Britain’s home buyers have seemingly gone insane as prices soar to record highs as the economic bad news continues to come.
Realtors have claimed that some ‘frenzied’ buyers are fighting for spacious family homes, coastal towns and rural retreats.
They say the Chancellor’s stamp duty holiday turbocharged a housing market that was already good after the lockdown ended.
But should you be willing to pay the asking price for your dream home or take it all with a grain of salt? With unemployment forecasts soaring and the stamp duty holiday for homes to £ 500,000 ending in March next year, experts are urging buyers to think carefully before paying above expectations.
In demand: Semi-detached houses in Newcastle are proving to be popular. The CEBR estimates that 150,000 moves have been postponed due to Covid and are now back in business
House price wars despite crash warnings
The Center for Economics and Business Research (CEBR) has warned that values could fall by as much as 14 percent next year after the house price hike.
The number of buyers looking for a new home increased by 38 percent in July compared to the same period last year, according to broker Hamptons International.
This meant that nearly a third of homes sold had bids from three or more buyers – with the average home making a record 98.6 percent of the asking price.
But some people are willing to offer even more to beat the competition.
The CEBR estimates that 150,000 moves have been postponed due to the pandemic and are now back in business.
Sanderson Young estate agent Duncan Young in Northeast Australia held over 40 viewings and received 28 offers for a £ 575,000 four bedroom semi-detached house in Gosforth, Northumberland. It sold for well above asking price after less than a month on the market.
He says, “Northumberland’s northeast coastline and historic villages were booming with price increases of more than 20 percent in July and August.”
Meanwhile, buyers are lining up to buy a new building near the northeastern coastal town of Bamburgh.
Mr Young says: ‘A seller on the popular Beadnell Point project had accepted a bid of £ 378,000 in March, but after the lockdown, the buyer tried to lower his offer because he said a downturn was imminent. We advised the owner to decline and they have since sold it for £ 425,000. ‘
Nick Withinshaw, of the Jackson-Stops real estate agency in Chester, says retirees and second-home owners are lured to the beauty of the North Wales coast, prompting homes to sell quickly.
He says: ‘We have marketed a four bedroom waterfront property in Red Wharf Bay, Anglesey, for £ 1.075 million. Within four days it had four viewings and a great offer, with an additional six viewings booked. ‘
House hunting: According to broker Hamptons International, the number of buyers looking for a new home increased by 38 percent in July compared to the same period last year.
The appeal of small town and village life
Smaller towns and cities are now also pulling buyers away from neighboring cities and busy locations. Experts say lockdown has prompted buyers to want more green space.
Analysis by real estate site Rightmove found villages covering more than half of England’s 16 hotspots, where sales have already been reporting all year 2019 between January and September.
Estate agent Gascoigne Halman says it saw a year-over-year increase of 77 percent in the number of homes sold in Chapel-en-le-Frith, a small town on the Derbyshire-Cheshire border, between June and August.
Director John Halman says, “Its rural location and proximity to the Peak District National Park attracts homebuyers who are seeing the pull of wide open spaces after the rural lockdown. The stamp duty holiday has boosted the market and prices are rising.
‘About a quarter of all the homes we sell receive multiple offers and yield more than the asking price.’
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Room to Roam: Smaller towns and villages draw shoppers away from neighboring towns and busy locations. Experts say lockdown has prompted buyers to want more green space
The bidding battles take place
Some properties receive so many offers that sellers are required to hold secret bids – also known as sealed bids or auction sales.
If multiple buyers are interested in the same property, real estate agents can ask them all to make a sealed offer. The seller then chooses which offer to accept, or a shortlist of buyers is drawn up and they are invited to make a final higher offer.
The spike we’ve seen in studies since the rules relaxed has caught up with every other spike I’ve experienced in my career
Martin Walshe, Cheffins, Cambridge
Martin Walshe, Cambridge director of Cheffins, says: “We have sold 160 homes in the last 100 days. Demand is so high that we have had more than 25 properties sealed in the past four weeks.
Lockdown caused those already considering a home to move almost frantically with the expectation that estate agents would reopen.
“And the spike we’ve seen in studies since the rules were relaxed has overtaken every other spike I’ve experienced in my career.”
What about London?
Even London is enjoying a busier-than-expected late summer, as buyers try to enlarge to get more space and rush to meet the March 31 deadline.
Aside from a 1 percent increase in house prices in the three months to March, the London housing market has seen prices fall for the past ten consecutive quarters, Nationwide said.
But despite reports that the capital’s residents are fleeing the big smoke and heading for the hills, surveyors and agents report a flat but stable market since the lockdown restrictions were lifted.
Harry Buchanan, director of Pimlico and Westminster at Jackson-Stops, says sales are 55 percent higher than the same period last year.
Mover beware: warnings against paying too much
Some agents expect the shopping frenzy to cool down as we enter the winter months, while others predict it will last at least until the stamp duty holiday ends.
But with job losses being forecast and economists predicting house prices to fall next year, buyers are being warned not to lose the lot and risk making an offer they cannot afford.
If house prices fall rapidly, some buyers may end up in negative equity if they sell their home and their mortgage is worth more than the property’s value.
Mr. Young, of Sanderson Young, says, “Five to ten percent above the asking price can be forgiven – but twenty to thirty percent more is a sign that people are getting carried away because prices shouldn’t go up that fast. ‘
Paula Higgins, chief executive of the HomeOwners Alliance, warns buyers who want to escape to the country to “go in with open eyes.”
She says, “Families need to think long-term when considering a drastic lifestyle change.
They could end up with negative equity if rural life isn’t for them and they have to sell in two years’ time when prices have fallen.
“You might think now that you want to work from home forever – but the appeal can quickly diminish and you may wish you were closer to the office again.”
She advises buyers to take a practice ride at rush hour so they know how long it will take to get to the office.
Broadband coverage can also be patchy in rural areas, so you may struggle to work from home.
Buyers need to act quickly for flashy mortgage deals
Buyers also have to switch quickly to get a mortgage.
Last week, TSB gave just a day’s notice to launch a fire sale that offered 90 PC mortgages to startups for a day or until the allocated funds ran out.
Loans were available up to £ 350,000 and purchases on flats were not allowed. Mortgage advisers say this was the first time banks had ever launched flash sales for startups.
Coventry Building Society and Accord, part of the Yorkshire Building Society, both held 10 percent of fire sales in deposits, with funds available for first-time buyers for 36 and 48 hours respectively.
New buyers with less than 10 percent down payment now have very limited choices after HSBC “ temporarily ” withdrew its 90 percent mortgage range this month.
Nationwide still offers 90 percent mortgages for first-time buyers, but doesn’t allow parents to give their kids the full down payment.
Borrowers also have weeks of delays to have their mortgage application reviewed as banks’ service levels collapse under the pressure of massive demand.
Realtors told Money Mail that retirees, upsizers, second home hunters, and cash buyers took advantage of the stamp duty vacation by buying up properties with “ dizzying confidence, ” but startups needing a 90 percent mortgage were a “ big deal. ” . ‘.
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