Post-Budget Briefing
Budget boost?
The Chancellor has applied what amounts to an irritant to the top end of the property market. One per cent increase in stamp duty is unlikely to have a significant effect on decisions made by buyers in the £1m+ category, but it may be reflected in prices achieved. Certainly, we will be advising buyers over £1m to bid another 1% less! However, it may have a more substantial impact on the land and development sector where margins are crucial and 1% can make a significant difference.
For cash-strapped first time buyers who are able to raise a deposit, the two year stamp duty holiday will be a welcome initiative. Certainly the raising of the threshold and temporary holiday applied in the past proved a helpful boost to the stagnant bottom end of the market, and we would expect to see an easing of the sector as a result. There is also likely to be a domino effect on the lower middle market which is being restricted by lack of activity at the bottom.
About turn on the cards?
After a slow start to the year, we are now beginning to see a significant improvement in the amount of property coming onto the market. And in many areas the volume of new property is dramatic. Vendors encouraged by reports of buying activity, and in some cases competitive bidding, are jumping in. But just as estate agents think they’ve got it all wrapped up, with enough property to sell, and plenty of buyers waiting for something to buy, the buyer levels are dwindling.
Why? Fear is the underlying factor. There’s a more positive mood surrounding the property market, but there’s a great deal of uncertainty surrounding the economy generally with a General Election looming. Will our finances be squeezed harder than they are now? What’s going to happen to mortgages? And jobs? And salaries? Will the Stock Market plummet for a second time? And will house prices drop again?
But for anyone with a real need or desire to buy, we could well be entering the best buying opportunity for a while. Increased quantities of stock will provide plenty of choice, and will prevent prices climbing. Lack of competition will mean buyers can operate at a sensible pace without being pressured to make instant decisions.
Our advice to purchasers would be to make sure that their finances are in order at an early stage. Find out how much you can borrow, and don’t push yourself too far.
Work on the basis that it’s a buyers’ market and you get to call the shots. There’s no guarantee that new property coming to the market is correctly priced. The vendor may be delusional, basing the value on a mythical uplift in the market; or the estate agent may have over-valued in order to gain the instruction. So proceed with caution and do plenty of research to give you a clear idea of what the market value should be.
Don’t feel you can’t pursue two houses (or more) at the same time. Be open with the agent and the vendor, but there’s nothing to stop you being live on more than one house.
Whatever you buy, negotiate as hard as you can. Generally speaking, prices are unlikely to rise for some time to come. Don’t be fooled into thinking we are in a rising market.
