James Max

Is now the best time to move house?

Is now the best time to move house?
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You don't need me to tell you that the property market has experienced a surge over the last year. The stamp duty holiday encouraged many to buy now rather than later, working from home has opened our eyes to living in areas with more natural amenities on the doorstep and we’ve realised that if we do only have to go into the office three rather than five days a week, a longer commute is tolerable. But for how long can the bubble continue? Whilst there’s plenty of speculation over how long this current boom will last, here’s my guide on determining whether you should take the plunge right now or hold fire.

Don't panic buy

Do you already own a home? If you are already on the ladder this is an easier question to answer because property prices are relative. What I would recommend is avoiding the situation where you have sold but are panicked into buying somewhere you don’t particularly like. Whether you hold fire or buy now, at some point the market will soften or fall back. If you’re in it for the medium or long term what the market does won't matter so you can afford to bide your time and choose wisely.

Make the most of a buoyant market

Do you need to move? If you need more space and you know where you want to live, a buoyant market allows you to take quick decisions, rather than waiting months on end for a sale. And you’ll have to be quick because there are others around who either have the cash or are hot to trot. And if that’s the case, you don’t want to get caught up in a bidding war.

Go against the flow

Are you moving with the market? If you are trying to move to the countryside or the coast or to secure more green space on your doorstep, you're likely to be met with stiff competition. If there are deals to be had, it’s with those properties that have been shunned by the recent enthusiasm for lockdown boltholes and work from home locations. If you look in core city locations, you’ll find the market is slower. If it’s an area where traditional overseas buyers are active, it's slower still. Hugh Seaborn, the CEO of the Cadogan Estate that owns 93 acres of shops, office and residential property in Chelsea and Knightsbridge has been reported to state that the value of shops and houses in Chelsea is nearing rock bottom. Since 2014, the value of expensive central London homes has fallen by 23 per cent. You’ll still be paying £1,800 to £3,000 per square foot though, so it’s hardly cheap.

First-time buyers

Are you a first-time buyer? Now is quite a good time to get into the market as it still has some way to go. Many commentators have suggested that the market is unlikely to collapse, although it may slow down a bit now that the stamp duty holiday is being phased out. For a collapse to happen a significant event must take place. In the case of central London that event has already happened – a dearth of overseas buyers and investors. In the case of the rest of the market it’s a rise in interest rates. And whilst inflation is looking threatening, unless or until interest rates rise significantly beyond that rate, the market is likely to continue on its current trajectory. Particularly good right now are longer term finance deals.

Personal finances

Get your financing right. I often advise that you should be looking less at the market and more at your own position. If you expect your income to rise in the coming years and can secure a longer-term mortgage at a fixed rate, you’ll be insulated from market movements. If whatever you purchase is affordable for you then the future movement of the market is irrelevant. That’s always the key in the longer term; the market must match your property needs with affordability. 

Room for growth

Find a property that has angles. The ability to extend is not to be underestimated, especially if the market becomes volatile in future. Adding a side return, extend out the back or adding an extra floor isn't something you have to be in a position to do immediately but having the option to expand is always valuable. It's wise to ensure any property you purchase can be adapted to your changing circumstances, rather than having to move every time your property needs change. One of the worries of buying into a busy or rapidly rising market is that at some point it will settle down. And you certainly don’t want to be selling into a market that’s congested. The longer you can own your property, the more likely you are to make a good return on it.

Time to rent?

What are the reasons to hold off? Just because you can borrow 95 per cent of a property’s value doesn’t mean you should. There’s a big difference in finance costs for a mortgage with a larger deposit than for one with a higher loan to value. And with rents quite depressed (particularly in city centres), you might be better off getting a good rental deal, saving hard and preparing to enter the market when it has stabilised a bit.

Spot the bargains

Where are the bargains? Property bargains in the current climate can still find them in new development. Not buying off plan but looking to schemes where the developer has sold most of the properties but there are still a few left. This is where the developer has largely completed the development but has yet to sell the last few units. That’s where their profit lies. And you may be able to secure a good deal. Another option is to look at properties that have been on the market for a while. Again, whilst the general market may be rising, for this particular property there’s a motivated seller who just wants to get the deal done.

Do your research

I am a big advocate of buyers doing their homework, not just on any prospective property purchase but on your chosen area. Find out what people on your street have done to their homes and if these works have resulted in a return at the point of sale. For example, two years ago when I bought a house, mine was the only one in the street not to have a loft conversion. Ten years later, when I’d saved the money I added a floor. The gain in space more than paid for the works. Spotting a strong micro market where homes retain relative value is more important than following what is happening on a national scale.

    Written byJames Max

    James Max presents the weekday Early Breakfast Show on TalkRADIO and is a qualified chartered surveyor.

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