Should I Stay, or Should I Go?

Written on 8 December 2022 by Nicholas Mendes

Should I Stay, or Should I Go?

I didn’t imagine my property blog would be titled after one of the greatest rock bands ‘The Clash’, but the lyrics seemed appropriate to how many will be feeling when it comes to making a property decision.

For many looking to purchase their first home, or considering moving, the past few months may have put on hold any plans or caused you to revaluate your options. House price increase over the last 2 years and the 40-year high inflation has resulted in homeowners’ incomes and outgoings to be stretched, as well as a looming property market dip which has added fuel to the fire.

A recent OBR report set the expectation that house prices will fall by around 9% between the end of this year and September 2024 due to a period of record highs. This will be driven by rising mortgage rates and tougher economic conditions. Average interest rates on outstanding mortgages will peak at 5% in the second half of 2024, meaning this is the highest average rate since 2008 and 1.8 percentage points above the peak that the OBR predicted in its March forecast. The average rate will then fall slightly to 4.6% by 2028 when the forecast ends.

When Should You Take the First Steps?

If you’re thinking about purchasing a property in the next year or so its worth keeping in mind there are typical points of the year when looking to purchase, that might bring more opportunities than others.
When making the first steps, it’s important to understand the market as well as the competition you could be facing. For example, as witnessed in the first half of 2022, we continued to see property price increases, despite the increase in rates and inflation due to the high demand and lack of stock on the market.

Traditionally spring and autumn tend to be the times more properties come onto the market. This is reflected in September when less properties tend to go on the market as homeowners and potential buyers want to ensure they have moved into and/or completed on a property purchase before the Christmas period. Other holiday periods to take into account are the summer holidays when many want to complete prior to school holidays.
When it comes to selling a home, sellers will also be keeping in mind the market and when there is likely to be higher demand to attract the highest number of interest and bidders to the property. That said, some homeowners might want to buck the trend and sell when there’s less competition from other perspective sellers, so you should still keep an open mind and go to viewings to ensure you don’t miss out on a prospective property. A recent MPowered house price index report highlighted 66% demand a chain-free buyer, 29% expect bigger offer from those in a chain and 10% wait to get 5 or more offers before agreeing on a sale.

We often find that March marks the start when there’s an increase in properties going up for sale, in preparation to complete before the summer period. From a buyer’s perspective its important that when you’re in a position to start looking at a property to get all your ducks in a row.
Speaking with a whole of market broker like John Charcol is invaluable for any prospective buyers. They will take the time to review your needs and circumstances and put solutions together to ensure your mortgage application is seamless and stress free.

Whether you a seasoned home mover or a first-time buyer, concerns in the market will be the same for everyone. Rates continue to be a key priority for many and ensuring the mortgage remains affordable. The time to encourage aspiring homebuyers to get on the ladder sooner rather than later to benefit from the historic low rates of the past, have now gone, and homebuyers need to ensure they take a balanced approach when it comes to making sure mortgage payments are and continue to remain affordable in the event of future rate rises.

Another topic is whether you should purchase a property with an impeding recession around the corner. This will come down to circumstances and ensuring you feel confident that circumstances won’t change and having this discussion with the broker or mortgage adviser. Although we tend to see property prices reduce meaning you could get more for your money, we could also see potential sellers holding back from selling while the market is unsettled, putting the lack of stock and demand back into question and how this affects properties you’re interested in and how quickly they’re taken off the market.

Ultimately, I would encourage any first-time buyer to try not to pre-empt when the property market has dipped, as this would often mean when property prices are rising, and you would have missed the boat. Whereas getting on the ladder, potentially saving on rent, you’ll indefinitely build equity in your home - getting on the property ladder is a long-term investment.

To get in touch with one of our expert advisers to discuss your options, enquire now or call us on 0330 433 2927.

Category: Nicholas Mendes