One of the most common questions we are asked is why are property prices in sought-after areas of London still rising? Confidence is the lifeblood of the residential property market and this is something that is in plentiful supply in areas such as Wimbledon Village.
However, confidence is a fragile thing and can quickly disappear. In the run-up to the general election, the prospect of a Labour Party victory – and with it the introduction of a mansion tax on properties worth £2m or more – dealt a heavy blow to the high-end property market.
And noises coming from the Bank of England’s Monetary Policy Committee that its base rate will rise in the not too distant future also threaten the confidence that the property market currently enjoys.
We would, therefore, advise anybody considering selling their property to take advantage of the warm summer and maximise the value of their home. Here are our five top reasons to launch your property on the market.
1. It’s a sellers’ market
The demand for property is at an unprecedented high level, which means the majority of homes on the market achieve their asking price or higher.
Those who are selling their properties know that buyers are in a weak position and have less bargaining power. In fact, discounts on properties have slumped to a five-year low.
Thanks to record low interest rates and a strong economy, buyers are being encouraged to get their hands on property even without the discounts. Since the outcome of the general election in May, property prices in London have surged by 17%, making now a prime time to put your home on the market.
2. There’s a shortage of homes for sale
The high demand is due to the lack of turnover in the market. Where the average number of years a homeowner would spend in a property was once eight years, it has now shot up to 23 years – nearly three times longer than 30 years ago.
With many unwilling to let their properties go, the Intermediary Mortgage Lenders Association has produced a report that claims much of the shortage is down to the baby boomers hoarding effect causing more people to rent privately with those who do get on the ladder doing so in later life.
The problem is exacerbated by a lack of housebuilding in the past 30 years with successive governments failing to account for what is actually needed and falling short by tens of thousands each year. This chronic shortage only means that your property will be even more popular.
3. Interest rates to rise?
They was a fear that interest rates would rise last Thursday but the Bank of England changed its mind thanks to a higher vote for continuity than was expected. However, many are predicting that a rise will happen in the first four months of next year if the bank’s inflation report is to be believed. While Bank of England governor Mark Carney has indicated an increase in the base rate would be 0.25%, rising to 0.5% by the end of the year, this could harm confidence levels.
4. Property prices to increase over the next five years
House prices are expected to rise by an average of 25% over the next five years. That means if you upgrade your property now in five or ten years you could be seeing a maximum return on your investment should you choose to sell.
5. Restrictions on older borrowers to be lifted?
The mortgage industry is being encouraged to lift restrictions on an ageing society and those taking loans out for homes. At a recent conference organised by the Council of Mortgage Lenders, the industry was urged to not discriminate on age alone.
So, it’s worth noting that there has never been a better time to take the plunge and move on. It could be to a bigger better brighter home, or you could choose to simply downsize, but whatever you choose to do, in this market there’s never been a better time to move house.
For more information on marketing your home, contact the property professionals at Robert Holmes for no-obligation advice.