If you’re looking to sell, now’s the time
If you’re looking to sell your home, now’s a good time to do it, according to the latest signs in Zoopla’s House Price Index. We’ve extracted some information from their article about this that we thought was particularly interesting. They said:
“The average UK property price has remained broadly unchanged this month, rising by just 0.1% since May, according to our latest House Price Index. That’s the lowest rate of monthly price growth since December 2019, while the quarterly growth of 1.4% is the slowest since March 2021.
Year on year, property prices are up 8.4%, down from +9.2% in April and the rapid house price growth seen across the UK since the start of the pandemic has finally peaked.
Demand for properties still remains strong at 40% above the five year average, but that demand is beginning to decline week on week, as the market returns to more ‘normal’ conditions.
With that in mind, sellers looking to capitalise on gains made during the pandemic-driven property boom should act sooner rather than later.
- Demand for holiday homes on the up
The holiday lettings industry has also played its part in boosting buyer demand since the pandemic began. Around one in five purchases in the South West in 2020-21 were additional dwellings. In the North of England, this figure was 26%, while in the capital it was 29%.
- What do higher interest rates mean for house prices?
As the cost of living continues to bite, mortgage rates are rising as the Bank of England increases interest rates, in an attempt to combat rising inflation.
Buyers are facing average rates of 3.37% for a five-year fixed-rate £250,000 loan now (with a 25% deposit), compared to 2.64% in December. That means the annual cost of a £250,000 loan has increased by £870.
If five-year mortgage rates continue to rise by more than another basis point, taking them to around 4.62% (levels last seen in April 2010), the annual cost of a mortgage repayment would climb by £2,500, compared to December 2021.
- If you’re a homeowner looking to move in the next two years
The rate of house price growth is expected to slow to 3% through the rest of the year, with prices rising at less than half the rate registered last year, where they were up 8.4%. However, property prices are unlikely to decline as demand for housing remains high, despite falling back from record levels.
And the stress-testing for mortgages introduced since the global financial crisis means that many homeowners have proved their income can withstand rising interest rates. That means the number of forced sales, which have a negative impact on pricing, is likely to remain limited.
The recent announcement that stress testing rules will be adjusted for borrowers, so they’ll no longer have to prove they can afford repayments at the Standard Variable Rate +3%, will mean some additional borrowers will be able to access loans, especially first-time buyers.
However, the move is unlikely to make a significant change to lending levels, as the general rule for lending to be limited to 4.5 times a borrower’s income remains in place.
Plus, the majority of homeowners are also locked into a fixed-rate mortgage, meaning they are protected from the current interest rate moves.
- Where is the market going in the next 3-6 months?
House price growth remains strong by any measure. The levels of annual growth seen over the last couple of months are the highest since late 2016.
However, there are now signs that the market is beginning to ease, despite demand levels remaining 30% above the five year average, as that demand is beginning to fall back from record peaks.
The market is still moving very quickly, but the time between listing a home for sale and that sale being agreed is starting to creep up, as the market returns to more normal conditions.
The economic outlook, and multiple base rate rises, are expected to lead to slower activity throughout the rest of this year.
That said, 1.2 million homes are expected to change hands across the UK in 2022.
- Should I delay buying a home?
If you’re looking to buy a home, it’s best not to delay. House prices will continue to rise this year, albeit at a slower pace than we’ve seen over the past two years.
And Interest rates are likely to continue to increase, as the Bank of England tries to combat rising inflation, making borrowing more expensive.
If you’re looking to get a new mortgage or to remortgage, it’s best to choose a fixed rate option with the lowest possible interest.”
Modified article taken in part from an article by:
www.zoopla.co.uk and written by Nic Hopkirk
If you liked this article, you may enjoy this one:
How to sell a house quickly and at the best price
Important Information
All property sales and the financial advice that surrounds them are as unique as the people engaging in the transaction. It is important to not decide without seeking professional advice. If you want to sell your home and are considering redecorating before marketing, speak to one of our Property Professionals to get the best advice for presenting your home for sale before making any investment. This article is for the purpose of information only and should not be seen as financial advice.