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Is now a good time to buy a house?

Is now a good time to buy a house?

As the UK gets to grips with its first recession in 11 years following the coronavirus lockdown, many are wondering if now is the right time to buy a home.

While the economy shrank by 20.4% between April and June, the property market has been buoyant since the shutdown was lifted in May.

The number of homes selling within a week of coming to the market is up by 125%, according to the latest data from Rightmove.

And as buyers look to take advantage of temporary changes to stamp duty rates, the usually quieter autumn and winter months look set to be busy.

 

So, should I buy a house now?

Whether or not now is the right time to buy will depend on your circumstances.

But with more properties coming to market and the Chancellor’s stamp duty ‘holiday’ in full swing, there’s more properties to choose from and the potential to make big savings should you take the plunge now.

 

The new stamp duty rules

Temporary stamp duty rules were put in place from July to stimulate the property market following the COVID-19 shutdown.

Under the new rules, buyers are exempt from stamp duty on the first £500,000 of their property’s purchase price.

That means buying a home for £500,000 or more will save you £15,000 compared with the previous stamp duty rates.

Those buying a home for less than £500,000 will pay no stamp duty, unless you’re a landlord or you’re buying a second home where a 3% stamp duty surcharge still applies.

The new rules are in place until March 31, 2021 – meaning there’s still a window of opportunity to buyers to take advantage.

 

When do I need to buy to beat the stamp duty deadline?

With a buoyant market comes busy local authorities and busy conveyancers.

With that in mind, Rightmove suggests allowing six months to sell your current property and complete the purchase of a new one before stamp duty reverts back to its standard rates.

That means you would need to get your current home on the market by no later than the end of September or early October in order to leave enough time to comfortably complete on your purchase before the end of March 2021.

 

Mortgages and borrowing

Borrowing remains affordable with interest rates still at record lows.

The number of high loan-to-value mortgages available is down, though, as lenders focus on buyers with larger deposits.

But if you’re able to include the money you would have spent on stamp duty as part of your deposit, there should still be a good mortgage deal out there for you if you can provide at least a 15% deposit.

 

The current market

Competition drives prices and property values have risen everywhere apart from London and the south east since the COVID-19 restrictions were lifted in May, according to Rightmove data.

But with sellers looking to secure a quick sale so they can buy before the stamp duty ‘holiday’ comes to an end in March, there are still deals to be done.

 

Prices in the North West

August average property price: £210,438

Monthly change: 1%

Annual change: 5.5%

 

Prices in the West Midlands

August average property price: £243,260

Monthly change: 1.4%

Annual change: 6.3%

 

Prices in the East Midlands

August average property price: £241,749

Monthly change: 1.4%

Annual change: 6.3%

 

Prices in Yorkshire & The Humber

August average property price: £206,818

Monthly change: 1.4%

Annual change: 5.9%

 

Is now a good time to buy a bigger house?

With the temporary stamp duty rules in place, you could make a substantial saving if you’re thinking of upsizing.

Buying a home worth more than £500,000 will save you £15,000 in stamp duty if you complete before the end of March 2021, as long as you’re not a landlord or buying a second home.

But even larger properties below that figure will mean a good saving in stamp duty costs, so if you can borrow sensibly and your finances are in good order, now could be a good time to buy a bigger house.

 

How long is the process of buying a house?

The time it takes to buy a house varies depending on the circumstances of the buyer and seller.

But as Rightmove suggests, in a busy market it’s best to assume a period of six months from deciding to sell or buy to completing a sale or purchase.

 

Further reading

If you’re thinking of buying a new property and you’re mindful about the timescales before the stamp duty rates revert to their pre-COVID-19 figures, you could consider buying a property at auction.

Auction sales can often be quicker than buying a home traditionally, but you need to know what you’re doing when buying this way.

Take a look at our guide to buying a property at auction, which explains everything you need to know.