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Word Count: 643 Date: Thu, 8 Jan 2009 10:29 AM

Buying New Homes In An Unstable Climate

As the recession takes grip, the construction industry is just one industry to feel the tightening of consumer purse strings. Building of New homes and new property developments start to decline as the demand for new houses decreases, often leaving property developers hundreds of thousands of pounds in debt, with new homes standing empty due to the drop in the housing market and property prices.

The word recession strikes fear into the heart of the construction Industry, the current recession is predicted to be worse than the one which hit in the nineties. Property developers are now witnessing a collapse in the new homes market, and as a result are forced to reduce house prices or offer incentives in order to keep out of debt.

Who does this benefit? Are there any winners in such hard times? Recent statistics are now showing that First time buyers may well benefit from such a drop in property prices. First time buyers are often the people in this situation who have been saving desperately for a deposit on a new home; the news of a recession, providing the mortgage lenders and interest rates favour is sometimes the perfect opportunity for first time buyers to get their feet on the first rung of the property ladder, occasionally even being able to purchase a bigger property than they anticipated. However in times of recession job security becomes more unstable in many areas leaving doubt as to whether to take the plunge.

Home buyers can also benefit because of the fall in house prices, suddenly there becomes an opportunity to upgrade, a possibility to buy nicer houses than previously, therefore maximising investment. Using the power of negotiation, developers will often be forced to offer incentives in order to sell property, whether these be cash incentives or upgrades to furnishings within a property such as kitchens, appliances, bathroom amenities or improving the quality of carpet. With negotiation on the home buyers side the potential to get what you want becomes more of a reality.

The attraction of buying new homes in a time of financial difficulty comes from some of the plus points offered, for instance if you had the choice of buying a new home which is ready to move into, offering the best energy rating and double glazing as standard, as opposed to an older property which would require more TLC and investment to perhaps bring it up to standard, which would you choose? This of course is very much dependent upon whether or not there is a mortgage product available to you at the time.

Many mortgage lenders have reduced the amount of mortgage products available. Others have completely withdrawn products for new customers, as well as tightening requirements and increasing the amount of deposit required, hundred percent mortgages becoming a distant memory and the rise in interest rates often being the final straw. Many consumers are hit with the worst due to fixed rate mortgage terms coming to a close in the middle of a recession and consequently not being able to afford the repayments on a re-mortgage, resulting in repossession of property.

Although its not all doom and gloom, if you are in a position to buy a new home then buy it quickly, a recession provides the chance for you to save money. Providing your circumstances in a recession or otherwise have the ability to cope with the financial demand on the other side of the recession.

Taking all points into consideration there will always be winners and losers in any given situation, sometimes its the consumer who benefits where industry, in this case construction, usually reaps the rewards. Being aware of your position, knowing your circumstances is essential in all financial climates when buying a new home.

About the Author

Anna Stenning debates the current financial climate of the housing market, offering advice for first time buyers on buying new homes.

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