Today’s expert is Kate Faulkner from Designs on Property.
If you are buying and selling a property, the ideal market is really one which is falling for a short period of time. This means you may sell a property you own for less, but you should save more on the one you purchase, so you benefit financially.
Typically though, for anyone buying or selling, it doesn't really matter too much what's happening market wise. When prices are going up, it's easier to sell your property and although you may have to pay out more for the larger property you are buying, you still get to upgrade your investment and over the long term, will benefit as prices rise.
If prices are falling you also do well as you sell your property for 10 per cent less than it was previously worth. For example a £150,000 home sells now for £135,000. If the one you buy is 10 per cent less as well, say £300,000, you can pick it up for £270,000, you make a £30,000 saving. Unfortunately, it doesn't always work that the property you are selling and the one you are buying are both moving in the same direction price wise, so it's vital to understand the individual markets for the property you are selling.
To decide whether now is a good time to buy and sell you should ask yourself:
• How many similar properties are for sale?
• What percentage of properties are sold versus for sale?
• How long will it take to sell your property?
• What do buyers of your property want - a wreck or a show home?
Once you have a good idea on the answers, you can then find out the same information for the type of property you want to buy.
What's important to make sure when trading up to a larger property in a falling/stable market is:
• Don't financially overstretch yourself
• Have a deposit of at least 10 per cent and ideally 25 per cent
• Make sure you can afford the property when interest rates return to 5 per cent
• Understand how much 0.5 per cent increases in mortgage rates will affect your mortgage payments
• Research the rental intake for the area
For more details visit the Designs on Property website.