After two years of rocketing house prices, the property market is coming back down to earth. The average house price in the UK decreased for the first time in 15 months, dropping £4,000 from £272,259 to £268,282, in October, according to Nationwide. The estate agency Savills predicts prices will fall by 10 per cent on average next year, and the number of sales will reach its lowest level since 2011.
“There are more price reductions at the moment than new listings,” says Jonathan Hopper, chief executive of the buying agency Garrington. “I think the scale and the shock of what’s unfolded politically and economically over the last six weeks has driven the message home that this isn’t a changing market, it’s a changed market.”
With prices expected to fall further in the coming year, sellers will be keen to sell while buyers will want to wait — creating an impossible standoff. So should you wait or should you bid low and go? Here’s our guide to where you have room to negotiate and the markets where you’ll be laughed out of a viewing for trying.
Will price falls help me as a first-time buyer?
Property values increased by 13.6 per cent in the year to August, according to official statistics, which means that if house prices were to fall by 5 per cent, this would just take prices in London back to August 2021 levels. Meanwhile, prices in Wales would drop to March 2022 prices.
Higher mortgage rates are going to hit first-time buyers at the lower end of the market hardest, because these are the buyers who need to borrow the most and are most likely to be feeling squeezed by the rising cost of living. As a result there are 27 per cent fewer buyers for properties costing less than £250,000 than there were last year, according to Hamptons estate agency, and 14 per cent fewer homes going on sale due to the increased price of moving up the ladder.
Record-breaking rents, however, mean it’s worth buying if you can. Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, a financial services company, says someone hoping to buy a £296,000 property may see the price drop £14,800 over the next year, but they would spend £13,944 renting the same property in that time. “When you bear in mind that all of this cash would go to a landlord rather than paying down the mortgage, it feels like less of a win,” she says.
Can I lower my offer after it has been accepted?
An offer isn’t legally binding until exchange of contracts in England and Wales. This is not the case in Scotland, where the accepted offer is legally binding, although buyers can make an offer subject to survey.
Once an offer has been accepted, the seller is legally bound to sell it to the buyer at that price. They do not have to accept a lower offer, they can simply quit the sale and put the property back on the market.
Gazundering, or lowering your offer just before exchange of contracts, is seen as bad form as it takes the seller back to square one and it can affect everyone in the property sales chain.
Long conveyancing times mean that some mortgage offers are expiring before exchange, forcing buyers to take on loans at higher interest rates than they had originally budgeted for. If this is the case, the seller may be sympathetic.
Where is there room for negotiation?
“It’s your everyday, lower-price houses in a mundane town that are sticking around because those are where the buyers are having to tighten their belts,” says Carol Peett, managing director of buying agency West Wales Property Finders http://www.westwalespropertyfinders.co.uk. “Any nice property is still selling incredibly quickly and smallholdings and properties with sea views are going way over asking.”
The hardest properties to sell, where there may be more willingness on the side of the seller to negotiate, are below £100,000 (Hamptons figures show they are spending 21 days longer on the market) and properties between £250,000 to £500,000 (18 days longer).
The cost of living crisis is motivating a new breed of seller at both ends of the property spectrum who may be open to negotiation. Empty nesters who used to be happy underoccupying large properties but are finding them increasingly unaffordable to run, and mortgaged buy-to-let landlords in the South East, where yields are typically lower than in the North, who are unable to raise the rent enough to meet their rising mortgage repayments, according to the Surrey-based buying agent Richard Winter. “There are discounts on uniform new-build-type properties that can only compete with each other on price. We’re seeing classic developer incentives — part-exchange, chain-break — creeping back in,” Hopper says. “Properties that require a lot of work are out of fashion too, because of the rising cost of construction and materials, and the reliance on cash to get around higher borrowing costs.”
How much can I bid below asking?
Almost 7 per cent of homes have had their asking prices cut by more than 5 per cent, according to the property portal Zoopla. Average discounts and prices are a blunt tool, however, and should be used as a rough guide. It all depends what you’re buying and where……
The Times – Friday, 4th November 2022 – https://www.thetimes.co.uk/article/house-prices-are-falling-should-i-wait-to-sell-my-property-jnxh0pxvf
If you are looking for a property in Pembrokeshire, Carmarthenshire or Ceredigion, give West Wales Property Finders a call on 01834 862816. We can find your perfect property for you whilst saving you time, stress and often money too.