Do house prices really affect everything?

November 10, 2014 by Rob Kahl

Do house prices really affect everything?

There seems to be a definite thawing in the property market. Some London estate agents are telling of prices dropping by as much as 20% with predictions for no more gains in house prices for next year. With the inevitable ripple effect from London is this something we can expect in Leigh on Sea?

The press is always hot to pick up on any fluctuations in house prices with attention grabbing headlines trying to instil fear in everybody. One week the property market is going to completely crash with everyone apparently getting their home repossessed and the next week, house prices are apparently rising so quickly that first time buyers will be so old they will have retired before they can afford to get on to the property ladder.

The reality of it all is obviously somewhere in the middle. The first 6 months of this year were, how can put it, a bit mad. House prices were rising at alarming rates with panic setting in for buyers. House seekers were desperate to find something before prices increased and vendors were very bullish about taking offers off of asking prices, accept down valuations from surveyors or be understanding in anyway about delays in the sales process.

Now though, things seemed to have calmed down somewhat and once again, over the course of the year, we will see about a 10% rise in house prices in Leigh, which is roughly about average for the past few years.

Everybody wants to talk about house prices; people who are not even considering moving want to know what their homes are worth but is it really relevant? Of course it isn’t if you are not looking to move, but it seems to be human nature or nosiness that people want to know how much they have made on their houses even if it is just on paper.

Fluctuating house prices only affect certain groups of vendors and purchasers. If you are upsizing within the same area then falling house prices can work in your favour. If you are selling a property for £200,000 and buying at £400,000 and prices have fallen by 10% then obviously you will save more on the new house than you lose on the old one. People should really focus on the difference in the prices rather than the agreed sales or purchase prices and work out their affordability from there.

The people that it effects more seriously are those that are downsizing. In Leigh we have a lot of purchasers moving in from London and the surrounding areas. They seem to be cashing in on the extraordinary prices achieved often buying family homes in Leigh for less than what they are selling 1 bedroom flats for in the centre of town. But, if you are trying to move into the area from parts of the country that are not so buoyant, then it can be difficult to justify the prices in Leigh against existing properties, let alone actually afford them.

There are in addition, those bold people that believe houses have risen to as high as they are going to get and therefore take the step of coming off the property ladder. This is obviously a huge risk in a rising market. I can completely understand the theory behind cashing in on your existing house, getting the best possible price you can and moving your family in to rented accommodation if need be, but, I would advice thinking long and hard about this before actually do it.

That said, it will obviously put you in a strong position when you do find your next house to buy. With no chain behind you, a decent deposit and the ability to move quickly, it will make you very to vendors. In addition, you may, in a strong market, even be able to negotiate some money off and will certainly make you stand out from the crowd if there are multiple interested purchasers.

All I would say, is be aware! If the market moves quickly so must you. As mentioned, in a relatively short space of time we saw prices rise by at least 10% in Leigh and if you have already sold your property and are relying on the bank interest, rather than existing property equity to increase your future deposit pot, then you could be disappointed, frustrated and out of pocket.

If you’re willing to take the risk, genuinely think that prices will fall and can predict what the housing market will do, then who am I to deter you, after all, you could be quid’s in!

Finally, just to give you an idea of my experience and just how ‘good’ I am at predicting the market, I remember selling 3 bedroom semi detached houses on the Highlands Estate for around £75,000 to £85,000 when I first started in the business. When we sold the first one for over £100,000 I thought it was completely bonkers and unsustainable. These same properties are now selling for in excess of £400,000 so what do I know!

Next week will be another instalment in my renovation and extension work at home. Finally something is happening so watch this space

This Article is by Rob Kahl at Scott & Stapleton
To discuss your propoerty, please call Rob on 01702 471155