This is a difficult question to answer. I appreciate we are potentially biased but I will try to be as unbiased as I possibly can when discussing it. Below I will discuss the factors that I think are important when deciding whether to buy now or hold off.
House prices
The expectation is that house prices will drop this year. How much is anyones guess, the general consensus seems to be by around 10-15%, of which we are already at around 3-5%. However drops as much as 35% have been suggested by some people.
I think the 35% figure is one of those where someone just wanted their name in the papers or is very pessimistic about the future. If house prices really do drop by anywhere near to 35% the economy is going to be in tatters and with global national debt at an all time high that is going to cause some very big problems… So lets hope 35% is just someone wanting their name in the paper.
Interest rates
This plays quite an important role as this affects the monthly repayments and in turn how much people can obtain for a mortgage. I think so far this has been the single biggest factor is curbing house prices so far. Demand is still there, but we are finding that people are struggling to get as much as they would have done 12 months ago.
Your circumstances
For me this is the biggest deciding factor. If you are living at home still and you want to get as much for your money as possible, then it could be worth holding fire. Your expenditure is probably quite low allowing you to save more and house prices will probably still come down a little more.
However, if you are renting then ultimately you are paying someone elses mortgage and probably paying more than a mortgage would cost for a similar type of property. In that case, I think you might be best looking at buying. Even if house prices do drop over the next 12 months, they will probably have recovered in 2-3 years. So unless you plan on buying and then moving in the next couple of years its not really an issue what house prices are.
If you are looking to move home then it is a slightly more difficult decision and in that instance I would probably just base it on whether or not the right property comes up. Dont be in a rush, but dont miss out on the right place.
My view
My view is fairly optimistic, I think house prices will drop by around 10% from their peak and we are already at around the 5% mark so there is probably some room for them to drop a little more but demand seems to still be there.
I think interest rates will fluctuate up and down, rates seem to be hovering between the 4% and 5% mark give or take 0.25% and the LTV. That can affect affordability, but if rates do drop then it will mean people can afford more and may in turn push up house prices again.
In terms of whether or not you should buy, I suppose that comes down to whether you are renting currently or not for me. It is a difficult one and I suppose the biggest is whether you find somewhere you like and can afford.