Trading up: Great time if your finances are in good order

publication date: Jul 11, 2011
author/source: Kate Faulkner, Designs on Property and Author of Which? Property Books

Trading up: Great time if your finances are in good order

This is probably one of the trickiest times to work out whether it's a good time to trade up from a small to a larger home. To understand what is going to happen in the market in the future is tough, even for the professionals!

If you are stuck in a rut with a home that is just too small for you and your family and not sure whether to trade up, then the first thing you need to do is work out what's happening in your local market.

The problem with all the property price reports in the media is that they are just ‘picking' average figures that in today's varied market are, to be honest, meaningless. Currently there are a few properties and areas which are worth more than even the dizzy heights of 2007. Most properties and areas though are worth a good 10% less than they were back in 2007. Meanwhile, areas really struggling with a poor local economy and high levels of repossessions are experiencing property prices which are 20% below the peak and may even fall further back during 2011.

Read our three articles below to find out whether it's worth trading up in your current market!

Should you trade up in a high performing market?

If you already own a property, your ideal scenario is to quickly secure a buyer for your property to allow you to secure a deal on a bigger home. To do this, it's much easier when a property market is performing really well. However, it is worth bearing in mind that if properties are growing at 5% in value, if your property is worth £200,000 it will increase by £10,000 whereas an increase of 5% on a more expensive home such as a £350,000 would mean it would cost £17,500 more.

Bearing this in mind, if you are looking at trading up and your property market is taking off after being in the doldrums for the last few years, then now may well be a good time to buy. Examples of this market include wealthy areas in and around London.

What you should be wary of though when trading up is that we are not currently out of recession and with neighbouring countries such as Greece and possibly Spain, Portugal and Ireland still in major financial trouble, it's important not to overstretch yourself. Economic shocks could still cause serious problems in the UK with increased interest rates inevitable, inflation likely to rise higher than wages and an uncertain effect of huge spending cuts which are only just coming into force, anything could happen and you must make sure you and your family are protected from problems such as unemployment, divorce, sickness and death. Sorry, I appreciate that's not a cheery note, but these are tough times and at the end of the day it's our family and friends that help us through difficult times, less so having a bigger property!

READ Article 2 - Should you trade up in a depressed, but stable market?

Also read Article 3: Should you trade up in a falling market?


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