Is Buying a Home a Good Investment?

Home ownership is one of the great life milestones, and something to which practically every family, couple or young professional aspires. However, the road to home ownership is not the straightest. This is especially true in a financial landscape mired by rising costs and relatively stagnant wages.

Still, the process of acquiring a first home is a worthwhile one, particularly when it comes to the rising value of properties – which is used by many to call property ownership a ‘good investment’. But does buying a home make sense at present?

Benefits of Owning a Home

The benefits of home ownership are, generally speaking, self-evident. Renting your home is only ever a temporary solution, and any of a large number of potentialities could see your living situation placed under threat. Landlords are able to increase the rent regularly – albeit with some serious legal caveats designed to protect renters –, making it a possibility that your rent is increased above your budget. No-fault evictions also allow landlords to require you to vacate at relatively short notice. 

Whichever way you leave, there will be little to show for your time living there besides the return of your rental deposit. Owning a home and paying a mortgage, meanwhile, enables you the security of a shelter you cannot be evicted from (save for an act of God). Not only this, but property values tend to appreciate over time – meaning your investment yields returns in the form of equity. Towards retirement, you could use an equity release scheme to access your gains; alternatively, you might move up the property ladder to a bigger and better home.

The Present Economy

Here, though, it becomes important to acknowledge the difficult state of the UK’s economy at present. Property ownership has not been accessible to many prospective first-time buyers, on account of the considerable increase in property values against average wages

In 2022, this was worsened by the sudden rise of mortgage interest rates, spurred by the Conservative government’s attempt to introduce inflationary policies amidst the cost-of-living crisis. The Bank of England raised interest rates to combat the inflation, leaving mortgages costlier for homeowners.

Buying in Wales

Of course, none of these insights would be worth much here if they weren’t applied specifically to Wales’ property market. Wales is fortunate enough to enjoy far lower house prices than England, with the average property value in March 2023 placed at £214,000 – £90,000 lower than the same for England. 

This average is somewhat skewed by the high concentration of high-value homes in urban and suburban areas of Cardiff and Swansea, with rural and suburban homes outside of capital and student cities often falling well below. Despite the lucrative value of many Welsh properties, there is greater risk here for first-time buyers; the same ONS data showed that Wales’ property values increased by the highest percentage in Britain, at 4.8% year-on-year. 

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