Property is big business, and nearly all of us get involved in the market sometime – with varying degrees of enthusiasm. This article gives an overview of the market, introduces the essential information and explains the likely timescales involved. It also explains the importance of new laws, which have a major impact on the process of buying and sell a home.
Rises and falls in house prices regularly feature in news reports, and most newspapers (both national and local) run substantial specialist sections on sections on the subject. Few dinner parties finish within some reference to it, from the amazing price paid for a shell of a building to the difficulty that young people have in affording even the smallest place of their own.
There is much hype about the property market and when you are buying and selling a property it is hard to get to grips with the essential facts and figures that help to equip you for a successful move. The following information puts the house market in context and helps you to plan your move from the start.
Key figures quoted by the media include:
- The average price of a home.
- The number of properties sold in any year.
- Whether the market is increasing or decreasing.
- Regional variations.
Historically there were up to 375, 000 properties for sale at any one time. During 2008-09, however, sales volumes dropped by approximately 60 per cent, so many fewer properties were available for sale. According to Zoopla, around 340, 000 are for sale in the UK in Summer 2010. They tend to sell within two to three months. In 2010, property prices seem to have stabilised nationally, while regionally, they vary dramatically. Some London areas, for example, appear to have already recovered to 2007 heights, while others have too many properties for sale and few buyers, so prices are still falling. It's essential to find out what's happening in the area you are buying and selling rather than rely on media headlines, which typically report national averages.
To date, we move house on average every seven years, which is when most of us take an active interest in the market, but like it or not, all home owners need the property market to stay healthy. For this to happen, we are reliant on a steady flow of first-time buyers to fuel the market in the first place. So when you are looking to buy or sell a property, it is crucial to understand whether first-time buyers are active as they will influence the market in general. This is why it is vital for you to understand the impact of the local market on your buying and selling decisions.
First-time buyers
First-time buyers have traditionally been vital to the health of the property market because they are the start of nearly every chain of purchases. The following factors make it increasingly difficult for first-time buyers to get on to the property ladder.
- House prices have risen faster than wages, putting more properties out of their range.
- The abolition of tax relief on mortgages in 2000 increased the real cost of a mortgage.
- Many graduates leave university with a hefty student loan to repay, reducing the amount of money they have available for property.
- Property investors have continued to snap up similar properties to first-time buyers, maintaining house price levels.
As a result, the average age of the first-time buyer has risen to 33 years. An average of 134,000 pounds is spend on their first home and, with the typical deposit now being 25 per cent, first-time buyers need to find up to 33,500. These changes often require first-time buyers to:
- Accept financial help from their family towards their deposit.
- Use their parents as guarantors on the loan.
- Share mortgages, sometimes with as many as four people contributing to a purchase.
- Opt for cheaper, smaller properties with little or no garden.
- Go to lenders offering first-time buyers 10 per cent or less deposits, incurring higher mortgage rates.
Increasingly, those that are eligible also have access to 'affordable home ownership' homes, which are being built in local areas by housing associations.
Because first-time buyers are so crucial to the state of the market, research them when you value your first property. If there are plenty of first-time buyers, the market buoyant. A shortage of them quietens the market.
Types of property
Driving around the UK reveals the wide range of house styles that have been built over centuries, sometimes side by side. There really is something to suit everybody (although it might not be on the market in the right location at the right price at the right time when you are looking for it!). Older, 'character' properties are especially popular and in short supply, so they command a higher price.
Thinking about the type(s) of property you are looking to buy is important. Some properties sell more quickly than others. All properties have advantages and disadvantages. Some people spend months searching for a type of property only to find that it doesn't exist in the area they want or that it is away beyond what they can afford, or other people's offers get accepted first as they are cash buyers.
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