It's time to buy property

Read five more arguments against a housing crash and for buying property now.

In There won't be another housing crash I donned my devil's advocate hat to present five arguments  that wannabe homeowners should buy now. The point? To answer the request of many readers who have read a lot on the 'bearish' case recently. I'm putting the hat on again for another five arguments:

Argument 6

Mortgages are relatively cheap

We already have to pay a lot in rent, and I think this is often under-appreciated when rent is traded for mortgage payments. It's true that mortgage costs can be more volatile and come with other risks (if you can't pay your bills you may lose your home, other assets and credit rating) but if fluctuating costs is a problem you can get a long-term fixed rate; these are about as cheap now as they'll likely get.

As I wrote previously, if the base rate rises to 2% we may expect an extra £150-£200 on our mortgage payments. That may or may not sound a lot to you, but the total bill will still be cheap in pound terms.

Argument 7

It is cheaper to buy than rent

Gets better. Recent research has found that it's cheaper to buy than rent (outside London - but in London affordability is better, based on local salaries). Abbey found the average rent of £434pm compares to a mortgage payment of £382pm (with a 25% deposit). That's a saving of £52pm. People in Wales and the north west would save on average £90pm. We can also overpay or save whilst interest rates are low.

Homeowners have to buy furniture and maintain their properties - but that's why we supply tips like Furnish your home for £1,000.

Argument 8

Property is in short supply

It's the old supply/demand argument, but no good devil's advocate would miss this out when tasked with the buy case!

Supply and demand is a tricky one, and many beg to differ. It would take a few articles to cover this completely, so I'll refer mainly to the most comprehensive report into housing supply, which was written by Kate Barker, formerly of the Bank of England, in 2004. It reviewed comments from 91 individuals and businesses, and referenced 43 studies, reports and books.

Barker found that house prices in most countries rise in real terms over the long term. She also found that they were already doing so here before the buy-to-let boom. Plus, relative to the rest of Europe, since at least l960 we've been building very few homes: we build the least now since World War 2. We need to build around 1/3 extra homes per year - 50,000 -, just to slow the increase in demand. However, homebuilders are reluctant for a large number of reasons and face considerable difficulties doing so.

Argument 9

Anecdotal evidence

Anecdotal evidence is by far the most popular argument used in property forecasting. (In my experience. Haha.) It's also the weakest. What one older homeowner and his inner circle have experienced can hardly be representative of the whole country, nor does it represent what will happen in future.

Someone told me recently that when he asked his parents about buying, they told him they had to take on a massive debt and live on stale cheese and water for years. According to his parents, and his parents' friends, the current generation is lucky that it can buy a property, and afford a few decent meals and home luxuries.

Of course, that's just one person's tale. You see, anecdotes are not a good argument for buying now - but nor are they good for arguing there'll be another crash soon!

Argument 10

Prices usually rise

Those who try to call a market crash are usually wrong simply because prices usually rise. Consider how wrong forecasters have been, calling a crash right back in 2002, for example.

It's time in the market that counts, not timing the market. Property prices have risen during every ten-year period in the past 30 years or so. That's not to say this will always be the case, but it's reassuring to know some sort of pressure keeps real house prices rising. This also means the earlier you get in, the more you're likely to benefit.

Whilst we may not see massive increases over the next ten years, I've shown many positives that could limit the downside. Meanwhile, you start your journey to being rent- and mortgage-free inside 25 years.

What have we learned?

With these ten arguments, I've presented you with the buy case, after some excellent articles from other writers on this site that forecast more doom for homeowners and joy for hopeful buyers. (Read Get ready for the housing crash part II to see what I mean.)

To that end, I've ignored all evidence that supports the case for another crash - just as my opponents (for want of a better word) have ignored anything that supports the case for a buy. I hope that the articles together provide you with adequate perspective.

Some of you may consider property forecasting to be a fun past-time. From my point of view, that doesn't necessarily mean it's a useful one. It is, as I am always saying, incredibly difficult to get right, which is why the professionals are usually wrong.

It's more important to focus on what we know, not on guesses. We know, for example, that to get a good price on a mortgage these days requires a 25% deposit. Wow. However, for me, the key questions to ask are:

• Have I (waited patiently till I) found myself a bargain?
• Can I afford it?
• Could I afford it even if interest rates rise dramatically?
• Would I be willing to stay here for a long time if prices fall and I'm stuck?

These are the factors you know and can control, so are the ones to focus on. Over the long term you should be better off if you buy, making forecasting a lot less important, thank goodness.

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More: Five money-saving tips for homeowners | Soapbox - getting through the mortgage maze