Uncertainty is always an upset for the property market, and it’s fair to say the result of the EU Referendum has delivered plenty of ambiguity over almost every aspect of life in the UK.
However, life also has a habit of moving on regardless of events and people will still need somewhere to live: whether buying for the first time or selling for the last, moving to the city for work or the country for retirement, upsizing for family or downsizing for convenience, a home will be required.
There is never a time when the UK property market isn’t in the news. We are bombarded daily with reports of record rises, imminent doom, short supply and even high-speed stagnation. The reality is that the pace of change is often far less dramatic than media tales, so here is our unemotional and practical commentary that we hope sellers and buyers will find useful.
Redhill has seen enormous price growth in the last few years: 16% in 2015 alone and yet more in the first quarter of 2016. This means almost anyone selling today will have more than enough equity to sell their property and cover their costs with plenty of money left over. Almost every homeowner in Redhill is in a healthy financial position to move.
Before the referendum was called, we were inundated with more buyers than we could handle, received multiple offers on almost every property we sold and achieved above the asking price on most of the sales.
On the Monday immediately after the referendum – we don’t mind admitting we expected a fairly quiet day – we actually sold two properties, one at asking price and one slightly below.
So people are still buying and the bottom hasn’t instantly fallen out of the market, but it is a different market. There are fewer buyers; there is more property available; single offers have replaced multiple bids. But then, you only need one.
If you are willing to be flexible on your price, you will find a buyer. You might decide that means getting ahead of the game and reducing the headline figure, or that you’re simply more open to offers. That could well depend on the type of property you’re selling, and its location.
People sometimes can’t see beyond their sale price, but it isn’t always the whole story: if prices go down and you are trading up, the gap between the price you sell for and the price you buy at, will shrink. That could be a significant amount. And even if it's your last time selling, you have had a fairly good innings.
The key is to avoid panic, embrace pragmatism, and keep your eye on what actually works to bring about your move. Life doesn't have to revolve solely around property prices.
If you are unsure about buying, don’t do it. Give yourself a break and wait.
If you think you’d like to buy but have concerns about what may or may not happen in the property market, consider the points below and see how they fit with your plans for your life.
It is very possible that mortgage rates – already at record lows – may soon come down even further, with the Bank of England expected to cut the base rate to 0.25% and lenders expected to start releasing 5 year fixed rates at potentially less than 2%. That is an extraordinary possibility for low-cost borrowing.
Historically, any downturns in the property market are over long before 5 years. Would lower borrowing costs today work out better than higher borrowing costs tomorrow when prices begin to rise again? Think ahead to your financial position 5 years from now when you've been paying off a mortgage at such a low rate of interest - you will have eaten nicely into the debt.
If mortgage rates come down then so will savings rates, which are already near zero. Your money will do nothing in a bank account, but we cannot remember a time in our careers when a property was not worth more 5 years after a dip in values.
The moment property prices stop rising, rental prices have a habit of going up. In terms of tenancy lengths, rent increases and notice periods, the UK lettings market is geared firmly towards landlords. An annual 10% increase in your monthly rent over 4 or 5 years could be quite chunky. Weigh that against a drop in mortgage rates and even a dip in house prices. How much would 5 years of rental payments give you at the end? Nothing. But 5 years of paying off your mortgage would have made a difference.
Already the fall in the pound has triggered huge interest from foreign buyers - that will immediately impact London, and where London leads the home counties often swiftly follow.
Buying into a neighbourhood that is on the up can be a way of beating the market. Redhill’s regeneration will dramatically improve both the look and offer of the town, making it more attractive not only for existing residents, but to potential buyers as well. Whatever the property market does, Redhill will be getting a lot more investment and attention.
Is it all about the money? For some people, the answer will be yes. Their sole motivation for buying a property could well be immediate and/or short-term profit, and that is totally fine. But not everyone is the same. If you’re looking to buy a property to call your home and enjoy for a good few years, a bit of turmoil can produce an opportunity that previously didn’t exist.
Hopefully you found these words useful, but if you’d like some help in deciding on your next best move, do come in or give us a call. We love to talk.