Is it Worth Waiting to Buy in the Current HOT Property Market?

The UK property market is experiencing one of the busiest sales markets in more than 10-years, so is now the best time to buy an investment property?

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Property Buying Frenzy

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32% of sellers were offered more than the asking price in April, which is the highest figure since records began (Propertymark), with the previous record set in May 2014 when 19% of property sales were agreed above the asking price.

£149 billion of homes were sold during the first 15-weeks of 2021 and this level of activity is expected to remain throughout the second half of 2021, with 1.52 million property sales expected to complete in 2021 for a total value of £461 billion, 46% higher than 2020 and 68% higher than 2019.

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Supply and Demand Imbalance

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Residential estate agents for traditional re-sale properties are now asking prospective buyers for their “best and final” offers to stop bidding wars breaking out as demand outstrips supply, however, buyers are still paying more than properties are worth.

Property buyers are facing many challenges with the shortage in the supply of properties available to purchase, with 27 properties per estate agency branch on average, fuelling these bidding wars.

The demand from buyers is at the highest level for the month of April since 2004, with an average 427 buyers per estate agency branch. This means that there is an average of 16 buyers for every available property.

This can impact on mortgages if the property valuation is less than the buyer has agreed to pay, meaning that their deposit required is much higher. If you are buying a property in a chain, this can add more risk to the transaction – click here to read more about the risks of buying property in a chain.

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What is Creating Demand for Property?

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The COVID-19 pandemic has created demand for multi-purpose living space where working from home becomes the new normal.

Working from home and flexible working also opens up the possibility to live in locations that were previously prohibitive due to the length of the daily commute. More people are now wanting to be within a commutable distance of the office, but as they aren’t commuting daily, they may consider more attractive locations.

As we are all spending more time at home, the need for access to green space has become more of a priority, whether that is moving to the countryside, or, moving to an attractive new apartment complex with manicured communal gardens.

The Stamp Duty Land Tax (SDLT) holiday has provided a huge opportunity for property buyers to save thousands of pounds on the cost of buying, which has caused many buyers to bring forward their next purchase as it became more affordable.

95% loan-to-value mortgages backed by the government, requiring just a 5% deposit has fuelled the first time buyer (FTB) market.

As home owners and renters alike reassess their priorities and bring forward their purchases to save money, the activity for property purchases has reached record highs.

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How to Buy Discounted Property Without a Bidding War

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Property prices are expected to increase by 21.1% in the UK by 2025 and rents are also forecast to increase by up to 16.5% in cities such as Manchester in the next 5-years, so now is absolutely the time to buy, but you need to be savvy about what you buy.

The frenzied property sales market does not mean that you have to enter into a bidding war, paying more than the property is worth as of the fear of missing out (FOMO). Buying property 12-18 months off-plan / before completion provides property investors with the opportunity to secure a brand new apartment, often below market value and with a whole variety of incentives available.

When you buy off-plan, prices are typically fixed and you reserve a property for £2,000 providing you with exclusivity to buy for a month, so there is no bidding war.

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Benefits of Buying Off Plan Property

• Fixed property prices
• Reserve your property for just £2,000 to avoid a bidding war
• Discounted below market value property prices
• Buyer incentives including Stamp Duty Land Tax and legal fee contributions, free furniture packs and interest on your deposit
• Secure the best property in a development with a great view
• Benefit from increasing property prices during the build without managing the property
• Buy with a 10-year building warranty
• New developments are being designed around the new demand for working from home and providing green space
• City centre locations for when the economy fully opens up

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Click here to book your free, no obligation, buy-to-let property investment consultation with one of our experts.