Confused.com gets an expert view on opportunities in the housing market
According to research by Hometrack, house prices will fall a further 10% in 2009. Though this may be grim reading for negative equity sufferers and those hoping to sell, for the lucky few with access to cash and trying to get on the property ladder, it’s all gravy!
According to Richard Donnell, Hometrack’s Director of Research, now could be a good time to go shopping for bargains. “You’re going to get a really good deal from someone that needs to sell,” he says, “regardless of what type of property it is or where it is in the country.”
However, as the market has gone from hot to cold in a matter of months, only those who need to sell, will.
“Seven million people moved home in the ten years up to 2007, but only two million new households were created,” Richard continues. “That means we did a huge amount of moving that we didn’t need to do. People were trading up on the back of easy credit and confidence in the housing market. Now that’s stopped and people are staying put. So if you really want to sell your home today, you’re going to have to take quite a big hit and sell for at least 10% less than what you could get in a more ‘normal’ market.”
Cash buyers, first time buyers and those with approved mortgages are in a terrific position to make some genuine savings and investments for the future. “The best deals will come from probate sales, repossessions and auction rooms. There will be semi-distressed sellers in all price bands. But you’re likely to see more bargains in the smaller one to two bed properties.”
How long will it take to get a return?
However, buyers should realise that a new home is unlikely to make you any cash in the short term. “You’ve got to make sure you’re doing it for the long term. I wouldn’t advocate this to anyone who wants to move in two years. If you’re really going to take the opportunity, you’ve got to be thinking about staying for five years plus.”
Richard explains that if this slump is anything like the last recession, it could take four years for prices to bounce back. “In 1992, we were in the middle of a recession and housing started to look affordable, but it wasn’t until 1996 when the economy started to sort itself out, that people began to move home again. So there was a four year delay while the recession worked its way through the system.”
Do your homework
If you want a deal, you’ve got to work for it and that includes finding great deals on mortgages. For a bargain new home, “You should keep your eyes peeled, do your research and be on the websites, rummaging around at least two or three times a week.
“If you do your research, you’ll become more and more confident, and when that golden opportunity appears, you’ll know. If you want to find out about auctions, identify the main auctioneering houses in your area and keep checking their websites. Probates tend to go to estate agents, and often estate agents will mark them as such. You just need to keep your eye on what’s on the market.”
