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Property Boom not Property Gloom

Why We Believe NOW is the Best Time to Sell Your Property

On the one hand, the UK is facing a shortage of housing with the number of properties available to buy on the market at a 10-year low, Brexit is (still) looming but mortgage rates and interest rates continue to be at favourable levels. The UK Government continues to put measures in place to keep first-time buyer activity stimulated at the bottom of the property ladder yet there is still caution among homeowners about whether to sell….or wait?

So, why do we think NOW is the best time to sell your home?

Mortgage Rates

Despite a rise in the Bank of England’s interest rate from 0.5% to 0.75% in August, mortgage rates in the UK are still some of the lowest in Europe and are marginally higher than the all-time lows recorded in 2017 (2-year, 3-year & 5-year fixed rates).

The table below shows the current average published rates of mortgages available from high-street lenders vs this time last year, five years and ten years ago:

Date

 

2 year (75% LTV) fixed rate 3 year (75%LTV) fixed rate 5 year (75% LTV) fixed rate 2-year (75% LTV) variable rate Standard variable rate
31-Oct-08 5.83 5.95 5.88 5.94 6.91
31-Oct-13 2.48 2.89 3.37 2.91 4.37
31-Oct-17 1.55 1.7 2.04 1.46 4.31
31-Oct-18 1.76 1.83 2.07 1.69 4.39

When we hear news about rises in interest rates, it is all too easy to forget the current landscape and it helps to visualise the context of the current base rates upon which most mortgage lenders base their own borrowing fees. In this chart, you can see the base rate set by the Bank of England over the last 39 years. As you can see, the UK is still enjoying a period of low interest borrowing and, whilst the interest rates are low, borrowing is at its most affordable.

bank of england base rate

The Danger of ‘Timing the Market’

We are hearing quite a bit of commentary about people who are waiting for a drop in prices before they buy a property and, on the face of it, this may seem like a good idea. The problem with this strategy is that doing so is taking a huge gamble on the fate of interest rates.

Did you know that a 10% decrease in house prices is immediately negated by a 1% increase in interest rates (based on a 30-year mortgage)?

Don’t believe us? Here are just two examples of how a drop in house prices, coupled with an increase in interest rates can affect monthly mortgage repayments:

  Buy Now 5% Fall in Property

0.5% Rise in Interest Rates

10% Fall in Property

1% Rise in Interest Rates

House Price £400,000 £380,000 £360,000
Mortgage Amount £300,000 £285,000 £270,000
Interest Rate 4.39 4.89 5.39
Mortgage Payments £1,501 £1,511 £1,514
Total Cost of Mortgage £540,184 £543,902 £545,201

Illustration based on 75% LTV, standard variable rate as of October 2018 (4.39%).

Trying to ‘time the market’ almost never works and most people forget that in order to take advantage of the market, they have to be on it in the first place.

When it comes to buying a property, the main issue about trying to ‘play the market’ is knowing, at the time, when the market has reached the bottom. We can look back retrospectively to see how house prices have risen and fallen but, in the moment, there is no way to tell if your strategy has worked.

The truth is that UK house prices fluctuate all the time and in response to an enormous number of influencing factors. From basic economic-recessionary cycles and growth to socio-political reasons.

Here, we can see the trends of the average house price in the UK over the last thirty years. There is variability in prices over the decades with the sharpest change occurring during the period 2006-2011. This coincided with the global financial crisis and followed a period of slow down for house price inflation.

A similar (but less marked) reversal occurred between 1990-1992 as the UK moved through a period of recession.

The commonly-held opinion by many economics advisors remains, that, given the long term above-inflation rise in house prices, property is a safe investment. This is true for homeowners but also for other investors and for property developers. This is even more the case when interest rates are low and alternative investment opportunities become less attractive.

average house prices uk since 1987

Brexit: The Elephant in the Room

We couldn’t put together an opinion piece of this nature without addressing the ‘elephant in the room’ and, whilst the word ‘Brexit’ is as unpopular as Christmas adverts in June, the fate of the UK’s economy post-departure from the EU is of prime concern for all of us. However, the speculation, just like the run up to Y2K is polarised in its opinions. Some believe that Brexit will have a huge impact on house prices in the UK whilst others believe that the current (and growing) domestic demand for housing is enough to keep the market buoyant.

brexit uk property prices

Image via Pixabay.

There is no doubt that the process of Brexit is an uncertain period and one that is expected to continue for a long period. Although the deadline for the framework of the UK’s departure from the EU must be completed by 11pm on Friday March 29th 2019, a 21-month transition period has been agreed until the end of 2020. The transitional period is expected to lessen the immediate impact that Brexit will have on the economy.

So, what will a post-Brexit world, look like for the UK property market?

Chancellor, George Osbourne has predicted an 18% fall in house prices over the two years of the transitional period in the immediate aftershock of a post-Brexit dip in the economy. Some forecasters predict that this drop (if it happens) could be a very positive factor for the market and allow many first-time young renters the chance to get on the property ladder.

Popular BBC property analyst, Henry Pryor, has predicted that the impact of leaving Europe could be much less shocking than feared with a possible decline in prices of around 5% with some of this slow-down already having occurred in some areas of the country. Whilst house prices in London may have fallen by 1%, other areas of the country have seen healthy increases (6% in the Midlands and Scotland).

The likelihood of a ‘crash’ in the UK property market is, by most analysts’ reckoning, ‘very low’ and ultimately the supply of houses coming to market will still be driven by the three D’s in a post-Brexit world; Death, Divorce and Debts.

And our final word on Brexit? The impact of the UK’s departure from the European Union cannot be known in advance but the likelihood of a property ‘crash’ is very low and, even if the housing market recoils during this period, it is important to remember that owning a property is a long term investment. Peaks and troughs will be ridden out over a period of many years and as long as you can continue to afford the monthly repayments (see Mortgage Rates), your home is not at risk from fluctuations in the market.

Autumn Budget

In the Autumn 2018 Budget, the Chancellor of the Exchequer announced some good news for the UK’s property market. Since October 2017, first time buyers do not have to pay Stamp Duty on properties worth up to £300,000 and Philip Hammond has further extended this incentive to include first time buyers of Shared Ownership homes.

The result is likely to improve the number of new buyers at the bottom of the housing chain and this can only mean greater mobility for the rest of the market.

Since 2017, the abolishment of stamp duty in this bracket has helped an estimated 121,500 people to buy their first properties and has boosted the number of first time buyers to an 11 year high.

 

property boom uk property prices

The number of first-time buyers are at an 11-year high. Image via Pixabay.

In addition, the Government also extended the Help-to-Buy Scheme. Originally intended to come to an end in April 2021, this government loan initiative will now run until 2023. The additional impetus that this financing provides for first time buyers is an important one and has so far helped more than 420,000 people get on to the housing ladder.

Buying & Selling: Two Sides of the Same Coin

In a market where a sense of caution is being fostered, it is only natural for sellers to be anxious about the value of their home falling. However, it is important to look at the fact that any reduction in the sale price of a property will also be seen with a commensurate drop in the purchase price of a new home.

So, whilst a 5% drop in the sale price of your own £350,000 home may feel like a big loss of £17,500, a similar 5% decrease in the purchase price of your dream £500,000 property will realise you a £25,000 saving!

In Summary:

We believe that there are a number of good reasons why now is the perfect time to sell your home and trade up:

  • Number of first-time buyers on the market is at an 11-year high.
  • More incentives announced to increase the number of first-time buyers.
  • Mortgage rates are still low and borrowing is at its most affordable.
  • Impact of Brexit will be a gradual and transitional process
  • A fall in the value of house prices will see commensurate savings to be made on trading up to a bigger property.

At the end of the day, the decision to sell your home will have many influencing factors and only you can make that judgement call about whether it is the right time for you. However, we strongly believe that the current landscape of the UK property market is a favourable one and are continuing to help clients maximise their purchasing power to secure their dream homes for the future.

If you’d like to know more about the local housing markets, get a current valuation on your property and find out how you can take advantage of low interest rates to trade-up your home then contact us today on 0118 912 2370.

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UK Property Price Predictions For 2018

With the New Year upon us, attention turns to the year ahead with many already asking us for property price predictions for 2018.

Whilst no-one has a crystal ball, there are some early indications that 2018 could see some growth after a relatively flat 2017.

So, what will house prices be doing in the year ahead? In this guide, we bring you the opinions of the UK’s leading property professionals so you can decide for yourself.

Did Property Prices Increase in 2017?

Despite a lot of negative press and some concerns over the impact of Brexit, particualtry in the wake of the controversial snap-election, house prices in 2017 remained stable. In fact, the average price of a home in England actually increased by around 2.45% (according to the Nationwide) or 3.66% (according to the Halifax).

house price price predictions uk

What will house prices do in the coming year? Image via Flickr.

Factors Affecting House Prices 2018

There are two main drivers behind the slowdown in the growth of property prices; reduced spending power and caution amidst the changing economic landscape amidst Brexit negotiations.

  • Inflation levels have outpaced wage growth in the last 12 months which has affected spending power. This reduction has had an affect on other areas including retail and leisure spending plus borrowing.
  • The property market is expected to remain cautious around the impact of Brexit as the details of the UK’s departure from the EU unfold.
property prices 2018

The impact of Brexit is still to be determined and may make the market a more cautious one. Image via Public Domain Pictures.

What are the Experts’ Property Price Predictions?

As ever, industry opinion is divided with some anticipating more growth (albeit slight), others predicting a slump and, as always, those that are on the fence who see a flat year ahead.

Moderate Growth

Some private developers are predicting a rise of 2-3% with some dips along the way as the market responds to news of Brexit.

The view is supported by Halifax who are playing a cautious game with their predictions, suggesting an overall increase in property prices by 0-3%.

Low Growth

A recent poll conducted by Reuters asked the opinion of more than 20 housing market specialists for their UK property price predictions for 2018 and the overall results showed that a small growth of 1.3% was expected nationally.

As ever, the property markets experience different trends in different regions and the consensus of opinion is that London and the South of England can see more moderate increases, if not a period of price drops and rises which will result in an overall flatlining.

Conversely, property prices in the North are expected to enjoy more consistent growth as earnings, relative to the cost of housing, make housing more affordable.

The slow down in growth is partly being attributed to the lack of confidence that buyers have in the value of their home with more than a third of homes on the market reducing their asking prices in a bid to sell.

No Growth

The Royal Institute of Charters Surveyors (RICS) paints a much bleaker picture and expects 2018 to see property prices grind to a halt.

The picture is made less rosy when you consider their opinion that the national average will offset weaker markets in the South and London who will likely see a fall in property values.

RICS members do not believe that the recent cut in stamp duty for first time buyers will not be enough to stimulate the market with affordability still being a barrier for many; again, particularly in the South.

london house prices 2018

Will house prices in London fall in 2018? Image via Wikimedia.

Regional Growth

Property market analysts, Hometrack, suggest that the UK can expect to see some encouraging growth in prices in regional cities like Manchester, Birmingham and Glasgow whilst London will see a period of stagnation.

Affordability is the key driver behind the opinion with London having experienced unsustainable growth over the last decade. House prices in the capital have leapt 70% since 2009 with wages falling far short of this increase. The bottom line with the price for London homes is that they are no longer within reach of the people who demand them and something has to shift. 2018 could well prove the turning point that the property market in London is realigned but don’t expect a major sea change.

Property Price Predictions for 2018: Summary

Forecasting for any markets is a gamble and there are no clear indicators pointing to any particular school of thought, but the general consensus of opinion is one of low growth outside of London and moderate growth for regional cities.

 

However 2018 pans out for the property markets, Property Assistant can help homeowners achieve the best price for their home and find their next dream property. If you would like to find out more about the markets in your area then contact us today on 0118 912 2370.

Featured image via Flickr.

Thames Valley House Prices: July 2017 Market Report

As figures for house prices in the UK hit the press for July 2017 we bring you our market snapshot on how the Thames Valley property market is performing.

House Prices: July 2017

The average house price for the UK in July 2017 was recorded at £226,185 which was 1.1% up on June 2017 and up 5.1% against the same period in 2016.

For the Thames Valley area, the average price was also up, but by a more modest 0.35% month on month to £358,307 or 1.56% against the same period in 2016. This can be broken down by area as follows:

Average House Price

Thames Valley Area Jul-17 Jun-17 Jul-16
Basingstoke and Deane £  302,690 £  302,726 £  293,097
Bracknell Forest £  355,918 £  349,543 £  350,052
Reading £  308,166 £  303,276 £  303,390
Slough £  303,181 £  301,986 £  295,357
West Berkshire £  347,017 £  347,995 £  336,135
Windsor and Maidenhead £  479,214 £  481,821 £  485,027
Wokingham £  411,964 £  413,871 £  411,876
AVERAGE £  358,307 £  357,317 £  353,562

 

The price divide against the rest of the UK remains sizeable with the average price of a house in the Thames Valley area being £132,122 higher than the rest of the country; that’s a staggering 58.4% difference!

house price rises UK

At the end of every rainbow sits a crock of gold… Image via Flickr.

With the exception of Windsor and Maidenhead, all areas in the region saw a year on year increase in the average house price, with the Royal Borough experiencing another drop in house prices resulting in 1.21% decrease year on year.

The biggest % gains were in West Berkshire and Basingstoke and Deane who both saw year on year increases of over 3%.

Average Prices by House Type: July 2017

Depending on the type of house you want to buy, prices vary considerably across the region. A detached home in Windsor and Maidenhead will cost you an average of £856,928 compared to a relatively modest £516,235 in Basingstoke and Deane.

The Bracknell area continues to outperform Wokingham and Reading with detached house prices. A detached home in Bracknell will cost you £36,041 more than in Reading and £15,736 more than in Wokingham. However, Wokingham rises above both Reading and Bracknell when it comes to the cost of semi-detached and terraced properties which pushes the average price in the area far above both neighbouring areas. This is largely due to a greater number of these kinds of properties being sold in the area as a result of there being a greater stock on the market in Wokingham.

A flat in the Thames Valley will cost you, on average, £233,100 which is still 3.06% higher than the UK average for a house.

House Prices: The Current Outlook

After the annual anticipated slow summer holiday period, markets in the region have been showing good signs of activity for the first three weeks of September. UK mortgage lender, Halifax, has reported an increase in borrowing which they believe to be a result of the continued shortage in housing combined with strong employment growth. This follows a nationwide dip of 0.1% in the House Pricing Index experienced in August. The outlook for September is therefore a moderate increase in the value of property with more mobility in the markets.

house price index uk

The House Price Index is expected to rise for September 2017. Image via Flickr.

As people look to get their homes ready during Autumn in the hope of achieving a sale and (hopefully) to move by Christmas, we have seen an increase in the number of vendors coming to market as well as commensurate rises in the number of viewings being arranged.

Property Assistant: Buying and Selling in the Thames Valley

If you are looking to bring your home to market during the autumn then Property Assistant is well placed to deliver a tailor made solution to get your home ready to achieve the best price. Not only can we advise on presenting your home and putting together a marketing plan but we can also arrange for a smooth purchase. We don’t disappear once your offer has been agreed but we take the time to look after your sale from viewings through to completion. And, if you are looking for a home in the area, we can also help you find your next dream home. You can download our free eBook – ‘House Buying Guide’, here.

Contact us today on 0118 912 2370 to discuss how we can help with all your property needs.

Where is the Information for our Market Reports Derived?

Each month, the UK Government publishes retrospective information relating to the recorded values of homes sold in the previous months (UKHPI). Collected by HM Land Registry, the prices reveal a snapshot of the market about three months ago with the information being a result of sales negotiated prior to completion and being registered with HM Land Registry.

It’s important to bear in mind that the figures stated on our monthly market reports are therefore based on historical data and do not reflect the current trends of movement on the market. The information we provide on the state of the current market is reflective of trends experienced now in terms of the value of properties coming to market, the commensurate value of offers being made against asking prices and the number of sales agreed.

Featured image via Pixabay.

Thames Valley House Prices: April 2017

What are house prices doing in the thames valley-April 17

Want to know what house prices in the Thames Valley are doing?

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Thames Valley House Prices: March 2017

UK property prices march 2017

Taken from actual transactions recorded by the Land Registry for March 2017, the UK House Pricing Index.

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Thames Valley House Prices: February 2017

uk house prices feb 2017 thames valley

Find out how house prices in the Thames Valley performed in February 2017