Is now a good time to invest in property?
For homeowners, first-time buyers, property investors, and estate agents, it’s been a long decade.
The GFC of 2008 decimated the property market, with signs of recovery taking years to emerge. Ongoing political uncertainty brought by the coalition government, unelected leaders, and then the Brexit vote plagued the market right up until the Boris Bounce in early 2020, during which we enjoyed an optimistic couple of months right before COVID reared its ugly head.
What has surprised estate agents and property experts is the post-lockdown bounceback. The confidence instilled in buyers and investors following Boris’ win and a clearer perspective on the EU situation was still there when estate agencies re-opened their doors. It was further bolstered by Rishi’s stamp duty holiday, and – more than likely – a healthy dose of post-lockdown clarity, where everything people didn’t like about their house, their job, or their partner(!) became impossible to ignore, prompting a nation of motivated movers.
Despite the strong summer market, there’s no doubt another recession is possible. For the property market to sustain this momentum, the job market must become secure, and there’s no way of telling how that might be possible in 2021 with ongoing health concern and potential future lockdowns.
So, is now a good time to invest in property? Is there any way of knowing?
The stats
- UK house prices increased by 2.5% between August 2019 to August 2020
- The East Midlands saw the highest annual growth in average house prices of 3.6%
- The North East saw the lowest rate of annual growth at 0.2%
- Rightmove reported October as it’s busiest month in 10 years
- Despite the spring lockdown, by June 2020, property completions had recovered to 64% of last year’s figures, and mortgage approvals had recovered to 60%.
What are the pros of investing in property in the current market?
- Stamp duty holiday. This one’s a no brainer if you’re thinking of buying a home or a property investment. A huge and unprecedented bonus that will save buyers up to £15,000 if you can get your completion through before 31 March 2021.
- Strong buyer pool. It’s a seller’s market, so if you’re needing to sell to buy something else, heightened activity is always good news.
- Motivated buyers. The end of the stamp duty holiday means that those in the process of agreeing sales are likely to remain committed. If they pull out of a purchase and break the chain, they’ll have to start it all over again, potentially missing out on the bonus. In theory, this means fewer fall-throughs.
What are the cons of investing in property in the current market?
- House prices have gone up. All this motivation has driven up the competition, which in turn drives up prices. Great news if you’re a seller, not so great for the buyers, who no longer have the negotiating benefits of a quiet market. You might find that what you save in stamp duty could be offset by higher asking price demands.
- Mortgage difficulties. If you’re a cash buyer, this won’t worry you. But banks are tightening the purse strings for mortgage buyers. 95% mortgages have all but disappeared, and in August, Nationwide put the kibosh on help from Mum and Dad, limiting parental contributions to 25% of a deposit. Many lenders now demand bigger deposits, as they’re wary about buyers with high loan-to-value mortgages losing their jobs and not being able to pay them off.
Where is a good place to buy?
If you’re starting to think the benefits offered by the current market are worth seizing, the trick is – as it always was – location, location, location. Thanks to the home-working era, big cities with property markets bolstered by proximity to offices may no longer be your best bet. Previously, access to tube or train stations and motorway exits were huge draws for commuters. These are now likely to be much lower on a buyer’s “must haves”.
Amenities are still crucial. Larger towns who will be able to recover quickly and thrive after blanket closures will be much more appealing than smaller or less-connected towns with suffering high streets.
Towns and villages that offer outdoor space are becoming more and more in demand as people reconnect with nature, prepare for possible future lockdowns, and spend more time working and socialising at home.
Oxfordshire has always been a natural go-to for this kind of lifestyle. It offers good sized plots with space for gardens and office extensions. Its economy is strong, as is its job market, due in part to the thriving tech and science sectors which will only continue to grow. Even better, you can still get to London in a hour if you still need to get to meetings, conferences, or in-office days.
For expert, tailored advice on how to navigate these unprecedented times, come and speak to us at Cubix Property. https://cubixproperty.com/contact-us/