Should we buy a home now or wait to see if house prices fall?

Q My boyfriend and I (both 29) are trying to buy our first home in north Leeds. It is a very competitive market, and houses nearly always go to best and final offers. Demand outstrips supply massively.

We can afford to spend £250,000 maximum which includes a deposit of £50,000. We have an agreement in principle to borrow the remaining £200,000. Ideally, we want to spend about £230,000 to £240,000 so we have money left over for renovations and so on.

When we started looking in May getting what we wanted for this figure seemed achievable but we just didn’t see quite the right house. However in the past few months prices have increased significantly. Now for anything that seems remotely near to what we want – a three-bed semi, with a bit of work to do, a garden, and not on a main road – the minimum is about £260,000 and the average hovering at about £270,000 to £300,000.

I have a trust fund from when my grandfather died which matures in a couple of weeks when I am 30. So I could use some of the money from that to give us a budget that would enable us to afford these higher prices. My question is, is this the right thing to do?

We are aware prices are inflated at the moment and we are worried that we will end up with a house that is worth much less that what we paid for it if house prices crash and would have wasted my inheritance. Should we wait until the stamp duty holiday ends? Or would waiting longer just mean the prices will keep rising and then we are completely priced out of the market?

My boyfriend would rather wait, but I would rather buy, as living and working in small rented flat is really starting to affect my mental health. What should we do?
JN

A If you wait until the stamp duty land tax holiday ends (at midnight on 31 March 2021), you risk facing even higher prices than you are seeing now. According to an article in the Yorkshire Post last month, although analysts at property firm JLL predict a 1.5% drop in Leeds’ house prices in 2021, they think they will rise by 2.5% in 2022, 4% in 2023, 4.5% in 2024 and by 4% in 2025.

Demand for property when more Channel 4 employees make the move from London to Leeds in the next couple of years could help support prices.

If you believe the analysts it seems to make sense to take the minimal risk of using some of your inheritance so that you can buy sooner rather than later. If you did decide to do that, and using part of your inheritance to fund the purchase would mean that you and your boyfriend were contributing unequal shares, you should ensure that this is reflected in the deed of trust that your solicitor will need to draw up.

It is also worth pointing out that if you bought somewhere and house prices then crashed, you wouldn’t have wasted your inheritance because it would have been spent on a home of your own. What your house is worth while you are living in it doesn’t really matter. It becomes an issue only when you want to sell – or remortgage – and it’s worth less than what you owe on your mortgage.

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