Industry pundits say values in most areas will tumble by as much as seven per cent in the year to come. This is thanks to a triple whammy of rising unemployment, public sector cuts and a weakening UK economy. Add in the effect of inflation, currently at five per cent, and the price fall could be the equivalent of 12 per cent, or £60,000 on a £500,000 home.
Even estate agents admit the market is on the ropes in many areas. Grainne Gilmore, head of research at Knight Frank, sums it up: “To achieve sales, vendors will have to cut their prices.”
But there are two sides to today’s challenging market. Every seller’s panic price cut can be a buyer’s bargain opportunity.
One person hunting for a good deal is businessman Paul Beamish, who believes the downturn is the perfect time to upsize. Next week he is putting his three small homes on the market. He owns a farmhouse in Bury St Edmunds, a Norwich town house and a holiday cottage in Gloucestershire. Their combined value is about £1.2 million.
He is willing to pay up to £1.5 million for his dream home, which would be in East Anglia and have an indoor pool and several acres of land.
“With the market flat or falling, the price gap between smaller and larger homes has reduced, so it costs less for me to step up a rung or two,” says Paul, who runs a food-labelling firm and imports custom-built motorbikes.
“I’ll get a bargain I wouldn’t find if prices were rising. There’s a lot more choice, too.”
The experts say he is right to make the best of the difficult market.
Knight Frank predicts price falls in 2012 of up to seven per cent in Wales and six per cent in the West Country, northern England and Scotland. There will be four per cent falls in Yorkshire, the Midlands and East Anglia. Even in Greater London, which has seen price growth in recent years, values will dip by about three per cent.
But there will be two exceptions to the rule. First, those places benefiting from transport improvements announced by George Osborne in the Autumn Statement may well buck the trend. Second, the most expensive properties in parts of central London such as the West End, Docklands and Mayfair are also forecast to show price growth of up to seven per cent. Most properties in these areas will be snapped up by wealthy overseas buyers.
Luxury homes in rural areas, however, will not be so lucky. Savills warns that the price of country piles may drop by about four per cent.
Yet crafty families can play this market to their advantage, as Michael Ward and his family are doing. The civil engineer from Didsbury in Manchester has just sold the three-bedroom semi-detached home he shares with his wife and two children, but only after slashing the price from £295,000 to £250,000.
“Some would be deterred by cutting so much from the asking price, yet I believe it works in my favour. The four-bedroom terraced house that I’m about to buy has been reduced by £60,000. This means in effect I’ve saved £15,000 thanks to the downturn,” he says.
So if you sell your home now and want to land the best deal possible when you buy your next property, what should you do?
The queen of property bargain hunting is Tracy Kellett, who runs the BDI Home Finders buying agency. She says the key to purchasing at the lowest price is to do your homework and be open-minded about what, when and where you buy.
“Look for properties that are compromised a little, but can be improved once you’re in. For example, a Seventies house is now out of fashion and tends to be cheap because it’s considered ugly. However, you can transform it by using an architect to add capital value even in this market,” she says.
“There are ex-local authority flats and houses too, usually with large rooms and tall ceilings. The middle-aged believe they carry a stigma, but the younger generation will buy them happily. This is mainly because they don’t know what council housing was,” explains Tracy.
She has two other tricks of the trade to help bargain hunters track down the best deal.
“Remember that cash is king. If you don’t need a mortgage, consider buying a property that is hard to get a mortgage on, such as an apartment above commercial premises. The seller will be desperate to get rid of it because they know there are so few buyers who can purchase without a loan. They’ll really compromise on price,” she suggests.
“And exploit what I call the 'vendor position’. If the seller is in debt or is in the throes of a divorce, they will want to sell immediately and settle for a lower price.”
There is one other tactic that fearless bargain hunters may deploy. Sell now, then rent for at least six months until finally buying again late in 2012. By then, prices will probably have fallen further. There is a property industry nickname for the growing number of people trying this tactic – the “in-betweeners”.
This approach is risky, though. If you sell and then prices unexpectedly rise before you purchase again, you will lose money. Likewise if you sell now, but cannot find the right property to buy later, you may end up spending more on rent than you expected. Yet some believe the possible risks are outweighed by the benefits.
“If you have the nerve, it’s probably the best way to secure a bargain,” adds Tracy. Although she acknowledges anyone taking this approach must budget not only for the rent they pay, but also for two moves, from the home they sell and from the one they then rent.
But if the experts’ pessimistic forecasts for the year ahead turn out to be true, there may well be a need for unorthodox selling and buying strategies.
During a boom market, they say that a rising tide carries all boats. Now that the waters are receding, only the shrewdest navigators will find something solid to hold on to. Fortune will favour the brave in 2012, and if you look hard enough, bargains can be found.
House rules / How to bag a bargain
If you buy a new-build, negotiate hard. Some developers will cut a deal to secure a sale and impress their shareholders at the end of the financial year.
Consider buying at auction, but inspect the property before you bid. Auction dates are on propertyauctions.com.
If you are looking at the top end of the market, hire a buying agent with a track record of finding properties and landing a lower sale price that more than covers their fee. Good buying agents include Black Brick (020 3393 6091; black-brick.com) and BDI Homefinders (0845 603 6110; bdihomefinders.co.uk).
Measure property on a price per square foot basis, and compare the asking price with nearby properties.
Buy a home with a friend or relative to increase the size of property you can afford, boost the deposit you can pay and secure a better mortgage deal.
If you are happy buying a repossessed property, sometimes advertised at keen prices to secure quick sales, there is a new website called begbies-traynorgroup.com.
Stamp duty rises for homes above £250,000, £500,000 and £1 million, so always drive prices down to below the lowest possible threshold.
Ruthlessly exploit any weakness shown in a survey. Insist on problems being repaired at the seller’s expense or try to agree a hefty price reduction.
Use sites such as mouseprices.com and propertysnake.co.uk to show what nearby homes actually sell for – often much less than asking prices suggest.
Remember to save money when you sell your own home. Bargain hard with estate agents on commission, which in many parts of the UK need not be more than one per cent.
Paul Beamish’s Bury St Edmunds farmhouse is on sale for £495,000 through Bedfords (01284 769999; bedfords.co.uk)
“With the market flat or falling, the price gap between smaller and larger homes has reduced, so it costs less for me to step up a rung or two,” says Paul, who runs a food-labelling firm and imports custom-built motorbikes.
“I’ll get a bargain I wouldn’t find if prices were rising. There’s a lot more choice, too.”
The experts say he is right to make the best of the difficult market.
Knight Frank predicts price falls in 2012 of up to seven per cent in Wales and six per cent in the West Country, northern England and Scotland. There will be four per cent falls in Yorkshire, the Midlands and East Anglia. Even in Greater London, which has seen price growth in recent years, values will dip by about three per cent.
But there will be two exceptions to the rule. First, those places benefiting from transport improvements announced by George Osborne in the Autumn Statement may well buck the trend. Second, the most expensive properties in parts of central London such as the West End, Docklands and Mayfair are also forecast to show price growth of up to seven per cent. Most properties in these areas will be snapped up by wealthy overseas buyers.
Luxury homes in rural areas, however, will not be so lucky. Savills warns that the price of country piles may drop by about four per cent.
Yet crafty families can play this market to their advantage, as Michael Ward and his family are doing. The civil engineer from Didsbury in Manchester has just sold the three-bedroom semi-detached home he shares with his wife and two children, but only after slashing the price from £295,000 to £250,000.
“Some would be deterred by cutting so much from the asking price, yet I believe it works in my favour. The four-bedroom terraced house that I’m about to buy has been reduced by £60,000. This means in effect I’ve saved £15,000 thanks to the downturn,” he says.
So if you sell your home now and want to land the best deal possible when you buy your next property, what should you do?
The queen of property bargain hunting is Tracy Kellett, who runs the BDI Home Finders buying agency. She says the key to purchasing at the lowest price is to do your homework and be open-minded about what, when and where you buy.
“Look for properties that are compromised a little, but can be improved once you’re in. For example, a Seventies house is now out of fashion and tends to be cheap because it’s considered ugly. However, you can transform it by using an architect to add capital value even in this market,” she says.
“There are ex-local authority flats and houses too, usually with large rooms and tall ceilings. The middle-aged believe they carry a stigma, but the younger generation will buy them happily. This is mainly because they don’t know what council housing was,” explains Tracy.
She has two other tricks of the trade to help bargain hunters track down the best deal.
“Remember that cash is king. If you don’t need a mortgage, consider buying a property that is hard to get a mortgage on, such as an apartment above commercial premises. The seller will be desperate to get rid of it because they know there are so few buyers who can purchase without a loan. They’ll really compromise on price,” she suggests.
“And exploit what I call the 'vendor position’. If the seller is in debt or is in the throes of a divorce, they will want to sell immediately and settle for a lower price.”
There is one other tactic that fearless bargain hunters may deploy. Sell now, then rent for at least six months until finally buying again late in 2012. By then, prices will probably have fallen further. There is a property industry nickname for the growing number of people trying this tactic – the “in-betweeners”.
This approach is risky, though. If you sell and then prices unexpectedly rise before you purchase again, you will lose money. Likewise if you sell now, but cannot find the right property to buy later, you may end up spending more on rent than you expected. Yet some believe the possible risks are outweighed by the benefits.
“If you have the nerve, it’s probably the best way to secure a bargain,” adds Tracy. Although she acknowledges anyone taking this approach must budget not only for the rent they pay, but also for two moves, from the home they sell and from the one they then rent.
But if the experts’ pessimistic forecasts for the year ahead turn out to be true, there may well be a need for unorthodox selling and buying strategies.
During a boom market, they say that a rising tide carries all boats. Now that the waters are receding, only the shrewdest navigators will find something solid to hold on to. Fortune will favour the brave in 2012, and if you look hard enough, bargains can be found.
House rules / How to bag a bargain
If you buy a new-build, negotiate hard. Some developers will cut a deal to secure a sale and impress their shareholders at the end of the financial year.
Consider buying at auction, but inspect the property before you bid. Auction dates are on propertyauctions.com.
If you are looking at the top end of the market, hire a buying agent with a track record of finding properties and landing a lower sale price that more than covers their fee. Good buying agents include Black Brick (020 3393 6091; black-brick.com) and BDI Homefinders (0845 603 6110; bdihomefinders.co.uk).
Measure property on a price per square foot basis, and compare the asking price with nearby properties.
Buy a home with a friend or relative to increase the size of property you can afford, boost the deposit you can pay and secure a better mortgage deal.
If you are happy buying a repossessed property, sometimes advertised at keen prices to secure quick sales, there is a new website called begbies-traynorgroup.com.
Stamp duty rises for homes above £250,000, £500,000 and £1 million, so always drive prices down to below the lowest possible threshold.
Ruthlessly exploit any weakness shown in a survey. Insist on problems being repaired at the seller’s expense or try to agree a hefty price reduction.
Use sites such as mouseprices.com and propertysnake.co.uk to show what nearby homes actually sell for – often much less than asking prices suggest.
Remember to save money when you sell your own home. Bargain hard with estate agents on commission, which in many parts of the UK need not be more than one per cent.
Paul Beamish’s Bury St Edmunds farmhouse is on sale for £495,000 through Bedfords (01284 769999; bedfords.co.uk)
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