Dispelling market myths
OVER the past few months there have been a number of conflicting reports purporting to have authority on what is happening to the housing market.
House prices are up in London but down elsewhere; mortgage lending is at a 30-year low; the average age of a first-time buyer is to hit 40 – the list is endless.
In my experience these reports rarely get it right – they are great for generating newspaper headlines but fail to provide buyers and sellers with any meaningful insight about the housing market.
At Plymouth Homes we look beyond the headlines and try to dispel the myths that can have an impact on the housing market.
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The most common statement we hear is that banks aren't lending. I disagree with this statement and feel it would be more accurate to say "banks are lending to people with a deposit and good credit history".
Banks were blamed for the housing boom of 2007 because of irresponsible lending, yet now they are being criticised for the exact opposite.
We have found that banks have simply gone back to the "old rules" of only lending to customers who have a deposit and can prove that they have the income required to meet the mortgage repayments. Mortgage rates are historically low and stable and, as a percentage of household income, mortgages are at their most affordable for a decade.
Another comment we frequently hear with regard to the housing market is that "nothing is selling". Well, again I disagree.
There are currently 2,093 properties for sale in Plymouth, with 530 of them under offer. In a booming market typically 50-60 per cent of properties would be under offer at any one time, showing the present figure of 25.3 per cent to be low.
However, we need to look at why the 530 properties under offer have sold and the other 1,563 haven't. We have found there are two reasons why a property will sell in this market.
The first category of properties that sell are those offering a potential buyer something special compared to other properties available.
This may be a particularly large garden, exceptional decoration, a highly sought-after location or unusual features.
These properties have a rarity value to attract a buyer, and will sell.
The other category selling well are the properties that offer the best value for money.
Buyers have a good choice, and if you cannot attract a buyer because your home does not have a rare feature you simply need to make sure that it is priced the same as other properties which are not quite as good as yours. This will make yours stand out and it will instantly become more saleable.
Although the current market is not booming, it is stable, and competitively-priced homes are selling. If you average out the "experts'" predictions on the future of property prices you would come to the conclusion that they aren't going to fluctuate very much, either upwards or downwards.
If you're considering entering the market for the first time this is reassuring; even if the property you buy doesn't shoot up in value for every year that you live there you are reducing your mortgage – and that must be better than renting.