Whether you are buying your first, second or even third home, there is nothing quite as exciting as putting your key in the lock for the first time. That flat, apartment, or house is finally yours after all those months of planning. You can now begin setting up your home, whether it be your first or forever home, but how has covid-19 affected house prices? Is now the right time, or should you wait?
How Could Covid-19 Affect House Prices?
The housing market has been booming in the last few years, with many fantastic deals. However, coronavirus hit the world, and suddenly house viewings couldn’t be conducted; therefore, all the West Knoxville homes for sale, London homes for sale, Edinburgh homes for sale etc had to move online. The only way to view a house was virtually, but this hasn’t seemed to halt the housing marketing, Which reports that sales have increased by 24% since July 2021.
However, it is predicted that house prices are likely to fall between 2% and 5% by the end of 2022, which is understandable given the current economy, but there are still good deals. Since COVID-19 began, the number of mortgage deals on the market has halved, with buyers being asked for more extensive deposits and those with only 5-10% deposits finding that most of the good deals have been withdrawn. This appears to be a temporary measure with some relaunching products in recent months.
According to The Evening Standard, first-time buyers are the most affected by the pandemic; with no equity in their current homes, they are being asked for eye-watering amounts as a down payment. Especially in the more expensive parts of the UK. With lenders no longer willing to offer mortgages to those with less than a 15 per cent deposit.
Let’s find a little optimism here; it can’t all be doom and gloom! There are still mortgages being offered and some outstanding deals. It’s all based on affordability, so is it time to move now or save a little bit more?
What will happen to the value of your home?
There are many inspirational posts (we will call them that) about 18-year-olds buying their first property and having us believe that they did it all on their own to find at the end of the article the bank of Mum and Dad helped a considerable amount. Now, I’m not saying that’s a bad thing. If it’s inspirational, that’s great, but some are misleading when telling you you can buy a house for £15k a year as a single person. I’ve looked, and different parts of the UK will always be more affordable than others.
Obviously, mortgages changed after the financial crisis when banks were offering loans as deposits (Northern Rock may spring to mind) 95% and 100% mortgages were actually readily available and not just from a broker.
I guess what I’m trying to say is THERE ARE OPTIONS! According to The ONS, the average house price in the UK is £292,000 (July 2022). An increase of £39k from July 2021. With this figure. You would need a joint income of £45k a year and a deposit of £55k. It doesn’t seem fair. Especially when your grandparents probably tell you they bought their first house for £6k!
So, you can either move to a cheaper area, look for more affordable properties, flats, tiny houses, ex-council or army, look at auctions, consider a property that needs work (not for the faint-hearted), save longer or consider buying a scheme. All of which are excellent options.
If you’re considering selling your home now, you might wonder what impact the coronavirus outbreak has had on the housing market. While there’s no clear answer yet, experts say that the current situation could make buyers less willing to purchase homes because of concerns regarding job security.
Briefly, mentioning government buying schemes can be the only way some people ever get on the property ladder. However, in April 2022, most of the schemes available have been withdrawn, which is concerning considering Forbes suggests that more and more of these schemes will be taken up, given that unless property prices fall by 37%, homeownership will be unaffordable for most people with an average income (£38k in 2021).
Now, before you decide you’ve had enough, throw all your deposit away on holiday to Bali. Once things settle down, you may find yourself in a better place, and house prices might be more affordable.
Using a Mortgage Calculator
When considering buying for the first time, moving or purchasing a property for investment, you may want to consider your affordability and whether you can afford the new mortgage or increase your monthly outgoings.
I don’t know about you, but I find mortgage calculators like *Mortgage Calculators.info are necessary when buying a home as there is so much to consider and understand. What exactly are you paying for? What’s the difference between a two-year fixed rate and a ten-year fixed rate? What are the lifetime costs involved? Will you be charged if you need to exit your mortgage early? And can you afford the house you want to purchase? A mortgage calculator can help you estimate your monthly payments, deposit, interest rate and if any other fees apply.
Calculate Mortgage Payments Using a Calculator
There are some extremely complicated mortgage calculators, but I was impressed with how simple *mortgagecalculators.info were to use. Originally for the US real estate market, they have recently branched out into the UK, and I was impressed with how simple their website was to navigate. It’s all on one page, and when I wanted to find the monthly repayment for a £400k property, it told me interest only and repayment costs with just a few simple steps, which was terrific—no having to fill in all my details, income or shoe size (it does feel like that sometimes). I have included the monthly payment details below.
The good thing is that they offer some great advice about applying for mortgages, where to go for advice and further steps to assist you. There are also many other calculators to choose from, including making mortgage overpayments, which I haven’t seen often. This can help if you want to pay off your mortgage early or increase your equity.
If you often find yourself scrolling, daydreaming through sites like Zoopla and Right Move, and dreaming of your next dream project, it can help you work towards those goals because you may have to wait a little longer than you planned.
Is it time to sell?
If you’re thinking about selling your home right now, there are some things you need to consider before making any decisions. If you can afford to, don’t wait! Purchasing your first home is a big decision and one that you’ve probably saved years for. We got caught by the financial crisis of 2007-2008, we lost equity, and a restriction on pay rises meant it would take us six years to afford to move.
I’m not saying post-covid will see a massive drop in house prices, but it may be worth considering that the best deals may be available now.
The Future of Home Buying Post Covid-19
The Guardian wrote back in October 2020 that with so many buyers losing their jobs, more so coming in the future. This could significantly impact the property market and house prices, with lenders continuing to be conscious and uncertain about how this year will fair. It warned that they wouldn’t be surprised if prices dropped sharply after activity slowed across the country within the next year or two.
Should you rent or buy now?
Generally, buying a home is more expensive than renting one (although times are changing). However, if you plan to stay put for at least five years, buying a home will likely save you money in the long run. If you plan to sell your home within the next few months, you might not want to invest too much in renovations. Instead, focus on improving your home’s appeal by painting the exterior and adding new landscaping.
Can you afford to stay put?
In addition to the potential effects on the housing market, the coronavirus outbreak could also affect the value of your home. Experts say that while the current situation isn’t likely to cause a significant drop in property values, it could lead to a temporary dip in the market. If you decide to sell your home right now, you may not receive as much money as you would otherwise.
We’ve all heard the best ways to save, whether through a side-line job, matched betting, cutting out takeouts or generally cancelling those unused subscriptions but saving for a home is usually a long-term commitment, and it takes longer than some realise, but with the additional factors of recent months and even more pressure to maintain income. It could mean those who would have chosen to change jobs stay and keep saving.
What’s the best option for you?
The coronavirus has caused many people to rethink whether now is the right time to sell their homes. In fact, according to data from estate agents, Savills and Knight Frank expect house prices to drop by 10% and 5%, respectively, in 2023. Economic experts from Capital Economics forecast that in quarter four, house prices will be 8.5% lower than they were in Q4 2022.
Homebuying demand fell after the September mini-budget, but according to Zoopla, more than 290,000 sales are still progressing towards completion. This will limit any immediate impact on house prices.
The decline in house prices is expected to be short-lived.
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