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| HOMEBUYING GUIDE The Editors CommentsTalk of a crash in the housing market and a return to negative equity are enough to put many potential homebuyers off. But if you’re reading this, you’ve probably made up your mind to buy a home, despite all the doom and gloom that’s dominated the headlines recently. Scaremonger headlines such as “housing bubble set to burst”, and “housing market to collapse” have been used to describe the inevitable downturn in the housing market. According to Halifax, house prices rose by 25.3 per cent during 2002 – the equivalent of £65 per day. Annual increases of this amount are obviously unsustainable, but the major disagreement between housing analysts is how sharp the downturn will actually be. Some reports have suggested that prices could fall by up to 30 per cent over the next few years. But more pragmatic commentators are suggesting that prices will not actually fall, instead they will rise more slowly – in the short term anyway. Lenders Halifax and Nationwide both suggest that house prices will continue to grow by 10 per cent this year. Certain parts of the country, where prices have been particularly high, are more vulnerable to a slump in house prices than others. Pockets of London, for example, may see some price falls during the coming year, but overall London is expected to see a 5 per cent price growth while parts of the North East of England may see up to 15 per cent, according to Nationwide. So where you buy will depend on how cautious you need to be. If you are buying a home now you are unlikely to experience the kind of price increases we’ve seen over the last couple of years, but long-term home ownership is still an attractive proposition. Just remember to work out if you could still afford your mortgage repayments if interests rates were to rise. And try to put down as large a deposit as possible. That way you will have enough equity in your property to withstand any price falls. If you can’t afford to put down a large deposit and you are worried that prices will fall, it might pay to hold off for a while – but remember that other buyers may be doing the same thing, which might make properties harder to find. Amanda Jarvis Editor
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