also cover your own repairs and insurance as an owner, likely £2,000 to £3,000 a year on an older house. You’ll also lose access to the capital you put in yourself as a deposit. Without capital growth, the true cost of owning starts to look a lot like the true cost of renting. The difference is what you get for the money. Rent buys you nothing. A mortgage buys you a stake in a home. Part of every payment builds equity that’s yours to keep, sell, or borrow against. Over ten or twenty years, that gap compounds. Renters end up with nothing. Buyers end up with an asset. Waiting for a crash that keeps not arriving has cost more first-time buyers a home than any downturn ever has. As the saying goes, the best time to buy a property was twenty years ago, the second best time is today. If you can afford the price and the mortgage on today’s rate, not a price or rate you’re hoping for, and the house suits your family, I’d go ahead and buy it. The real risk here isn’t buying too soon. It’s staying tenants too long, where the only mortgage you’ll ever pay off will be your landlord’s. EXPLORE MORE ON THE TOPICS IN THIS STORY