Purchasing property in a buyer’s market

Since the UK credit crunch began in summer 2007, mortgages and property have rarely been out of the news. These two topics have become the constant topic of conversation all over the country.

A year ago we were in a seller's market. Now it is the opposite: a buyer's market. So what does this really mean for you if you are a residential property buyer?

In general terms the market has moved in your favour. The Halifax announced that house prices fell by 2.5% last month from February 2008. The other main housing index, Nationwide, indicated that prices fell by 0.6% in March. According to Peter Hogan of the Royal Institute of Chartered Surveyors, "Sellers are having to reduce by between 5% and 10% of the asking price. Many buyers are biding their time to see what will happen."

In reality it depends on which rung of the property ladder you are on and your current mortgage situation as to whether you can immediately benefit from this buyer’s market. If you are looking for a first-time mortgage or need to remortgage then it has become more complicated and expensive. Get plenty of advice from expert advisors. A good mortgage broker will seek to find you the best deal appropriate to your circumstances. Mortgage lenders are currently withdrawing many offers and putting up their rates and fees on new ones (even though the Bank of England decided this month (April 2008) to cut the base rate of interest by 0.25% - down from 5.25% to 5%). When you find a mortgage that is right for you, act quickly to secure it.

If you are ready to purchase now, I recommend that you do your homework and negotiate on price. Make a lower offer based on your research (market conditions, how long the property has been on the market, potential structural problems to fix, poor presentation, etc.), and that you feel comfortable with. If you believe that a property is over-priced then make an offer that you consider realistic. No one can predict the future but if you can’t purchase at a price that you are confident with, then walk-away from potential financial problems and negative equity. The last thing you want to be worrying about is a possible future house price slide and killer mortgage payments.

Remember, a property is only worth what somebody is willing to pay for it! If you are at all uncertain or uncomfortable about doing the negotiation yourself then get someone who is a confident negotiator to do it for you - a friend, a family member or an expert professional property finder and purchase price negotiator.

Next time I will be discussing vendors selling in a buyer’s market.

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Laurent Stadelmann - The Property Finder & Adviser
Managing Director - Chez-Vous HomeSearch