Coronavirus has turned everything into extremes – and Britain's property market is no exception. Just a short while ago in lockdown, thousands of sales were on hold and doom-laden forecasts of a house price crash were everywhere.
But fast-forward two months, and it's a very different story. Pent-up demand, combined with Chancellor Rishi Sunak's stamp duty giveaway, have combined to put a rocket up the housing market.
Just over two months since the property market in England reopened – Scotland and Northern Ireland followed suit a few weeks later, and Wales later still – and estate agents say the market is booming.
Last week Nationwide Building Society reported UK house prices rose by 1.7 per cent in July, having fallen 1.6 per cent in June. So, with such rapid swings in the supposed health of the property market, how do you work out what to pay for a house now?
Pent-up demand, combined with a stamp duty cut, have put a rocket up the housing market
SPOT WHICH WAY THE MARKET IS HEADING
Remember, a house's worth is determined by one simple factor: how much someone is willing to pay for it. And when buyers are flocking to the market with competing offers, prices inevitably start to creep up.
London estate agent and former chairman of the Royal Institution of Chartered Surveyors, Jeremy Leaf, says that's already started to happen.
'The market has really picked up over the last few weeks and we're pinching ourselves because we're busier than we'd thought,' he says.
'There's a lot of pent-up demand which has been given extra impetus by the stamp duty holiday. Low interest rates and supply not yet matching demand is also helping support prices.'
Nick Morrey, of mortgage brokers John Charcol, says: 'Currently the market is very strong.
'After the market opened up, the valuers managed to clear their backlog, estate agents roared back into life, there were reports of significant demand outside cities and so demand has just been rising and rising.'
There are even reports of gazumping – sellers accepting a higher offer even though a deal had already been agreed. So for now at least, there would appear to be upward pressure on prices.
A bounce back saw the average UK house price rise more than £4,500 on Nationwide's index and annual house price inflation return to 1.5%
CHECK THAT ASKING PRICES ARE REALISTIC
This is the key question to answer before you make a bid or accept an offer: is the asking price fair?
Last month, property website Rightmove reported that the asking price of new homes had jumped 2.4 per cent to a new record high of £320,265, up 3.7 per cent year on year. But until ONS sales figures are released later this month, we won't know whether buyers have actually been paying more on done deals.
Property buying agent Henry Pryor says: 'I suspect once we start to see the detail of what has been agreed, the reality is that most people who have sold took a bit of a knock, possibly as much as 5 per cent, to get the deal done.'
In reality, whether you should be setting higher prices – or paying them – will depend on the specifics of the property and people in question. For example, sadly, agents are reporting a jump in probate sales due to the spike in Covid-related deaths.
In these instances, the family may be more concerned about getting a sale done and you may find a discount is already factored into the price.
The same could be true of inner-city flats without gardens, which are less popular with lockdown fresh in the mind.
On the other hand, coronavirus has also prompted a rise in people looking to move to larger properties with outside space.
Canny buyers are checking everything from broadband speeds to mobile phone reception; which home delivery services are available; as well as off-street parking for electric vehicles. They are also looking further afield than previously.
So be aware that asking prices on in-demand homes may already have been bumped up.
David Hollingworth, of broker London & Country Mortgages, says: 'Lockdown has made us all focus more on where we live and what is essential if many of us are going to be working from home for longer or more often.'
To work out if a price is fair, ask local estate agents and check online for what is on the market in your preferred area, how long it has been on the market and whether the price has changed in the past few months.
For example, was it listed for sale in January, taken off, and relisted at a higher price or a lower one?
Try the Zoopla website, which shows previous prices as well as whether the price has been reduced, and Mouseprice.com.
'You really shouldn't be paying as much as you were going to in March 2020, because the world has changed,' says Henry Pryor. 'If you know what it was worth pre-lockdown then you should be paying less.'
However, Nick Morrey says you shouldn't get too greedy about 5 to 10 per cent reductions, given the high levels of demand in some areas – particularly if there are several bidders.
Experts advise entering a 'no gazumping' contract. Discuss this with the estate agent to discourage your vendor from accepting a higher offer if you've agreed a price.
FACTOR IN £15,000 STAMP DUTY HOLIDAY
Another factor to take into account is Rishi Sunak's move to scrap duty for buyers in England and Northern Ireland for the first £500,000. That means until the end of March next year, buyers can save up to £15,000, with the average saving likely to be around £4,500.
Rishi Sunak has scrapped stamp duty for buyers in England and Northern Ireland for the first £500,000
Hollingworth says the giveaway has added to the number of house-hunters. 'The stamp duty holiday will draw out the people who were putting their decision to buy a house on hold until next year and who might be tempted back into the market sooner.'
However, Pryor sounds a note of caution and says sellers will be pricing the stamp duty discount into their asking price.
So a property that was £485,000 might be priced closer to £500,000 by sellers who know that the buyer is getting a £15,000 tax break.
'The savings will be used to compete with other people for a finite resource, so all that will happen is that it's going to push house prices up,' Pryor says. 'So the stamp duty holiday might not provide the advantage as far as buyers are concerned.'
BOOST BROADBAND TO ADD VALUE TO HOMES
So if you are looking to take advantage of this honeymoon period to move house, what are your options? Sellers should 'move fast', advises Nick Morrey. 'Demand is strong and it might be so for the next few months, so don't dither.
'Declutter your house and get at least three estate agents to value it. It's a seller's market at the moment so you don't have to take the first offer that comes along. If you have two or three people offering then you can often get the asking price or above for your property.'
Pryor adds: 'If you want to sell, it appears that there is a bubble that you may be able to take advantage of and sell either close to or at your pre-lockdown March price.
'But I don't expect the bubble to last past September.'
Remember that space – always desired – is even more sought after since lockdown, while proximity to a train station for the daily commute is no longer as crucial.
With working from home likely to be a long-term trend, boosting the home office potential is a great selling point.
'Installing super-fast broadband to a property adds to its value,' says Morrey. 'It's become the fourth essential utility after gas, electricity and drainage.'
While there might currently be a 'mini-boom', many experts still expect house prices to fall later this year
BUT DON'T BANK ON AN INSTANT PROFIT
While there might currently be a 'mini-boom', many experts still expect house prices to fall later this year. The Centre for Economics and Business Research forecasts prices will drop 5 per cent by the end of the year and 10 per cent by next year, with many others from Zoopla to the Office of Budget Responsibility also forecasting falls.
Henry Pryor says: 'There may be some post-lockdown euphoria, but we will start to see some much less attractive headlines on house prices when the furlough scheme ends and when the real cost of this pandemic starts to become clear.'
Buying in a seller's market is a tricky business at the best of times but in times of such uncertainty, how should buyers proceed?
'I'm not expecting a crash, but I am expecting the prices to adjust downward by 5 to 10 per cent,' Pryor says. 'If you are buying your own home rather than an investment, then my advice is to pause and wait to see what the data says.'
However, Morrey says: 'If you delay and the market falls, then supply could dry up. There's a price to be paid for what's right for you and your family.'