Selling a home is rarely stress-free, but in the context of the cost of living crisis and rising interest rates, property owners have even more to consider than usual.
The state of play is also very different based on where you live, whether you’re upsizing, downsizing, moving in with a pal or partner, or planning to switch to rental. So, here’s what you need to know to make the best decisions for you.
Is now a good time to sell your home?
There’s not a simple yes or no answer to this as there are a number of factors at play and it really depends on your personal circumstances. But we’ll set out some things to consider.
If you’re hoping for a big return on your home, now might be a good time to sell, especially if you’re not looking to buy another property e.g. if you’re moving into rental, moving in with a partner, selling a deceased relative’s property etc. However, it’s worth knowing that buying is expensive right now (more on that later).
The average house price hit a record high of £289,099 in May, according to analysis from Halifax. But you might want to get on with it if you are planning on selling up, because the market is showing signs of cooling.
Across the UK, the typical property value increased by £2,857 month on month in May, Halifax found. An imbalance between supply and demand for properties remains the primary reason behind the climb.
This means that while now is a good time to sell your property, it might be a very stressful time to buy another one.
Nicky Stevenson, managing director at estate agent group Fine & Country said: “In this uncertain economic climate, there is a sense that the housing market is at a crossroads, with future gains unlikely to match the huge spikes recorded over the last 12 months.
“While there remains a strong appetite among existing homeowners to trade up, the supply crunch which has driven record growth in the recent past is slowly starting to ease.
“As the imbalance between supply and demand continues to narrow, annual gains are expected to soften further in the months ahead.”
That said, waiting until next year to sell is unlikely to improve matters. According to the Telegraph’s property correspondent Melissa Lawford: “Annual house price growth at the start of the year was so high, home values will still be 5.4pc higher year-on-year by the end of December, but over 2023, they will fall by 2.9pc.”
Is now a good time to buy a home?
Clearly, this depends on whether you’ve got property to sell first, or if you’re a first time buyer. The high property prices right now might mean good returns for anyone looking to downsize, even in a market that’s starting to cool.
However, if you’re looking to move into a larger/more expensive home, this may be tricky. Experts are predicting an increase in people sitting tight and renovating their current homes, due to difficulties accessing larger mortgages.
Martin Beck, chief economic adviser to the economic forecasters at EY ITEM Club, explained: “Households seeing a fall in real incomes this year, as high inflation bites, means fewer people will be able to afford to borrow the necessary amount they need to buy at higher mortgage rates.”
Where you’re looking to move to and from will also be a factor, but the steep prices are almost universally bad news for first time buyers. Over the past decade, the cost of a home has risen by 74%, or £123,016, Halifax said.
In cash terms, London house hunters need £247,638 more than those looking 10 years ago, whereas those in the east of England need £153,930 and those in the East Midlands typically need an extra £108,116.
Northern Ireland had the strongest annual house price inflation in May, seeing prices rise by 15.2%. The south west of England also recorded a strong rate of annual growth at 14.5%.
In Wales, house prices jumped by 13.7% annually, pushing the average house price there to a record £216,120.
Only Yorkshire and the Humber, Scotland and London recorded annual house price inflation below 10% in May.
In Scotland, house price growth continues to “underperform” relative to the UK average, according to Halifax, with annual inflation at 8.3%.
Alice Haine, personal finance analyst at investment platform Bestinvest, said: “The latest data from the Halifax House Price Index adds to the mounting evidence that house price growth is being impacted by the uncertainty facing the wider economy.”
She added: “With rising house prices, lower disposable incomes and fewer people with the right debt-to-income ratio to qualify for a mortgage, some first-time buyers may delay their entry into the housing market, while existing homeowners may stick with their current home, focusing on a remodel or extension instead.”
How much can you expect to sell or buy for?
The average house prices in May and the annual increase, according to the Halifax index, are as follows:
– East Midlands, £239,859 (12.3% increase)
– Eastern England, £337,216 (11.6%)
– London, £541,942 (6.3%)
– North East, £166,449 (10.6%)
– North West, £219,849 (10.6%)
– Northern Ireland, £185,386 (15.2%)
– Scotland, £198,288 (8.3%)
– South East, £391,845 (11.4%)
– South West, £305,173 (14.5%)
– Wales, £216,120 (13.7%)
– West Midlands, £244,071 (10.6%)
– Yorkshire and Humber, £200,469 (9.5%)