Wed 19 Sep 2018 View all news articles
House prices in the UK fell by 0.5% in August, the largest monthly drop recorded since July 2012.
That’s according to the latest Nationwide House Price Index, which claims the average property price in the UK dropped to £214,745 last month.
Here, we take a look at the reasons house price rises are slowing down, and explain how you could pick up a bargain this autumn.
Why are house prices dropping?
The new data from Nationwide claims that house prices are falling on a month-by-month basis – but remain 2% up year-on-year.
The slowdown could be attributed to a number of factors. Some observers point to the ongoing uncertainty surrounding the UK’s withdrawal from the EU, while others cite the prospect of further base rate rises or simply a seasonal slowdown due to one of the hottest summers on record.
And while the market could begin to pick up after this lull, some experts are urging caution. Robert Gardner, Nationwide’s chief economist says: ‘Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on house price growth and market activity this year, though borrowing costs are likely to remain low.’
Should you rely on house price indices?
It’s dangerous to look at one index in isolation, especially when it comes to monthly data, as this can be volatile.
There are lots of house price indices, all of which use different methodologies to reach different conclusions about the market.
Both Nationwide and Halifax use their own mortgage lending stats to calculate average prices, while the Office for National Statistics (ONS) uses Land Registry data.
This means the first two indices are based on smaller sample sizes, while the third is more comprehensive but reports its data much more slowly.
As an alternative to sold prices, some property portals examine sking prices to calculate seller sentiment. For example, the Rightmove index claims asking prices dropped by 2.3% month-on-month in August, but remained 1.1% higher than a year before.
As such, you shouldn’t rely on any particular index to get the full story of what’s happening in the market.
Agents reducing property asking prices
This doesn’t mean that indices are no use, as they can be useful to indicate market trends – and one thing they all agree on is that things are slowing down a little at the moment.
There are also signs that agents are facing a slowing market, too.
For example, the estate agency Connells relaunched 5,000 properties with big price cuts this summer.
Is it a good time to buy a house?
September tends to be a popular month for both buyers and sellers, as both start to think it’s ‘now or never’ if they want to get in to their new homes before Christmas.
Indeed, every month from September to December last year saw over 100,000 transactions – well in excess of the figures recorded in the winter months.
And with asking prices dropping, there might be some bargains available to savvy buyers.
How to make yourself attractive to sellers
If you want to get a home for a cut price or push the transaction through before the festive season, preparation is everything.
Do your research
Before spending hundreds of thousands of pounds on a new home, make sure you know everything there is to know about the property you’re buying.
You should do plenty of research – be it online or by getting clues from the agent (though remember the agent works for the seller). Find out answers to the following questions to see if you can grab a cut price deal:
- How long has the property been on the market? If it’s been a while, does this suggest sales have fallen through in the past or that there’s an issue with the property?
- Are there repairs that need doing before the property can be moved in to?
- Does the seller have a motive to complete the deal as quickly as possible?
Have a mortgage agreed in principle
Obtaining a mortgage agreement in principle from a lender shows sellers that you’re serious and cuts down on the chances of any nasty surprises later in the process.
While an agreement in principle isn’t a guarantee you can afford the property, it’s a good indication that you’re creditworthy and will be able to complete the purchase if your offer is accepted.
Know which experts you’re planning to use
You don’t have to have selected your removals company yet, but it helps to be ready to go when your offer is accepted.
Think now about which conveyancer you’ll appoint to look after a purchase, and take recommendations on house surveyors in your area.
Keep you budget private and play it cool
Above all, buy properties with your head and not your heart.
If you find the right property, don’t rush in with all guns blazing. It’s important to be enthusiastic, but a level head and negotiation strategy might mean you get the property for a cheaper price.
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