The best places to buy property in 2011

If you fancy getting on the housing ladder this year, here's how to work out the best place for you to buy.

Despite the many troubles of the housing market over the last few years, the desire to buy remains as strong as ever in the UK. First there was a survey from the Building Societies Association which found that 59% of us would buy immediately or within the next 12 months if the deposit was already sorted out.

And now the National Association of Estate Agents has reported a surge in new enquiries, with almost two-thirds (59%) of member agencies reporting that the number of interested house-hunters registering with them at the start of January was higher than usual for this time of year.

So if you are one of the many who want to buy in 2011, what should you consider when it comes to finding the right place to buy?

Back to the future

One indicator when it comes to working out where to buy is to look at history, and a recent piece of research by Halifax may prove useful in that respect.

The lender looked at the counties of the UK to track which areas performed best in 2010. Here are the top ten:

What is quite encouraging about this result is that it’s not London and the South East topping the table, but regions that tend to be overlooked like Conwy and Dumfries that are performing really well. Indeed, over the past five years, Halifax reckons buying in Scotland has delivered a great return, with seven of the top ten performing counties found north of the border.

Halifax questions whether that will continue though, suggesting that the South East will be the most consistent performer in terms of house prices in 2011, due to the relative non-reliance on public sector jobs.

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If they’re right, the towns that have the most exposure to public sector employment may see sharp price falls this year. It will likely come down to your own attitude as to whether that makes them a place where you should avoid buying, or a potential bargain location! For a full run down of the areas likely to be hit hardest (and least affected) have a read of Spending cuts will slash house prices in these towns.

So what other factors will go into finding the best place for you to buy this year?

Keeping it affordable

Of course, while buying in places like Conwy might look cheap based on your current wages, would it really work out as such a great deal if you were working in the area?

Some recent research by Nationwide on how the various regions of the UK performed in terms of house prices last year included highlighting the most affordable sub-regions within each region in England, calculated using local salaries and house prices. These are the towns and cities where your money will go furthest when buying.

The type of property to buy

A further consideration will be the type of property you buy. Of course, to a certain extent circumstances will dictate this – if you are married with three kids, it’s fair to say studio flats are not going to make it onto your shortlist.

However, the changing composition of households in the UK means that demand for smaller properties is on the rise. A study by property portal Globrix last year found that studio and one-bedroom flats had performed the best with asking prices rising by 1.5% over the year. In contrast, bigger properties, such as homes with five bedrooms plus or flats with three bedrooms, had a torrid time, with asking prices falling 2.8% and 4.7% respectively. For more, have a read of Why big houses are seeing big price falls.

Now, asking prices are not a perfect way to measure trends, but they give a reasonable indication. Indeed, according to research by the Department of Communities and Local Government, the number of one person households is predicted to rise from 6,822 in 2006 to 10,899 in 2031, to the point that they will account for almost 40% of the households in the UK.

There is significant demand for properties to cater for a single person, driven by all sorts of reasons from rising divorce levels to immigration, so it’s worth bearing in mind that if you’re going for a smaller property you may face more competition, which could drive the price up.

However, in theory that should also make it easier to sell when you decide to move on.

Bargains at auctions

One place to look for bargains in 2011 will be the auction houses for recently repossessed properties. The word repossessions automatically conjures up images of trashed, dingy one-bedroom flats to many of us, but that’s not accurate – you can find plenty of great repossessed properties available at your local auction house.

What’s more, you’re likely to have an even wider selection this year – the Council of Mortgage Lenders reckons that repossessions will rise from 36,000 last year to around 40,000 in 2011.

Have a read of both How to buy a repossessed property and Buy your home online and get a bargain! for more.

The money problem

However, for most buyers the biggest barrier to buying a property anywhere in the UK in 2011 will be the mortgage market. The Council of Mortgage Lenders believes that gross mortgage lending this year will total just £135bn, the same as 2010 but hugely down on 2008’s figure of £253bn. As a result, it believes the level of property transactions will total just 860,000, about two-thirds of what it would consider a normal, functioning housing market.

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The fact is that lenders aren’t that keen on lending at the moment, and regulatory changes both domestically and across Europe are only going to further dampen their desire to lend.

Add to that the possibility of mortgages becoming more expensive as interest rates begin to creep upwards, and it looks like finding the perfect property will be only half the battle in 2011.

Buying for the right reasons

Of course, despite what some of the naysayers believe, there is never really a right or wrong time to buy property, so long as you are buying for the right reasons.

And that means you’ve found a property that will suit you and your family for an extended period of time, and not because you reckon you can make a few quid by flogging it to a property investor in five years.

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