What does the future buying, selling and investment market hold for you?

publication date: Sep 19, 2012
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books


What does the future buying, selling and investment market hold for you? 

The UK Property Market - Future

The future of the property market depends on how confident and motivated buyers and sellers feel. This in turn depends on the type of homeowner you are and what your financial circumstances are. Below we look at different target markets to help understand whether buying, selling, renovating or investing in a home is right for you over the coming months and years.

People who own their home outright
For many, the credit crunch hasn’t affected you that much, so you can actively participate in buying and selling a home. The only downside for homeowners in these circumstances is that the value of your property may have fallen. However, most of you who own your home outright and have done for some period of time –10 years or more, so the reality is their property has perhaps grown in value by 180% instead of 190 to 200%.

The upside is you have cash, so if trading down, you should be able to get a good deal on the property you want, or even in a tight market where you have to compete for a property, you can out bid any competition to secure the property you want to live in for the next ten or more years.

For you, buying and selling a home should be less about the money you make and more about making sure you are happy in a home you want to be in, for the future.

People who have a mortgage
Whether trading up or down is right for you depends on the equity levels in your existing property, added together with the savings you have to put towards another property.

If you have at least 25% equity to put down on a new home and especially if you are trading up, then now could well be the best time for you to move on. However, you’ll need to be realistic on the price you sell your property for, not forgetting once you’ve sold you’ll be able to negotiate on the next one.

In this case you may consider selling first, then renting so you are able to pounce on the property you want with cash ready to go and a mortgage in place, which allows you to get the property you want at a good price.

For those of you who are struggling with negative equity or low deposits, it may be a new build with incentives, especially one that offers part exchange may be the best route for you to go down. You’ll need to be careful though not to overstretch yourself and consider renting out one or more rooms to help improve your deposit/equity or overpay on your mortgage if you can.

Being realistic about your selling price is important, as is looking for a special bargain locally which will help to improve the deposit versus mortgage you need. The more you can get your deposit/equity levels up to 25% the better rates you are likely to secure from lenders.

People who are thinking of getting onto or back into property ownership
Whether now is a good time to buy a home depends on:-

  1. The market in the area you are buying
  2. Whether you have a big enough deposit
  3. How secure your job and financial future are

If the market and type of property you are looking at are showing stable prices for the last six to twelve months it does suggest your area may well have bottomed as far as house prices are concerned. If this is the case and you have a good deposit, the next twelve months may well be the right time to get on the property ladder.

For example, new builds are offering some great incentives for first time buyers that may not be available long term and these can help you onto the ladder without stretching you too much. New build prices, in the main, have also been fairly static for some years, so prices in this market seem to have bottomed out. However, you’ll always need to check at a local level what’s happening as each market varies almost by postcode!

To protect yourself, as a ‘Plan B’, make sure you purchase a property you can rent out and cover your costs just in case the unexpected happens.

If you just can’t seem to find the deposit you need, don’t lose heart. Lower loan to value deals of 5-10% will come back at some point, so look at properties you feel you could afford on your salary, find out what kind of costs you would incur and then start saving. In most areas, yes a decent property on a good street will seem out of your reach, but a few streets away, in an OK area, there will be an OK property available.

Work out how much it would cost for just you or with someone it would be to buy and aim to save up 5-10% of this deposit over the next 3-5 years. Find a local supportive building society to work with who will give you some good saving rates and make sure you take full advantage of any tax free savings schemes which are available.

For more information about getting onto the property ladder, read our top ten ways to afford your own home article

Property Investors
Lenders are loving buy to let investors who have 25%+ deposits at the moment. This won’t necessarily last, but good deals are available. The main thing you need to watch out for is not to overstretch yourself, make sure you have a few grand spare for each property to help you if times get tough or a tenant doesn’t pay – which is happening more and more.

However, bear in mind two key things. Firstly, you are more likely over the coming year or so to make money from rental income than capital growth, so set your objectives for your investment and make sure it stacks up financially. Secondly, ensure you choose the right property in the right area. This requires careful research and means you need to know what’s a good price and the costs of renovating the property so you can let the property legally.

There are also good financial deals for individuals who want to buy land and build or do major renovation projects. As with buy to let, make sure you’ve done your research and have good tradesmen on-site. One way of fixing a good proportion of your costs is by using a kit company such as English Brothers this will also help to speed up the build.

Not sure what to do? Then why not contact us and let us know where you are, why you are looking to buy/sell and a bit about your deposit level and we will try to help you know what your property options are.

Need help with a property problem? Have a question? Why not call Designs on Property on 07585 897128 or Contact Us via email.
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