Ed Mead
Follow Ed

Q. Thinking prices would be going down last year I signed a one year rental. Values seem to be going up, should I buy or stay renting?

A. It’s easy to stay in a rental if values are falling but if, like in London, they’re still going up, it’s difficult to resist low mortgage rates and buy. Much depends on your age, where you think you’ll be working, and whether you have enough for a deposit. With anyone much under the average first time buyers age of 37, the chances of saving the minimum 25 per cent deposit are slim.

The average price in London is £320,000, so £80,000 is a lot to come up with. The single biggest argument for staying in rented property is job uncertainty. Mobility has suffered heavily with increases in Stamp Duty, with moving now costing at least six per cent of your capital at average London prices. This is a lot and if your job ambitions take you away, the flexibility of renting allows you that latitude.

Since the 80s people have looked at property as an investment but it’s worth remembering that there’s little wrong with thinking about living in a rental and making your money work by investing in your own business or being more entrepreneurial. Perhaps the fact that where you live is your home has been forgotten.

There will be many forced to rent because they can’t (or fear not being able to) get a mortgage, so whatever you do, you need to be talking to a mortgage broker before you even consider taking the plunge. Getting a mortgage is more difficult than ever so get all the help you can.

The last part of your question is whether prices will carry on going up and as I write this there’s little to suggest they won’t. However, last year pundits subscribed to the view that prices would fall by around five per cent and they’ve gone up over 10 per cent: this year’s forecast is flat or a little down. But my hunch is that values will continue to go gently upwards as supply shows no sign of easing and demand seems constant.

Also, rental volumes seem to be dipping, as many current tenants are thinking that higher rents have made them consider buying more attractive.