To Buy or Not To Buy

Created: 06/04/2006

Local estate agent, Perry Bishop and Chambers has seen a promising start to 2006 from all its offices across the Cotswolds.  Ian Perry reassesses the market, three months into the year – and the main question is “To buy or not to buy”. 

While homeowners are busy pondering this, they are also wondering if now is a good time to sell. The pointers are confusing.  The market did end last year on a high.  Concerns about this continuing into the New Year were soon dispelled as more property came onto the market and there seemed no shortage of buyers.  All this activity suggests that the buoyancy will continue throughout the summer and into the autumn.
 
But the underlying statistics act as a little grey cloud in an otherwise clear blue sky.  It is a cloud worth watching.
 
Home loans over the past few months grew at a slower rate than in the previous period.  This may be because the boost caused by last August’s interest rate cut is coming to an end.  Also the rise in fuel bills plus tax increases may also be acting to dampen spending.
 
Inflation is now at 3.5 per cent, much in line with the anticipated increase in house prices this year. Some commentators even feel that house prices could rise broadly in line with earnings for up to ten, or even twenty years.
 
So have we seen the end of boom and bust cycles? Apart from any unforeseen fiscal bombshells it does seem so.  Any growing pressure on finances such as a change in interest rates or a rise in unemployment would quickly prevent any further uplift in house prices.
 
Does that answer those questions about whether to buy and/or sell?  It probably means that those homeowners waiting for further increases before they sell may wait in vain.  Prices may not keep rising, or not to a significant level.  So now would be a good time to sell.
 
It is also a good time to buy.  The choice is quite wide, and the savvy seller has learnt that the key to finding a buyer is not to be over-ambitious with the price tag.  “But we will take a lower offer,” say some.  Not if they haven’t had an offer in the first place they won’t!  Buyers now have too much choice to waste valuable time viewing properties they regard as over-priced.
 
One piece of good news for first time buyers, which will also have a positive knock-on effect on the rest of the market, is the lifting of stamp duty exemption to £125,000. This follows the raising of the threshold from £60,000 to £120,000 in the Budget of 2005.  This year’s increase was not large but it does show a positive trend, and it should encourage first time buyers to step onto the first rung of the ladder.
 
Overall the market is finely balanced. It is a good time to buy.  Do so now and you will be in your new home in time for the summer.

Back to news