Following the exceptional and somewhat artificial market we’ve experienced in the last couple of years, it’s easy to feel quite negative about the current housing market. However, the situation is not as simple as it seems. As we emerged from the COVID-19 pandemic, the housing market throughout the UK witnessed unprecedented growth, but it’s unlikely to happen again. Comparing that period to the current market won’t provide an accurate picture of its performance.
The “Race for Space” Phenomenon: The so-called “race for space” was prompted by buyers gaining access to more flexible working arrangements, the stamp duty holiday, and the limited availability of housing stock. Consequently, there were numerous buyers competing for a limited number of properties, which drove up prices. Buyers found themselves making increasingly higher offers to secure a sale, and properties often sold within days of being listed.
An Abnormal Market: It’s crucial to remember that this was not a normal market. To illustrate the exceptional nature of this period, consider the following: In 2018 and 2019, UK house prices increased at an average annual rate of 2%. Now compare that to the average increases of 7.4% in 2020, 10.8% in 2021, and 9.8% last year, amounting to a total increase of over 28% in just three years. Even the worst-case predictions for a decline in house prices are nowhere near a drop of over 20%. Unless you purchased a house within the last 12 months, the value of your home will have increased.
UK house prices increased at an average of 2% per annum in 2018 & 2019. In the past three years combined they have increased at a national average of 28%.
Navigating the Current Market Conditions:
Let’s get serious and discuss how to buy and sell homes in the current market conditions.
For Buyers: How to Bag a Bargain
If you’re a buyer waiting for house prices to plummet before making a purchase, that scenario is unlikely to occur. Instead, prices will likely return to more normal levels. However, you can still take advantage of the market by following these steps:
Prepare: Organize all your paperwork, have your deposit readily accessible, secure a mortgage offer in principle, and have a solicitor lined up. This will demonstrate your commitment to the purchase and allow you to move quickly once you find a home.
Research: Many houses are currently marketed above their actual worth. Research recently sold properties in your price range and area from the first half of 2022. This will give you a realistic idea of what you can buy now.
Ignore Current Asking Prices: Most asking prices on property portals are inflated. Consider moving up to the price band above your maximum spend to explore available options.
Plan: Before looking at houses, develop a strategy for putting forward your offer. Clearly explain why you are the best buyer and why your offer stands out. Remember, the highest offer doesn’t always win; sellers often prioritize buyers with a solid financial position and demonstrated commitment.
Property to Sell: If you have a property to sell that isn’t under contract, refrain from making offers on other properties until you have a sale agreed. This will ensure you can negotiate a better price. Instead, read our advice for sellers to ensure a successful sale.
For Sellers: Being Realistic About the Current Market.
If you’re looking to sell, it’s essential to have a realistic understanding of the market and price your property accordingly. Keep the following tips in mind:
Invite agents who provide honest pricing advice. Be cautious of agents who claim to have sold comparable houses for higher prices, as it doesn’t guarantee your property will achieve the same figure or exceed it. Compare prices from the first half of 2022 for a more accurate estimate.
Choose an agent based on their competence and track record, not solely on fees. Agents who can negotiate well to secure the best price for you are worth their fee.
Avoid lengthy contracts; limit your agreement to no more than four weeks. Agents who push for longer contracts may lack confidence in their ability to sell your home at the suggested price. You should remain with an agent because you want to, not because you are obligated to.
Distinguish between listings and sales. Look for agents who have a high number of sold boards in your area, as it demonstrates their proactivity in achieving successful sales.
If switching agents, inquire about their proposed selling price. A good agent will suggest a new marketing approach with a revised price, rather than merely relisting the property at the same price. Listing at a lower price can attract more buyers.
Changing your mindset is crucial
Getting the Best Price and Multiple Offers:
If you’re struggling to attract offers or viewings, it’s time to take action. Start by having an open conversation with your agent. Consider the following steps:
Be honest about any issues affecting your sale. If your agent focuses on market conditions or property features instead of providing solutions, they may lack the necessary experience or courage to secure a sale.
Be proactive and drop your price. Waiting too long gives the impression that your house is overpriced and discourages potential buyers. Consider lowering the price by at least 10% or adopting an “offers over” strategy.
Changing your mindset is crucial. Dropping the price may seem drastic, but unless you purchased your house within the last 12 months, it is likely worth more than what you paid. Changing your approach can help you sell quickly and avoid further financial losses.
Avoid chasing the market with small incremental price drops. This raises buyer suspicion and eventually leads to a stalled sale. Instead, proactively set a competitive price that attracts buyers.
Understanding the Best Offer:
Once you start receiving viewings and offers, remember that the best offer isn’t always the highest one. Look for offers from buyers with a solid financial position, short chains, and proof of deposit or cash. If the buyer needs a mortgage, ensure they have an agreement in principle. Consider requiring a reservation agreement for added security. By securing the best offer, you can negotiate effectively and move forward with your onward purchase.
In the current housing market, it’s crucial to approach buying or selling with realism and adaptability. By understanding market conditions, pricing your property competitively, and working with experienced agents, you can increase your chances of success. Remember, seeking advice from professionals can provide valuable insights and support throughout the process. If you require honest advice and assistance with your house sale, contact Harrisons today at 01795 47484