‘It’s time to sell’: Estate agent calls top of the housing market
When a garage in Camberwell sells for £550,000 and one in 15 London homes are being sold for £1m or more, it’s fair to say that we might be reaching the top of the UK housing market.
Two weeks ago, the Bank of England issued a warning that Britain’s property market is in danger of heading for a fresh crash. While the boom has been largely concentrated in London and the South East, where annual price growth ranges from 5 per cent in popular commuter areas like Essex and Hertfordshire to 20 per cent in some parts of the capital, prices are rising in every region of the country.
They increased by 10.9 per cent year-on-year in April, and on top of that, sellers are getting an average of 96 per cent of the asking price, the biggest chunk for a decade.
Such levels of price rises are unsustainable in the long-term, because home ownership would simply become unaffordable for the majority of people in the country.
In a recent episode of the BBC’s ‘Under Offer’ programme, an estate agent in Chelsea complained that properties were being listed for record prices and then vendors are increasing the asking price when they don’t get viewings.
If prices just keep increasing so that agents get listings then buyers will eventually stop looking until an adjustment occurs, which is now starting to happen in London. Average UK house prices have actually fallen in the last two months, so there are already signs that the market in some parts of the country may be starting to cool.
There are other factors that may cause a slowdown in the market. The current boom has been fuelled by low interest rates and the Help to Buy scheme, both of which are likely to change in the near future. Interest rates are at an all-time low and are only going to go one way – the question is when and how steeply they will go up. Meanwhile, the government has admitted it is concerned about house prices and is coming under pressure to scale back the second phase of the Help to Buy scheme. In addition, new stricter regulations on mortgage lending mean longer application periods and, in theory, fewer approvals.
The housing market is complex and not easy to predict, and of course any decision to sell depends on individual circumstances. However, what is clear is that we are very much in a sellers’ market. A shortage of housing plus high demand means that properties sell easily and quickly, often above the asking price.
Now is a great time to sell, particularly if you are looking to downsize or move out of a big city, but we expect more properties to come on the market and interest rates to rise soon. By not selling while the going is good you could be missing out on potentially huge gains.
Russell Bennett is co-founder of online estate agency Houses.co.uk.