For decades it’s been the safest bet. Arrange a mortgage in principle, start your search and buy a well-located house in London. Then sit back and watch the house prices rise.
Sure, there have been some bumps along the road; 2008 was a big hit to people’s ‘paper property portfolios’. Yet, ten years since Lehman Brother’s collapse rippled across all markets, UK residential capital values have more than recovered.
The general trend for property prices may well be up for years but, timing your entry point is everything. So, is it a gamble to be buying now?
The Governor of the Bank of England, Mark Carney, would have us believe so. Prices are set to fall some 30% if the most catastrophic scenario plays out. Yet, people need to move, families out grow their homes and younger generations are eager to get on the property ladder, oftentimes being better off paying a mortgage than the crippling landlord rents.
The trouble is, buying your first home is not the dream we are all made to believe. You need to save for a deposit, need to find extra for stamp duty and then have the mortgage millstone around your neck, sometimes for life.
Worse still, if Mr Carney is even half right, you are signing up to a colossal amount of debt, only to be leveraged into a falling market, amplifying your losses. Terrifying and a material risk to your personal future solvency.
And we haven’t even spoken about what happens if it’s all ok – interest rates are likely to rise, along with your monthly payments.
If you’re not one of the lucky ones, with Bank of Mum & Dad providing a realistic shot at the first rung of the ladder, there is perhaps another way. There is a new industry emerging. They give customers the chance to own their own home, with no mortgage or stamp duty to pay, by buying a ticket, answering a question and entering a draw to win. In some cases the ticket price is £25. In others, it’s just a fiver. £5. What’s that, a pint in the pub or an cappuccino and a muffin? By entering the competition, you change your life by perhaps losing a few pounds or and winning a house. Not bad for £5.