Is this a good time to buy a property?

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The Halifax figures last week seemed to show house prices were treading water, which would seem to indicate a low risk of big declines, and a good chance to negotiate.

Is this a good time to buy a property?
The average price of a home fell by 0.5% in September from August to £161,132, according to Halifax. This came after a more marked drop of 1.1% in August, and price increases in June and July.

The mortgage lender talked of a mixed pattern, "consistent with a market where prices are lacking genuine direction".

A price war among lenders has pushed payments for new borrowers to their most affordable levels for nearly 15 years, Halifax said. The Bank of England kept its base rate at a record low of 0.5% on Thursday and with governor Sir Mervyn King warning of the "most serious financial crisis we have seen at least since the 1930s, if not ever" rates are likely to stay where they are for a good while.

Average mortgage repayments now stand at £574.15 - 26% of earnings after tax, compared with £887.62, nearly half of take home pay, in the summer of 2007. This figure is "significantly" below the average of 37% over the past 25 years and the lowest since 1997, Halifax said.

Martin Ellis, Halifax's head of housing economics, said: "Obviously you have to be able to raise a deposit, but it is more affordable than it's been for a long time." He added, though, that uncertainties to do with the economy and job prospects are putting a lot of people off buying a home.

Many experts you ask would say: yes, it is a good time to buy - as long as you can stump up a large enough deposit and have a secure enough job to keep paying the mortgage. It also depends on your local housing market. If prices have been falling for a while, you may want to hold off.

In Edinburgh, for example, conditions still favour buyers even after though the number of homes on the market has declined, said David Marshall, business analyst at the Edinburgh Solicitors' Property Centre.

"There are more homes for sale than you would normally see at this time of year whilst the number of people who are in a position to buy is still relatively low. Sellers are having to work harder to attract buyers and in most cases will have to be willing to offer a little leeway on price if they are to secure a sale," he told the Scotsman.

Meanwhile David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains said: "Annual and monthly house price falls look like bad news in the short term for homeowners, but there are positive signs when we look ahead.

He noted that mortgage rates had reached record lows and last week Leeds Building Society launched the cheapest ever 2 year fix at 1.99%.

"This makes finance affordable for buyers and remortgagers alike – not just today, but for years to come. Even though lenders still have plenty to be nervous about as the economy splutters forward, the unprecedented affordability of finance will give them improved confidence in borrowers' ability to repay their debts. Nonetheless, being able to save a sizeable deposit remains a barrier for many buyers."

Alex King, a director of mortgage broker SPF Private Clients, said low interest rates, cheap mortgage finance and, in many areas, a shortage of homes are propping up prices while weak confidence and reduced disposable incomes are forcing many people to sit on their hands.

"The result is a cancelling out and a property market that is essentially in limbo - unsure of its direction. An over-reliance on national data, such as that provided by the Halifax, masks the huge regional disparity in the UK market. Within a matter of miles you can have two entirely different property markets - one fairly robust, the other in reverse. We advise our clients to stay in tune with what's happening in their local market, not the national market itself," he said.

"London is a case in point. While the rest of the market struggles, the capital is proving resilient. What is clear is that now represents a opportunity for anyone who is able, or willing to buy."
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