Buying a house in 2024 as a Muslim: It’s better but it’s not great 

In gladiator fashion, my family and I have descended into the seething miasma that is the housing market and in this article, I’ll cover: (1) where we’re buying and why; (2) how we are financing it and the available Islamic options today; and (3) some top tips for getting a great deal on a property.  

But first, let’s just address the all-important question: is now a good time to be buying? 

Is now a good time to be buying? 

Sellers still think it is the halcyon days of 2020-21 when houses were being bid up in pricing wars and estate agents were holding closed bid auctions on houses. But as interest rates have risen, buyers are not as plentiful in the market anymore. 

However, house prices are still rising on average¹, having increased by 17% since 2020. But those statistics hide a very important additional detail. Over the last 2 of those 4 years, house prices have only increased by 1.14% and 2.05% respectively.  

This means that the majority of that increase happened in 2020 and 2021 but tapered off after that. House prices have been largely flat, if not falling by 5% in certain parts of the UK in the last 2 years. 

So all in all, the interest rate rises have meant less money for buyers to buy with, so fewer deals are being done, so demand for houses tapering off, and house prices looking quite sensible in most areas. 

As we have explained in this video, we think that the market is taking a pause for breath, while rates are high, but as soon as rates start falling, as they are expected to over the next 2 years, we think the market is going to pick up rapidly, and will balloon even more aggressively than before. 

So now is the time to buy in our humble opinion. 

Where are we buying? 

Again, as covered in the video, there are a number of very promising cities outside of London where a lot of the housing action has shifted to. Places like Newcastle, Manchester, Leeds, Bristol, Bath, Nottingham and Liverpool feature highly in this list. 

We particularly like Manchester as we believe the city is about to have a serious inflection point over the next decade which is going to bring its house prices close to London prices. Manchester is also where my in-laws and parents live in and around, so it made familial sense. 

How are we financing our purchase? 

We will be financing via an Islamic mortgage. I like Islamic mortgages because they are still typically the cheapest option available (when you see the entire transaction in the round), and because they are offered via a regulated entity. 

I did briefly consider alternatives in the “shared ownership” bucket but ultimately decided against. 

Regulation around mortgages is pretty vital – because it’s all fun and games until the blow-up happens – and I am pretty risk averse when it comes to my residential home so prefer to go with a product that has transparency, track record, legal clarity, and external regulation.  

Islamic home financing rates are still more expensive than the mainstream, but interestingly, due to the rise in rates generally, and due to the increased competition in the Islamic mortgage market between Strideup and Gatehouse, rates are now within touching distance of mainstream rates. 

Gatehouse is offering 5.39% on a 65% FTV for example to its existing customers on a refinance. Barclays is offering 4.83% to its new customers right now. That’s probably as close as I have ever seen it in my time in the industry. 

So ultimately we will end up going with Strideup or Gatehouse, with Al Ahli a dark horse in the background if rates start falling. 

As an aside – Labour have come into power later this month – and sorting out Islamic home finance and Islamic investments generally should be top of the pile for us as a community. We have a historic chance to genuinely address the issue, help the country with its housing crisis, and come up with investment products that allow ordinary investors to reap the dividends from any profits made. 

Top tips for hunting out a bargain 

• Understand the macro first then zoom in. So make sure you’re hunting in the right places rather than falling in love with a house in a completely hopeless area. 

• Understand the square meterage and the average price per square meter. This is the real yardstick of value when buying a real estate asset that the pros will refer to. There is of course nuance here – some houses will need a lot of spending on them to get their square meterage up to the quality of another – other houses have large square meterage but it’s because they have massive cellars that would need significant spend on them to bring them into use. 

• Use Rightmove – not Zoopla – Rightmove right now has by far the bigger selection of properties available. 

• On Google Chrome install “Property Log” which is a Chrome extension that allows you to see historic price falls in the property you are viewing. This is very helpful in picking out where a price has recently fallen and how long a property has been on the market (as sometimes estate agents delete the entire property and then re-upload it). 

• Have a look every so often whilst you are hunting on auction websites like Allsops. It is rare that exactly the right property in the right area will come up for you to buy while you are in the market, but if it does, the discount you get on it will be worth it. 

• Ask simple but important questions at viewings and to estate agents: why are they selling, are they in a chain, are there any known issues with the property, what are the sellers’ timelines, have there already been offers on the property? 

• Make offers in writing. 

• Be unafraid to make a low offer – but justify it, and establish yourself as a serious buyer. Realistically though, when going through an estate agent you are unlikely to get too much more than 5-10% off asking price. If you want real bargains you have to go off-market and that’s best left to the professionals. 

• Be unafraid to wait and stick at certain offers – especially for larger properties with less buyers. 

• Think about how difficult or easy you will find selling a property on exit – if it is going to be difficult then that should be factored into price. 

• If you want to go on full “pro-mode” in property buying, think about how much value you can add to the property through loft conversions, extensions, cellar conversions, planning permission for entirely new developments in sites with larger acreage, by putting in change of use applications and changing the site to a HMO or commercial building, whether a portion of the house can be rented to your business to help with tax planning, and whether all the above value-additive stuff you are thinking about will actually work in the area the property is. Because sometimes an area is not good enough for someone to pay above the odds even for a larger property – so there would be no benefit in spending on that kind of property – all it does is make it harder to sell later.  

• Make sure you get a survey done – it usually at least pays for itself in remedial costs. 

Final thoughts 

Our community is growing and developing but the fundamental challenges around financing a home remain. However there is progress and there are enough green shoots everywhere for us to be very optimistic about the future. 

We ourselves are working on solving this exact problem with our income fund on Cur8 – and we are getting ever closer to making a decisive move in addressing the issue by bringing £100m+ of new financing to the market. Make dua for us – we’ll keep you all posted on our mailing list. 

Footnotes:

1. https://www.nationwide.co.uk/house-price-index/  ↩︎