If you are buying and selling a home, does it matter if the market is going up or down?
Never a day goes by when we don’t hear some news about property prices. So far this year I’ve seen headlines suggesting property prices have achieved ‘record highs’, others saying the ‘property bubble has burst’, while our previous chancellor claimed house prices could fall by 18% if we voted for Brexit.
This can make it difficult to know whether now is a good time to move on or stay put. However, the good news is it doesn’t really matter in my view whether you buy and sell as long as you know the type of market you are going to be operating in and plan for prices going up and down in the future.
This is especially the case if you are buying and selling at the same time, as property prices are relative. So if prices are falling, you may not get as much as you’d hoped for your own property, but you could secure a new home for less. The opposite is true, too; in a rising market, you may pay more for your new home, but should get more for yours, boosting the equity you have.
Buying and selling in a fast moving and rising market
Most people think this is the best market to sell in but when you have to buy another property, it can actually be one of the hardest.
In a rising market your property can be sold within days following lots of viewings. You may get multiple offers and have to choose who gets your home. Do you sell to the highest bidder or a buyer who is ready to start the purchasing process?
Once you have secured an offer you are then under pressure to buy for the deal to go through. But now you are the one competing for a property and could find yourself struggling because others keep offering more.
However, at least you can sell your home - which means you can move forward and will eventually find a property you can secure.
Buying and selling in a slow moving and falling market
This can be a tricky market to work in and whether it is easier to buy or sell typically depends on the type of property you have, as well as the location.
If you have a desirable home that rarely comes onto the market, keen buyers are unlikely to be deterred by a poor market. But if your home is on a busy road, or subject to flooding or subsidence, quieter markets could mean it takes take months or even over a year to sell.
In this kind of market, people tend to try to negotiate the best deal they can – but, if you are trading up, this can actually work in your favour.
For example, if your property is worth £200,000 but, due to a slow market, a buyer offers 90% of the asking price, ie £180,000, in theory you ‘lose’ £20,000. However, if you are trading up to a property worth £300,000 and manage to secure a 10% discount, you save £30,000 and actually end up £10,000 better off.
Can you afford to buy and sell now?
The real question is whether now is the right to time to buy and sell for you and your financial circumstances.
If you have plenty of equity to put towards your next home, or can even buy outright, then it matters less what’s happening in the market.
However, if your property hasn’t risen much in value or, worse still, is worth less than you paid for it, that will make it tough to sell in a falling market.
Speak to your broker
Much as we worry about prices rising or falling, what is often more important is the affordability of a mortgage now and in the future, whether you can cover the costs (agent fees, legals and stamp duty) and if there are buyers for your home and properties available for you to purchase at a price you can afford.
To find out more from your local broker, please get in touch with us today.
For further information call: 02083431777