Is Now A Good Time To Buy A House?
With house prices on the rise, Conveyancing Expert looks at whether now is a good time to buy a property.
07 May 2021
More homebuyers are actually paying over the asking price for properties than at any time in over seven years. The UK’s property market is at its strongest for a long time, with buyers desperate to secure purchases before the stamp duty holiday ends. But is now the time to take the leap? Conveyancing Expert takes a look at what is happening to house prices to help you decide whether to make a move or wait until things calm down.
The Stamp Duty Holiday
The temporary cut to stamp duty had a significant impact on the property market. The cut was due to end on 31 March 2021 which resulted in a huge rush of buyers aiming to get purchases in time. HMRC figures show that 190,000 transactions took place in March, double that of a year earlier. The tax break was actually extended in March, meaning we’re likely to see high numbers of sales continue at least for a little longer.
What Is Happening To UK House Prices?
Lockdown caused many people to reassess their living arrangements with particular emphasis on extra rooms and gardens. This increased demand in the housing market and since there are not enough houses to match the demand, prices have shot up.
According to the most recent data from Nationwide, annual UK house prices rose by 7.1% in April, up from 5.7% in March. Month-on-month prices rose 2.1% in April alone, which is the biggest monthly rise since February 2004.
In the last year England, has seen a house price growth of 8.7%, to an average price of £268,000 (8.7%), in Wales to £180,000 (8.4%), in Scotland to £162,000 (8.0%) and in Northern Ireland to £148,000 (5.3%). The North West of England was region to see the highest annual growth in average house prices (11.9%), while London saw the lowest (4.6%). (Figures from the ONS)
Naturally, greater demand results in higher prices, especially for those moving to larger and/or more expensive homes; the Land Registry shows how detached houses in the UK have increased in price by the biggest percentage over the last 12 months and flats and maisonettes have seen the smallest growth.
Mortgages Rates In 2021
The pandemic saw the number of mortgage deals available halving. People with smaller deposits were the worst affected. However, there are now 3,659 fixed-rate mortgages available; this is still 25% less than before the pandemic but the highest seen since last spring. Rates are fairly good for those with a big deposit.
Is Now A Good Time To Buy A Home?
The stamp duty cut and low mortgage rates might encourage many to take the plunge but there are some downsides of buying in a lively market, especially one influenced so heavily by external factors such as a pandemic and short term tax cuts. With regards to the Stamp Duty Holiday, the £500,000 tax-free limit will be lowered to £250,000 in England and Northern Ireland, and £180,000 in Wales on 1 July, meaning that even if you’re looking to buy very soon, you will struggle to get your purchase complete before the end of the tax holiday.
Also, the incredibly high house prices around at the moment could mean that if you buy now, you could find your property is worth much less than you paid after the current surge dies down.
Bearing these factors in mind, it may be sensible to take a step back rather than rushing into a purchase. Always think of the bigger picture and the long term goals.
What About Selling My Home?
It is very much a seller’s market right now but only you and your individual circumstances can dictate whether you should sell now. If your property has increased significantly in value, you might decide to cash in now and progress to another home. If you're selling at the top of the market, you’ll probably be buying at the same level, so the hike in value of your current home may not have a significant effect.
With working from home likely to remain more commonplace than it ever was, home buyers are looking for different things from a property than they were a few years ago. If you are thinking of selling in the near future, think about how your property fits with what buyers in your area are searching for, and consider what improvements you could make to make your home rise in value and attract greater interest.
Conveyancing In 2021
The past 12 months have seen massive changes in ways of working for all of us, not least in the conveyancing market. Also, the rapidly approaching end to the SDLT holiday (England) and the LTT holiday (Wales) and the end of the Help to Buy scheme in its current format, coincided with the busy Easter period. However, we are as dedicated as always to progress your sale and purchase efficiently and thoroughly and in a timely manner.
If you are looking for quality conveyancing services, Conveyancing Expert are here to deliver an excellent and efficient service, ensuring your property transaction is completed with expert legal advice.