How the housing market has changed… It was just a few years ago when it was a seller’s market and they were confidently in control. They would have open days where many people would come to view a property for sale leading to bidding wars and a seller walking away with a decent profit. Today it is now a buyers’ market. A buyer can bid down a price, rather than the price increasing way beyond what the buyer anticipated. What a total reversal! Where have all the buyers gone? UK home sales dropped by 7.2% between February 18th and March 18th to 92,270, the lowest level since May 2016 (88,680) according to data by the HMRC.
With the uncertainty following Brexit and a rise in interest rates, property prices have subdued and remained broadly flat according to Nationwide’s house index.This has made it affordable for “generation renters” who are aged between 20-39 years old. This is especially the case in the London area. PWC estimated house prices in London this year could be around £60,000 lower than if the UK had voted to remain; this contrasts to a difference of around £10,000 in Scotland and just £8,000 in the North East of England.
The Financial Times stated in an article, “profits at Foxton’s have slumped nearly two-thirds as the London-focused estate agents grapple with a slowdown that has pushed sales activity in the capital’s property market to “near historic lows”. Real estate agents are struggling to find buyers for their clients, making it the perfect time to test the waters and ‘haggle a deal’.
Brexit has offered a window of opportunity for first-time buyers to purchase their home rather than renting. Potential first-time buyers should be preparing themselves financially to take on a mortgage.
Tips on how to start your journey onto the property ladder
Ensure your credit history is in order before applying for a mortgage.
Mortgage lenders always conduct credit history checks. Avoid your application being delayed or denied due to a negative or low score by being aware of your credit history and score before considering a mortgage. It is wise to make a habit of checking your credit reports and credit scores to eliminate or minimise pre-credit check worries.
Are you putting aside savings for a mortgage deposit?
One of your primary money goals should be to save a percentage of your income. Consider cutting back on costs so you can grow your savings. In some cases, the ‘bank of mum and dad’ can supplement those savings with extra deposit money or perhaps even lend the full deposit for your first home.
Visit estate agencies
Take the time to visit local estate agents and ask questions. This can help you learn first hand about the properties you are interested in and the price brackets you can realistically afford.
Ask yourself questions and set yourself goals
What can I realistically afford at this time, a flat or a house? Can I afford one bedroom or two bedrooms etc? Do I want to live in a trendy more expensive neighborhood or do I prefer living in a neighborhood that’s not upmarket but has bigger sized properties?
Don’t be afraid to bid 10%, 20% or even 25% below a property value
Some sellers want to sell and their property may not be shifting. As a buyer feel confident to put in a lower bid than what’s advertised. You might be surprised that your offer gets accepted or even if it is declined, you could end up paying a decent price below the market price. This may not happen in all situations but with the current market as it is, do not be afraid to bid much lower than the asking price and then increase the price accordingly if necessary.
Sit down, do some background research and a bit of financial planning
Planning your financial future will allow you to be prepared for the property market and you will know exactly where you stand. The What’s Your Financial Gameplan Workbook can give you a full picture of your financial situation, including credit scores, settling debts, but most importantly helping you to achieve your goal: owning your first home.