Where are house prices heading? It is a burning question many homeowners are now asking themselves as they assess whether it is either time to move and pick up a bargain, or stay put and hunker down for the foreseeable future.
Unfortunately, there is no definitive answer.
Whichever housing survey you scrutinise or estate agent you speak to (admittedly, hardly the most trustworthy of professionals), the signals are all over the place. Mixed as a bag of liquorice allsorts.
When it comes to house prices, the country is as divided as it is on Brexit
When it comes to house prices, the country is as divided as it is on that toxic subject called Brexit.
In the last few days, data from property website Rightmove and estate agent Your Move suggests that the housing market remains both fragmented and subdued.
According to Rightmove, this month has been the weakest start to a year since 2012. Average asking prices, it says, rose to just below £299,000 – 0.4 per cent higher than in the previous month and 0.4 per cent above a year ago.
‘A somewhat patchy and variable picture depending on where you are in the country,’ remarks its housing guru Miles Shipside.
Your Move paints a similar picture. Its data indicates that house prices rose 0.3 per cent in December 2018 with annual price growth the most sluggish for seven years. A flatlining market, it says.
Yet it is not all doom and gloom. Far from it. While economic uncertainty, fuelled by the Brexit factor, has certainly disrupted the London housing market – and to a lesser extent the South East – the market as a whole is far from dead.
Scratch a little underneath the headline figures and there are pockets of spring-like bloom. Parts of the country are still experiencing annual house price growth in excess of five per cent. In some regions, properties are being shifted in less than 60 days while transaction levels are ahead of last year.
Where sharp house price falls have already happened – for example, in some London boroughs – it has caused a marked pick-up in the number of people looking to bag a bargain.
This has all been helped by readily available cheap finance with rates on many fixed rate mortgages below 2.5 per cent – deals that provide financial protection well into the term of any future Labour Government. Rightmove, for example, is seeing buyers pay 4.5 million visits to its website daily, looking for homes to purchase.
‘Many people appear to be contemplating a New Year move,’ says Shipside. ‘Home-movers have a track record of ignoring the politics and continuing to satisfy their housing needs.’
In the London borough of Richmond, where house prices have been adversely impacted by Brexit, some estate agents remain remarkably upbeat.
Elliot Rowe is sales manager at Marsh & Parsons, one of London’s premier estate agents with an office a stone’s throw from Richmond’s busy railway station. He says buyer interest in homes is 35 per cent up on the same time last year.
‘We have been pleasantly surprised this month,’ he says. ‘There is a lot of interest in one and two-bedroom apartments. People just want to get on with their lives – and are no longer waiting to see what happens with Brexit.’
Other agents are more sanguine. Richard Winckley, of Major Son & Phipps, says heavy stamp duty costs – resulting in an effective 4.4 per cent charge or £43,750 on a £1 million purchase – has stopped many people moving.
He believes some have stayed put, preferring to spend the money they would have paid in stamp duty on a home extension or loft conversion. It is a point echoed by Edward Hall, manager of estate agent John D Wood. ‘Stamp duty is proving a real killer.’
CAMBRIDGE: BIDDING WARS ARE BACK IN FORCE IN HOTSPOT CITY
The university city of Cambridge is enjoying a resurgence of interest among property hunters.
They are attracted by the charm of its ancient cobbled streets and easy train commute into London. Dotted among the streets close to the centre are a plethora of ‘sold – subject to contract’ signs.
According to Jamie Ullmer, sales manager of estate agent Leaders, phones are ringing off the hook. He points to a board inside the office with blue ‘sold’ strips plastered across four homes that have been snapped up. He says: ‘We already have 30 appointments to see properties at the weekend – interest is crazy. People are shaking off their January blues.’
He says that two-bedroom Victorian terrace homes costing £350,000 are top of many buyers’ shopping lists, often as starter homes. He says: ‘If you get a few people interested, there is a fight for the property.’
A similar story is told at nearby estate agent Haart. Half a dozen red ‘sold’ labels are stuck on the corner of homes displayed in its front window – almost a quarter of those advertised.
Sharp-suited Daniel Sumner, owner of a winning smile, says: ‘Forget the doom and gloom. There are some real buying opportunities in Cambridge and people are waking up to them.’
He adds: ‘There is still not much property on the market. Homes that come up for sale are often offered via an open-house invitation – where a dozen or so people come along and view. Sometimes they get involved in a bidding war so keen are they to buy.’
Sumner points to a five-bedroom, semi-detached family home put on the market for £600,000 just before Christmas that recently sold for £615,000. He says: ‘It is all about marketing. Stuck on an online website, this home sat on the market for six months. With us it sold in three weeks.’
Lee Wainwright, chief executive of online estate agent Purplebricks, is convinced now is a good time to buy. He says: ‘There are some great properties out there, interest rates are making finance affordable and owning is generally cheaper than renting.’
Key market drivers, he says, are first-time buyers and new home builds where an array of tax incentives and stamp duty breaks are making home ownership more affordable.
He adds: ‘Naturally there is caution in the air but we are seeing sellers looking to trade up or relocate. The housing market is vibrant outside London, especially in the Midlands –West and East – and some Northern towns and cities.’
Your Move’s data confirms that cities such as Derby, Leicester and Nottingham have all enjoyed house price growth of more than five per cent over the last year – with sales taking 64 days to complete (against 80-plus days for Greater London).
The housing market is vibrant outside London, especially in the Midlands –West and East – and some Northern towns and cities — Lee Wainwright
A growing family and aspiration are key drivers for owners wanting to move up the property ladder – helped by keen demand from first- timers who make attractive buyers because sellers can protect themselves against being caught in a long transaction chain.
Most second-steppers are looking to expand into three or four-bedroom properties with a wishlist of a good garden, drive and garage.
Location is key, with distance to work, transport links and catchment areas for schools big considerations.
Sam Mitchell, chief executive of online estate agent Housesimple.com, says: ‘Sellers in this kind of market need to price sensibly. If you price right, there’s a buyer out there. Pent-up buyer demand has been building since December. Low interest rates and competitive mortgage deals make it an attractive market, but low stock levels in some areas have left buyers with limited choice. Sellers who market now will have their pick of buyers.’
He adds: ‘The North West and Yorkshire have good value properties on sale. Affordability is not such a problem in the North as it is in the South for families looking to upsize to a family home.’ Finally, it is still possible to track down a house for less than £20,000 – a typical pre-1980 price – in parts of Scotland and the North of England. The properties may not tick the dream home box but for a DIY enthusiast it could be the bargain they are looking for.
The cheapest property on the books of online estate agent Housesimple is a one-bed flat in Port Glasgow with a selling price of just £4,000.
BUT OTHERS CASH IN ON CHEAP FINANCE TO CREATE THEIR DREAM HOMES
Victoria and Byron Dale with two-year-old daughter Ayda have improved their home
Some homeowners have decided now is not a good time to move. Instead, they are staying put and taking advantage of cheap finance to remortgage and do home improvements.
That is what Victoria and Byron Dale have done. They have decided it is time to build a ‘forever home’ rather than move up the housing ladder.
Two years ago, they bought an end of terrace three-bedroom home in Salford, Greater Manchester. They took out a two-year fixed rate home loan with Nationwide Building Society priced at 2.79 per cent.
They have now just remortgaged, taking out a five-year fixed rate loan with HSBC at 1.94 per cent. In doing so, they have borrowed more so that they can keep renovating the house. Victoria, a 32-year-old officer for a local housing association, says: ‘We were not tempted to move. This is going to be our home for a long time.’
The extra borrowing will allow the Dales to have a secure wall and fence built around their property as well as a patio built and an astro turf play area installed for two-year-old daughter Ayda.
Victoria adds: ‘By the time we are done, the home will be renovated from top to bottom. It’s our Brexit fortress.’
David Hollingworth, of mortgage adviser London & Country, says it makes sense for non-movers such as the Dales to ‘take control’ of their home loan. Most borrowers, he adds, are looking at longer term security in the shape of five or ten-year fixed rates.
Compare true mortgage costs
Work out mortgage costs and check what the real best deal taking into account rates and fees. You can either use one part to work out a single mortgage costs, or both to compare loans