Buyers: reasons to be upbeat about the property market
Just over a year ago, Viewber conducted a survey on what most frightens buyers. Just 12 months later, the same worries still hold true, but we are on the cusp of a very different market.
The old adage that bad news sells has never been more apparent and potential purchasers can be forgiven for delaying buying plans. Headlines, however, can be misleading and with the right advice, the buying market can be a less scary place!
In this blog, we share our confidence-boosting advice for buyers thinking of moving home in the next couple of months.
Mortgages: be prepared with professional advice
In our 2021 survey, a buyer’s biggest fear was being rejected for a mortgage – a worry cited by 27.7% of participants. Fast forward to 2022, and we know the mortgage market is still a top concern. As a result of fiscal turbulence and a rising interest rate, we can’t hide the fact that home loans have become more expensive.
While it’s only a crumb of comfort that mortgage rates are still at historically low levels – we know it doesn’t feel that way with typical fixed rates doubling in the last 12 months – there are still some great home loans being released but it usually takes a professional to spot them.
We can’t stress how important it is to work with a mortgage broker or independent IFA. They have access to exclusive home loans that you won’t find on the High Street or even on comparison websites. More often than not, the most attractive mortgages are available for just a few hours before they’re pulled from the market, but a good broker will have alerts set up and they’ll make an application on a buyer’s behalf without delay.
Brokers will also help borrowers prepare for revised affordability checks. While the Bank of England did scrap its stress tests on 1st August 2022, banks are keeping their own in place. It is becoming the norm for lenders to require buyers to demonstrate they can afford repayments if their mortgage rate rose to 7%, 8% and even 8.49%. Prove you have the earnings or funds to keep up with rising repayments, and you’ll stand the best chance of your mortgage application being accepted.
Choice: more homes coming to market
In our 2021 survey, 8.5% of respondents were worried about the prospect of gazumping – when another buyer comes in at the last minute and makes a higher offer, usually just before exchange is about to take place. Gazumping is most prevalent in a market where there are more buyers than properties available but there is evidence to suggest the tide is turning in favour of purchasers.
Stacks Property Search was reported in the trade press calling what is ‘fast becoming a buyers’ market’ but what exactly does a ‘buyers’ market’ mean? It’s generally when there are more homes for sale than active buyers. As a result, purchasers face less competition and are in a stronger position to negotiate with sellers over price and extras.
There are already signs that more homes for sale are being made available. Rightmove’s latest figures show a 4% increase in properties coming to market after the mini-Budget, when compared to the two weeks beforehand. This trend is backed up by Landmark Information Group’s latest data, which shows listings are back to pre-pandemic levels, reversing the restricted supply seen over the last year.
In addition, the Royal Institution of Chartered Surveyors (RICS) said the number of inquiries from potential homebuyers fell for a fifth month in a row in September, reducing competition among buyers for the same property and lessening the chances of gazumping.
Trading up – best in a tough market
Many want to sell as they’re needing a bigger property. Wel IF your own property has fallen by £25k but the one you’re looking to buy has fallen by £50k – who’s the winner there?
A note on house prices
There are very few topics that grip the nation as much as house prices but if you’re a buyer – especially a first time one – news of climbing property values isn’t always cause for celebration. Multiple sources, however, show that property values are stabilising, and some speculate there could even be a downward correction, releasing some of the price pressure that built up during the pandemic.
The Nationwide’s House Price Index is usually a good barometer of property sentiment. September’s report showed that UK house prices didn’t change between August and September 2022, ending a 13-month run of consecutive house price rises.
Stamps duty [saved at the bell by Mr Hunt] savings take immediate effect
While it may take time for any property price corrections to filter down to buyers, there has been a change to the stamp duty thresholds, and this is already reducing a home buyer’s moving bill.
Any home bought that’s worth £250,000 or less will have a zero-stamp duty bill, thanks to September 2022’s mini Budget. As the first £250,00 portion of a purchase price is now stamp duty free, those buying a home for more than £250,001 will typically save around £2,500 on their stamp duty bill. First-time buyer ‘stamp duty relief’ has also been revised to reduce the end tax bill. As before, first-time buyers don’t have to pay stamp duty on the first £425,000 of a property’s value but they can now buy a home worth up to £625,000, instead of the old upper threshold of £500,000.
