VICTORIA BISCHOFF: The bonkers property market can’t go on forever – and if it does drop today’s impulsive buyers will find themselves in negative equity
After more than a year cooped up in a first-floor flat, my fiance and I would like nothing more than to move somewhere bigger, with precious outdoor space.
But until the property market simmers down, we’re staying put.
Usually I take what estate agents say with a large grain of salt, as it’s in their interest to talk up the market. But even so, there is no getting away from the fact it is bonkers out there right now.
Hot property: Many buyers rushing to beat the stamp duty holiday deadline will end up paying far more than they save in tax
Many houses sell within hours of going on the market – even Rightmove addicts are struggling to keep up – while viewings are fully booked in minutes, so buyers who can’t drop everything to get there pronto are missing out.
Some budding homeowners are so desperate they’re buying blind, putting in offers before they have even seen the property. This seems an extraordinarily risky move, as even the highest quality video viewing is no substitute for visiting in person.
When I was hunting for my first flat, there was one that had looked perfect in the pictures. But a visit to the property revealed that the noise from the main road was dreadful and parking impossible.
Yet as house prices continue to soar, many buyers are so panicked they will miss out that they are not thinking clearly.
There are reports of people routinely paying tens or even hundreds of thousands of pounds over asking prices. Sealed bids are also back, encouraging people to stretch themselves to breaking point.
It means many buyers rushing to beat the stamp duty holiday deadline will end up paying far more than they will save in tax. As we report, it’s little wonder some first-time buyers are abandoning the traditional dream of home ownership and instead seeking out cheaper alternatives.
Granted, not everywhere in the UK will be experiencing this level of mayhem. But with prices up by an average of 8.2 per cent in just 12 months, according to Halifax, we are firmly in bubble territory.
Analysts predict that prices, currently underpinned by a shortage of housing stock, will continue to increase this year, even after the stamp duty holiday tapers off in June.
But they cannot rise for ever.
As the vaccine rollout lures back more sellers, particularly downsizers worried about Covid, and workers return to the cities, supply will increase. The end of the furlough scheme could also lead to a rise in sellers.
If prices do start to drop, those who have bought with small deposits are in danger of falling into negative equity.
Rising interest rates are also a risk for people who have already stretched themselves to the absolute limit of what they can afford.
If the past year has taught us anything, it’s that no one knows what the future holds.
So it’s vital buyers keep a cool head and resist any pressure to make a rash decision.
Thank you for sharing your best money mottoes — here are a few of my favourites.
Money Mail reader Philip Wainwright writes: ‘My parsimonious ex-boss had a motto, ‘Treat every pound as a prisoner.’ And it does make me think before buying that cup of coffee I don’t really need.’
Sharon Cringle shares hers: ‘As a parent of three now grown-up children, my money motto has always been, ‘The best for less.’ If you can shop around and think before you buy, it is possible to purchase top quality at lower prices.’
And Paul Woolard adds: ‘Living beyond your means is a road to ruin. So never buy what you can’t afford and pay off your debt as soon as possible.’
After its final stores closed for good on Saturday, I’d like to bid Debenhams a fond farewell.
My mum worked at the store in Coventry for many years before she died. She even managed to convince the manager to give me a Saturday job as a 16-year-old.
Debs was always our favourite place to go shopping — and, oh, the bargains you could get on Mega Day.
It’s hard to believe it’s gone, and my heart goes out to the thousands of loyal staff — my mum’s colleagues and friends — who have lost their jobs as a result.