It’s never a great idea to get out the crystal ball in an attempt to time your house move. Anticipating the market when there are so many factors involved is like trying to herd cats. All you can really do is look at the current situation and ask, ‘is now the right time to move?’. Here’s how I’d weigh up the options:
PRO – The end of the stamp duty holiday
Hang on a minute. Until 1 October 2021, stamp duty wasn’t payable on homes costing less than £250,000. Now it’s returning to its former £125,000 limit. And that’s a good thing?
It could well be. Because the general consensus is that, while the stamp duty holiday was designed to keep the housing market bubbling at a precarious time, the actual effect was to send prices into overdrive.
It’s by no means a certainty, but some are suggesting the end of the holiday could lead to a correction in the market – and that could mean a window of falling prices (which could be enough to offset the stamp duty benefit). That would be extremely welcome because…
CON/PRO – Prices
There’s no getting away from it, house prices are high. The average UK home is now worth £255,535, which is around £19,000 more than a year ago. But then, up is pretty much what house prices always do. True, the market crash of 2008 saw prices plummet and it took a couple of years for things to stabilise, but since then UK house prices have increased (even if only by a small amount) every single year.
We can’t predict the market, but in general terms, the trend is generally upwards – which is why the cheapest time to buy a house is usually now. That will be especially true if the end of the stamp duty holiday (see above) leads to a short period of falling prices before things inevitably start to creep up again.
PRO – Take your time
The end of the stamp duty holiday has left lots of people rushing to meet it. I’m not suggesting that has led people to buy a house on impulse, but time limits inevitably mean you can’t look as widely or as deeply as you might otherwise. With the window closed, you can afford to take a little more time to find your perfect place. And the whole process should feel considerably less fraught.
Bonus PRO: Another minor but notable knock-on effect of that rush to meet the stamp duty deadline is that getting hold of removal firms, surveyors etc has been unusually difficult. It’s about to become considerably easier.
PRO – Your savings
In 2020, households saved almost three times more than they did the year before. Clearly, that’s not every household – but as life (sort of) returns to normal some people are sitting on savings they would never have dreamed possible just a couple of years ago.
That’s especially true of soon-to-be first time buyers, many of whom returned to their parents’ homes as the pandemic bit. It’s amazing what a year of rent-free living can do for your deposit-saving programme.
The trouble with a healthy savings pot, though, is that it doesn’t always stay healthy. So before the temptation of a holiday or two eats into all that hard work, now’s the time to move.
CON – Rising cost of living
From food to energy, prices have only been heading upwards recently. Even some government ministers have suggested this winter could be a tough one for many. So if buying a new home would see you financially stretched, you might want to press pause and see how the next quarter pans out before taking the plunge.
PRO/CON - Housing supply
You’ll no doubt have read reports that one of the reasons house prices have been shooting up is that demand has outstripped supply. That remains the case in many areas. But as furlough ends, some are suggesting we could see an increase in supply as families make the decision (or are forced) to move to a home that matches their new circumstances.
It’s difficult to get too excited about something which relies on others’ misfortune, but if you’re looking to buy, this could have the dual effect of bringing more properties onto the market and reducing prices.
PRO – Interest rates
It doesn’t apply to everyone (see our recent post on the self-employed) but there are some eye-catching interest rates available right now, especially for first time buyers. If you happen to be in the happy position of having saved more than a 5% deposit, you’ll find those rates are even better.
Now’s the time to take advantage.
Should you buy now?
It’s always a personal decision, and there are certainly some cost-of-living issues on the horizon that could causes you to think twice, but there are also a lot of factors that could play to your favour right now.
You don’t have to make the decision immediately. Why not test the water first? To explore what’s ‘out there’ and to discuss your situation, give us a call.
