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May 27, 2020

Is now a good time to buy a property? 5 important things to consider outside of COVID-19

How has Covid-19 impacted the UK property market, and is now a good time to buy. Here, we examine the effects of the pandemic on the property market.

As lockdowns begin to ease and the U.K. property market springs back into action, enquiries have started ramping up.

One of the main questions on buyers mind is, “Is now a good time to buy?”

It’s obvious there is a cyclical nature to property markets, and I will be covering what drives these cycles in detail over the next few weeks. Understanding where we are in the overall cycle is crucial when analysing a property purchase.

COVID-19 & real estate cycles aside, here are 5 fundamental factors that are often overlooked:

1. Your Financial Position

It’s not impossible, but it’s hard to buy property without access to funds. Having a steady income and savings in the bank will bring you a lot more options. Also, a good credit score and no large debts will help a great deal. The best time to buy a property is when you can afford it.

2. The Month of the Year

You can also use the month of the year as a guide for the best time to buy a property. Estate agent data show prices are generally lower towards the end of the year. Usually, it’s because sellers marketing a property in December may need to sell and are more likely open to negotiation. Prices can be up to 7% less than from the end of February to June which are the U.K.’s busiest months.

3. Interest Rates

If you have good credit and are in a stable financial position, it makes sense to invest in property when interest rates are low. It can make a big difference as they can significantly impact the return you receive from your investment. Due to the current economic climate, rates look set to stay low, which is good news for those looking to enter the market and those that are already servicing mortgages.

4. Available Properties on the Market

When there are lots of properties on the market, it can be a great time to buy. If sellers need to compete to sell their homes, they are more likely to compromise on the asking price to get it off the market. As mentioned above, you might be able to find a great deal at the end of the year, as owners are more likely to have to sell their homes. However, there tends to be more on the market during the spring and summer months

5. The Economy

It’s worth understanding the local economy, in addition to the overall economic cycle. Even if the greater economy is doing well, you still need to know what’s happening in your area. Housing and unemployment figures are important when evaluating an opportunity. When the economy is doing well, employment is high, and buyers are in a stronger position to buy a new home. Levels of construction also play a role. When new construction is robust, there is more availability in the market relieving pressure on house prices.

So, is now the right time to buy?

Knowing the right time to invest in property is just as important as researching the market and knowing which type of property suits your strategy. There are no set rules; sticking to solid fundamentals like proper research, due-diligence and realistic financial planning will all go a long way. While attempting to predict or time the perfect moment will likely result in inaction.

As U.S. World War II General George Patton said, “A good plan violently executed now is better than a perfect plan executed tomorrow.”

Ultimately, the best time to invest is when it is right for you and you can afford it.

If you like these ideas, but don’t have the time or know where to start, speak to someone from our team. We will be happy to share how we have helped clients access great investments without the hard work or headaches.
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Article by: Rory van den Berg