Market Update – A season of change and the question of whether to buy now or wait?

There is one certainty in life (apart from death and taxes) and that is ‘change’ .. not only are we entering the Autumnal season but in the past few weeks, we have a new monarch, a new prime minister and with this, the unveiling of a new ‘mini-budget’ on 23^rd September 2022, which revealed a set of the most radical tax cutting budget measures since 1972.

With all this change, breeds uncertainty.  A term which markets, in general. don’t like but we have become fairly familiar with over the past couple of years …

There is no escaping concerns surrounding interest rates, particularly with the base rate increasing from 1.75% to 2.25% on 22nd September and analysts speculating that The Bank of England base rate could rise above 4% by the end of 2022. In light of the mini-budget, we have seen thousands of mortgages pulled from the market and fears take hold of how purchasers will afford increased mortgage rates, with the cost of living crisis adding further fuel to the fire.

Reforms to Stamp Duty thresholds will of course benefit those purchasing properties now, with purchasers saving up to £2,500 across the board, and first-time buyers being able to access up to £8,750 in relief.  The positive effects of the Stamp Duty changes will almost certainly be eclipsed however if interest rates rise further.

We have to remember that all the media surrounding predictions of price falls, are just predictions and no one has a crystal ball to know exactly what the situation will be in 6 months, or a year’s time.  A dip is however likely over the coming months if interest rates continue to rise but the nature of any price falls are likely to differ substantially depending on the nature of the property, location and price point, with more affluent purchasers with lower debt requirements being in a more fortunate position to ride things out.

• Mortgage Rates – If interest rates do continue to increase then it’s advantageous to investigate with your mortgage broker / lender, now, as to what terms they can offer you as it is likely that by the costs of debt will increase into 2023. 

Several major lenders have increased how far in advance they will enable existing borrowers to ‘lock in’ their mortgage deals, enabling you to lock in a new mortgage deal now, and stay ahead of future rate hikes.

• Cash Purchasers – If you are in a position where you are not reliant on debt, there will be vendors who are motivated to sell now, particularly if they currently have their property on the market, giving you (or Strang & Co acting on your behalf) the opportunity to acquire the property on the best possible terms. 

• Hidden Gems – The fundamentals of the market with a significant Supply / Demand in balance remain.  At Strang & Co, we seek out the best properties for your price bracket, and provide you with the advice you need to make the most informed decisions.

• International Purchasers – If you are an international purchaser, UK residential property is looking particularly attractive, particularly for purchasers buying in Dollars, who can take advantage of sterling’s historically weak position, relative to the dollar. 

• Take the long term view – Our advice to clients is that if you are looking to own a property for at least 10 years, then despite fluctuations to property prices in any given cycle, history of the UK’s housing cycles (see Nationwide House Price Index and Land registry data) has taught us that property values increase over time.

• A home is for living – The pandemic has taught us that life is for living, and although Property is an investment, it is much more than that.  It is more often than not, the backdrop to your life – a place to live, to work, a sanctuary, a place to host / raise a family and to enjoy and make memories.