Property News

Ten property market questions UK buyers want answering

1.
Q: Did UK property prices increase during 2020?
A: Despite the pandemic, the answer is a resounding “yes”. Obviously, the picture is more nuanced on a regional and local level but, overall, UK residential sold property prices increased by 6 per cent (figure from Halifax).

2.
Q: Let’s talk numbers. How much can I expect to pay for the average UK property?
A: Again, according to Halifax, the average price of a UK home was worth £253,374 at the end of 2020. This is £14,295 more than the same property would have been worth 12 months earlier.

3.
Q: Some commentators are likening today’s property market to that experienced by buyers and sellers in 2007/2008. How accurate is this?
A: The uncertain economic conditions that followed the 2007 crash pushed down the number of properties being bought and sold. Tighter mortgage regulation made buying even harder. Although in 2021 mortgages are still not easy to obtain and high sold property prices have pushed many buyers towards the Bank of Mum and Dad, today’s property purchasers have better and more access to credit than their counterparts of 2007 and 2008. They are also more wary of spending, preferring to save despite historically low interest rates. Access to credit plus spare cash makes it more likely that the property market will continue to move.

4.
Q: Did the Brexit effect really suppress the property market?
A: Estimates vary and are hard to quantify with precision, but analysts tend to agree that completed property transactions tailed off in number between 2016 and the end of 2019. The re-election of a Conservative Government in December 2019 was a little like opening the starting gates on hundreds of thousands of transactions deliberately stalled by the buyers and sellers concerned. A second stall occurred with the first Covid-19 lockdown in spring 2020 although, according to ONS statistics, by the autumn property transactions were back to pre-Covid levels.

5.
Q: Can we expect a post-Brexit bounce?
A: Hopes for any post-Brexit bounce may depend how far into the future one is prepared to look. While the last-minute deal struck between the UK and the EU may have made the economic risks of the split at least less immediately pronounced, the inevitable changes to how UK businesses must conduct their working relationship with their EU counterparts have yet to play out. At some point, the impact of these changes—plus any impact on jobs—will filter through to the wider economy, including the property market.

6.
Q: What’s happening with the stamp duty holiday? Will it be extended?
A: The current, new lockdown has raised the question as to whether the stamp duty holiday—due to expire on 31 March, 2021—might be extended. However, although there’s a petition to Parliament asking for an extension, the government has gone on the record stating that it will not do so. Of course, there’s nothing to stop them revisiting the issue but, at present, there’s no indication to suggest this is likely. Furthermore, many conveyancers and estate agents are now seeking to manage their clients’ expectations by warning new clients that, at this stage, they will not benefit from the stamp duty holiday, as their transaction will not complete by 31 March. Those whose transactions are already underway may be luckier, although, with just over two months to go, a hefty backlog of mortgage arrangements, valuations, and conveyancing could make meeting the deadline tricky.

7.
Q: What are the best tips for buying a property as quickly as possible?
A: Anyone determined to give themselves the best chance of completing prior to the expiry of the stamp duty holiday needs to move fast. Buying at auction, especially if finance is already in place, could be one option, although it won’t suit every buyer. If buying through an estate agent, it makes sense to choose a property with a short chain—or, even better—no chain. Although easier said than done, a buyer determined to purchase a property not in a chain might try to do so by choosing a new build help via Help to Buy (with the fairly obvious caveat that not every buyer is eligible for Help to Buy). Whatever property a buyer is purchasing, a proactive solicitor will be a godsend throughout the transaction, although their responsiveness will, to some extent, depend on the buyer’s own organisation in terms of collating relevant documents, and, where necessary, arranging a mortgage. Finally, it’s often recommended that a buyer “chases” their solicitor regularly to help speed up the process. However, buyers should bear in mind that too much contact can be counterproductive, wasting the legal advisor’s time or making them less productive.

8.
Q: Are there any other ways for those who miss the stamp duty holiday to save money?
A: It’s possible. If demand for properties begins to tail off a little in April, buyers may find themselves in a better negotiating position when it comes to agreeing a purchase price. While some sellers will choose to hold firm and refuse to drop the price, those whose need to move is more urgent may be more flexible.

9.
Q: Can we expect downward pressure on house prices in 2021?
A: For many commentators, the answer to this is “yes”. The new lockdown, increasing use of furlough, rising unemployment, and a general disinclination to spend money may prompt many would-be buyers to postpone or dismiss a potential move. As has always been the case, without sufficient demand from buyers, prices are likely to come under pressure. That said, the vaccination programme offers hope that normality—or some degree of it—is set to return at some point this year, and this may prompt a release of pent-up demand in the property market. In short, waiting to buy in the hope of snagging a lower price is only ever going to be a gamble.

10.
Q: What’s happening with mortgage rates?
A: For those who are hoping to buy and need finance to do so, mortgage rates play a crucial role. Fortunately, there is no sign that the Bank of England intends to raise the base rate—at least in the short term. This will keep mortgage interest rates low, and ensure the continuation of a wide choice of excellent deals for prospective property buyers.

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Source: Nethouseprices.com 12.01.21

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