If you think the housing market is done and dusted for 2014, and your dreams of a new home are on ice until next year, think again. This is the perfect time to snap up a bargain. Despite recent mild weather, chill winds are hitting parts of the market now. This means every seller has three strong reasons to get their business done this side of Christmas.
Most homes still on sale in November have been looking for a buyer for months and many will already have price reductions. Property website Primelocation.com has about 420,000 homes on sale across England and more than 140,000 have slashed asking prices.
Similarly,says that although most parts of the country have had house-price rises this year, some have seen falls. A typical two-bedroom home in London’s swish Belgravia is 7.6 per cent cheaper now than a year ago, says the website, while Poole and Plymouth prices are down 7.1 per cent and 5.7 per cent.
“In some areas there’s a lot of unsold stock and desperate sellers. We’ve achieved a discount of 33 per cent off the original guide price for a property in Hampshire,” says Edward Heaton, of Heaton & Partners (heatonpartners.com). This buying agency helps purchasers find a home, then negotiates to ensure the lowest possible price is paid.
“As a buyer, you can get a bit of a bargain at the moment. We’ve seen a seller’s market for 12 months, but as the pressure mounts for vendors to sell by the end of the year, the market has tipped,” says Martin Robinson, sales director at estate agency Hunters (huntersnet.co.uk).
The second reason sellers want to cut a deal as soon as possible is the uncertainty surrounding the general election in spring.
Traditionally, the prospect of an election means buyers hold back until they know how their income and tax might be affected. But for the brave buyer, it’s a chance to look at properties with fewer rival purchasers waiting in the wings.
“In the six months up to polling day, we expect to see transactions fall between 10 and 20 per cent. Voters will wait to see which party gets in and how their personal finances will be affected,” says Johnny Morris, head of research at Hamptons International (hamptons.co.uk).
In London, the effect is more dramatic. Home sales slump by 30 per cent just before an election, because overseas buyers also tend to wait until they know the result.
This time the market will be even more volatile. That’s because housing issues, such as interest rates and mansion tax, will be at the forefront of debate.
Golden chance: house prices have tumbled in Plymouth and Poole ALAMY
Ironically, this is particularly good news for buyers with deep pockets. If they want to buy for more than £2 million – the threshold where an annual mansion tax is likely to start under Labour and Liberal Democrat proposals – they may find sellers slashing prices between now and polling day.
For vendors, this might mean “taking between 10 and 15 per cent off” to ensure the asking price is below £2 million, says Lindsay Cuthill, director at Savills ().
Another reason to consider buying sooner rather than later is that mortgages may become harder to obtain.
There has already been a sharp drop in house loans from banks and building societies. Back in January there were almost 125,000 approvals in just one month. However, this fell to just 61,247 in September, according to the latest figures from the Bank of England.
Now the bank’s financial policy committee wants to have more say on how much lenders offer borrowers, from spring 2015. “This move could weigh on mortgage availability as lenders become more cautious,” adds Liam Bailey, Knight Frank’s research guru ().
Meanwhile, in Scotland there is an additional reason to buy soon. If you spend too long thinking about it, you may well have more to pay. This is because the Scottish government has introduced a land and buildings transaction tax (LBTT) to replace stamp duty from April.
This all adds up to one thing. Buy that home you want now or regret it if house values soar, says James Greenwood, managing director at Stacks Property Search ().
“With oil prices falling, economic recovery talked up and election uncertainty resolved in the spring, there could be a boom late next year. It makes sense to buy now,” he says.
What more encouragement do you want? Seize the day.
Ten pointers for canny buyers
1. Prepare: secure a mortgage and hire a solicitor, so you’re good to go.
2. Get a survey on your existing house: so it avoids nasty surprises.
3. Incentivise your estate agent: high commission for a quick sale.
4. Be prepared to rent: it gives you flexibility to move quickly.
5. Research: if the vendor must sell urgently, they might strike a deal.
6. Get help: buying agents charge about £1,000 then a share of savings negotiated.
7. Offer below asking price: most homes sell for around 95 per cent.
8. Visually check property: obvious faults will justify a lower offer.
9. Then get a survey: this applies even on a new-build.
10. Remember Help to Buy: it needs just a 5 per cent deposit.