Is now a good time to buy a property? : Opinion

There were two significant influences on the housing market in 2016: stamp duty and the EU referendum result. Unfortunately, both have led to many contradictory stories regarding property prices and the 2017 outlook.

Following the decision to leave the EU there has been a lot of uncertainty in the UK housing market. Despite this uncertainty; house prices in the U.K have continued to grow. (Zoopla price data has revealed that the average property in the UK is currently worth £299,764.)

Paul and I have recently put one of our properties up for sale, and as a result I personally believe now is a good time to buy a property as there are plenty BMV (Below Market Value) deals available. It took me about 8 hours to sell my flat in 2015, I was inundated with offers in a matter of hours after carrying out an open house. Selling this property feels a lot different; offers and general interest have been much slower than they have been in the past.

I've listed some observations/personal opinions below:

• Recently, I have noticed that some properties have been on Rightmove and Zoopla for over 6 months. (A potential sign that the seller is probably getting desperate and will take a cheeky offer)

• I’ve also noticed a trend of property prices being reduced over the past two/three months, I get the impression that prospective buyers are being cautious and waiting to see what happens to the property market before buying ... Use this uncertainty to your advantage.

• I think this is a great opportunity to take advantage of seller’s uncertainty. If a property has been on the market for a long time I'd suggest putting in a BMV bid. Just because a property says £350,000 does not mean you can't offer £300,000. (Trust me it has worked for me)

• Nobody wants to buy a property and see a property crash three months later and likewise nobody wants to sell a property to then see that prices have risen three months later. This is the risk you take with property, however as a buyer this just highlights why it is important to buy BMV, that way if the market does crash at least you (hopefully) wouldn't have lost too much equity if any.

• The Office for National Statistics (ONS) have said that the typical property cost 7.6 times average annual earnings of employees in England and Wales. Considering that lenders do not tend to lend more than 5 times a salary; property prices are getting out of reach for many, maybe now is a good time to buy before prices become even more unaffordable. 

• JLL has forecast that house price growth will be "subdued" and largely flat until 2019, with a slowdown in the number of new homes built. If this is the case then it can be argued that now is a good time to buy seeing as price growth is set to be minimal. On the other hand it can be argued that there’s no rush to get on the ladder as prices aren’t forecast to rise. Personally I’d aim to get on the ladder whilst prices are fairly stable.

• Many property experts argue that falling prices at the top end of the market and a slowdown among the rest has been caused primarily by changes to the stamp duty system, rather than Brexit. I believe this to be true. Figures by the Council of Mortgage Lenders (CML) showed would-be landlords borrowed £800m to buy new homes in January, down from £1.4bn the year before, and £900m in December. It seems there’s currently less landlords to compete with which can only be a good thing.

• I believe the slowdown in the property market we are now seeing is a price correction after the un-savvy investors rushed to buy before the stamp duty changes were implemented, this spike in activity led to many people purchasing property over the odds.

• Recent reports have claimed that 10 would-be buyers chase each home for sale in England and Wales. Whilst this may be true for some areas, I do not believe it is true for every area. It’s worth identifying areas with low demand. London is not the be all and end all!

• Interest rates are at a record low level. The average new mortgage loan in January 2017 came with an interest rate of just 2.05%, down from 2.49% a year ago and compared to 5.34% a decade ago. Now’s a great opportunity to find a mortgage with a low interest rate.  

In conclusion, you don't need to wait for a property crash for you to get on the property ladder. If you can get a property significantly BMV then it can be the equivalent to buying a property during a crash. 

Always remember, property is a long term investment. The recent Housing White Paper published by the Government states that the UK needs to build 250,000 homes a year to meet demand (last year it was 140,000) as long as the UK continues to struggle to meet this target; it is likely that prices will continue to rise as supply fails to meet demand.

Is now a good time to buy a property? I can't answer yes or no but I don't personally think there's a bad time to buy a BMV property. 

Property Cohorts' Top 10 Credit Rating Tips

Your credit history provides mortgage lenders with an indication of how financially responsible and reliable you; and helps lenders determine whether they will lend to you and at what interest rate.

Unfortunately; the importance of having good credit isn't highlighted from a young age which ultimately leaves many prospective buyers unable to get on the property ladder.

Here are Property Cohorts top 10 credit tips:

1. Check your credit

It may seem very simple but you'll be surprised how many people we speak to that have never checked their credit rating. It's the FIRST step to knowing what you need to improve and it's one of the first things that a lender will check when offering you a mortgage.

2. Use Experian or Clear Score

You only have to enter a few personal details and both will give you your credit score along with some tips on how you can improve your score. Clear Score is free and Experian offer a free 30 day trial.

PCTIP -  See what you need to improve and cancel after the 30-day trial. You can always log back in at a later date if you want to check again. (It's very easy to fall into the trap of signing up to free trials then continuously forgetting to cancel the service when the direct debits start coming out.)

3. Plan in advance

If you're planning to buy a property, it's worth starting to manage your credit file at least a year in advance.Getting your credit up to scratch does not happen overnight!

4. Get yourself a credit card

If you've never had credit before, it's difficult for a lender to assess you. Consider taking out a credit card and making a couple of purchases on it each month and then repaying the balance in full at the end with a direct debit to build a good credit history. This will show that you can responsibly manage credit.

5. Never miss repayments

Always pay your direct debits and credit card bills on time, if possible pay off your credit card in full. (I am personally really against paying interest on credit cards, so I always pay off my full balance when it’s due as opposed to the minimum payment amount)

PCTIP - If you’ve made late payments in the past, set up a direct debit so you don’t miss them again.

6. Keep your credit card balances low

One major factor in your credit score is your credit utilisation. This is essentially how much you currently owe divided by your credit limit. E.g. If you have spent £8000 on a credit card with a limit of £10,000 then your credit utilisation is 80%. The smaller this percentage is, the better it is for your credit rating.To boost your score, pay down your balances, and keep your credit utilisation low.

7. Get on the electoral role

Your presence on the electoral roll provides valuable proof of your address to lenders. Electoral roll information is used to confirm your identity, which is then passed onto lenders when you apply for credit, to prevent fraud. Thus, if you're not on the roll when making an application it will appear that you don't exist, or you're starting afresh with no credit record; both will have a negative impact.Many people assume they're automatically registered, or don't bother doing it.

8. Be careful with your applications

Do not apply for lots of credit cards or loans at one time. Each time you apply for a financial product, a search will be recorded on your credit record (the so-called credit footprint). If you apply for lots of credit or are declined credit many times in a short period of time this will impact your credit rating. 

9. You can get a mortgage if you have bad credit

There are specialists’ lenders who will lend to those with bad credit. For example, a company called the Mortgage Lender offer mortgages to the self-employed, older borrowers and those with poor credit.

PCTIP - Be aware that you may find yourself paying a higher interest rate due to poor credit.

10. Act on the above tips!

“To learn and not to do is really not to learn. To know and not to do is really not to know.”

― Stephen R. Covey, The 7 Habits of Highly Effective People

Property Cohorts' Top 10 Tips For Saving for A Property Deposit

As it’s a new year we thought it would be a good idea to give you some brief savings tips to those of you saving for a property deposit for 2017/18

1) Set yourself a savings target
Start by working out the true cost of buying the property you desire.
Additional costs to bear in mind when saving for a deposit property include:

• Stamp duty
• Conveyance fees
• Mortgage product fees
• Mortgage adviser (if used)
• Furnishing
• Renovations
• Removal hire

2) Calculate mortgage costs
After you have set your target, work out how the monthly repayment costs of a mortgage for your desired property (bear in mind possible increases in price) and try and save the equivalent on a monthly basis.

3) Set up a standing order
Set up a standing order to leave your account the same day as you get paid. Treat saving like a bill by setting up a regular payment and you'll soon get used to not having the extra cash in your bank account each month. 

4) Use a budget spreadsheet
Make a yearly budget and review it on a monthly basis. Set out all income and expenditure and cut out any unnecessary expenditure. We have put together a Property Cohort Budget Template which you can download and use for free.

5) Don’t be scared to adjust.
Compare the monthly target from your savings spreadsheet to your current rate of savings. If you're not saving enough you can either:
-  Increase how much you save by cutting monthly expenses.
-  Adjust your saving goals, either by reducing the value of the property you want to buy less or by pushing back the target date for buying the property.

6) Save before you spend
This one is self-explanatory!

7) Fixed Rate Bonds
If you are early on in your saving journey Fixed rate bonds can be a great option. It pays a guaranteed amount of interest for a set length of time, however it is likely that you won’t be allowed to access your savings during the fixed term, so only invest money you can afford to lock away.

8) Help To Buy ISA
If you’re a first-time buyer, you could get up to £3,000 from the Government by saving with a Help to Buy ISA. (More information can be found on page 8 of our property guide. (www.propertycohort.co.uk)

9) Stop renting
Most people renting have very little spare money to save for a deposit. Think about whether you could survive without your own space for a short time.
Consider the following:
-       Find somewhere cheaper to rent perhaps out of London
-       Moving back home with parents
-       Downsizing

10) Do not dip into your savings
Only dip into your savings in case of an emergency.
PS.  Dining at fancy restaurants, Holidays to Miami, designer clothes and new trainers are not emergencies!!

Bonus Tip: Don’t just say saving for a house is your priority, show it is!