Is it Wise to Move House in Times of Austerity?

The property market has been fairly good at taking the knocks over the years, earning a reputation for being one of the best places to target your money. But with these times of austerity upon us, is the housing market still a good bet? During the recession the marketing held up well and resisted the big falls some had suggested. For many years the UK housing market has sat awkwardly between housing shortages and the impacts of interest rates and inflation. If prices fall there has usually been a group of young buyers eagerly waiting to get a foot on the ladder and owners desperate to avoid a negative equity.

Much depends on the figures you give credit to. Estate Agents will naturally be the most upbeat; always looking for positive signs, after all their livelihoods depends on the market continuing to churn. Take a look at the big lenders and a different story tends to emerge. Currently mortgage approvals do seem restrained which mirrors some of the sentiment coming from the land registry who says prices are 3.2% down on the year to October. Other economists forecast that prices will rise 15% over the next five years pointing again to home shortages as the ever present factor stimulating the market. There is however some consensus in that we will not see the growth we became accustomed to in the 80s, 90s and early 2000s. We also need to consider (now more than ever) the impact of inflation on the Consumer Prices Index. While many homeowners will have enjoyed the impact of lower interest rates on their monthly mortgage payments, in real terms their properties could actually be falling in value.

One thing that is for certain is that now is the time to drive a hard deal. If you are looking to buy your first house or sell and move on, there has never been a more important time to wheel and deal. Sellers will perhaps need to compromise somewhat and buyers will need to be savvy over getting the best possible price. London always has its own property micro climate which tends to resist big falls, but for nearly all other areas buyers and sellers will need to be very realistic.

If the market is slow everyone associated with it can be pushed a little. For the keen seller doing deals will also mean pressing estates agents and removals firms for better rates. For the very budget conscious buyer look at repossessions (which increase in number during difficult times) and perhaps the services of a man with a van to save on moving costs. Stamp duty is hard to avoid (unless you fall below certain thresholds) but negotiating a sale price below certain levels could bring you into a lower charge band and save you thousands. Make sure you know that current bands before negotiating on anything. Desirable locations and beautiful homes will always be keenly pursued by those with the money to pay over the odds, but for the vast majority the market will be a pretty aggressive place. New buyers with skinny deposits will need to consider their investment as perhaps much ‘longer term’ than buyers did in the past. Plenty of analysts still predict falls over the coming years so it’s best to see homes as places to live and not the short term investment they once were.

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