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:



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.