Throughout 2020 and 2021, the scarcity of properties coming onto the market in comparison to increasing buyer demand, plus the impending deadline for the end of the stamp duty holiday, meant that we were very much in a seller’s market. House prices increased by a record 24% from the summer of 2020 to the end of 2021, with steady growth in both asking and sold prices.
However, in 2023 the housing market and the wider economy is in a very different position. Since the beginning of 2022 we have faced a spiralling cost of living crisis as energy and goods prices have soared. Inflation rose to its highest level since 1981 in October 2022, we officially entered a recession in November 2022 and the base rate hit 3.5% by the end of the year.
As a result, house price growth fell for the fourth consecutive month to December 2022, as affordability became a major concern and our confidence in the housing market is shaky.
Rental fees have also risen at their fastest rate for seven years. Indeed, renters now pay more on housing costs per month (24% of their weekly expenditure) than homeowners with mortgages (16%), meaning that even saving to get on the property ladder in the first place can be challenging.
When it comes to availability, we have also seen a significant increase in new properties coming onto the market with Rightmove noting a 46% year on year increase on Boxing Day 2022.
All of which means that buyers are now in a position where they can (and should) take their time to secure their new home for the right price rather than having to jump in with a higher offer to beat the competition.
What does this mean for buyers who are also selling a home?
Unfortunately, this also means that those homeowners who are both selling and buying at the same time may need to take a hit on their sale price to expedite their move, but of course they can take this into account with the price they are offering for their next home.
Those worrying about losing equity in their homes thanks to predictions of a drop in house prices of between 2% and 10% for 2023 should rest assured that in the long term house prices will recover. Despite a number of economic downturns over the last 40 years, house prices have still soared an impressive 974% overall since 1983. Indeed, house prices are expected to recover in 2024 and grow again by 18% overall by 2027.
So, how should you go about haggling then?
First and foremost, make sure all your ducks are in a row. If you are haggling over the cost of your new home, then you need to be able to bring something else to the table besides an asking price offer. Very few of us may be the holy grail cash buyer, but vendors with timescales to meet will look more favourably on chain free buyers who can move quickly. If you are a first-time buyer with nothing to sell, great! But make sure your mortgage agreement and deposit are in place and ready to go once you have found a property you like to avoid any delays.
On the flip side, if your vendor needs a long lead time – for a long distance move or the purchase of a new build property which isn’t ready for instance – make it clear if you can move into rented accommodation or stay with friends or family to give them the time they need.
Secondly, do your research. Make sure you know the local market so you can offer an informed price for the property type and location. A vendor (or their estate agent) may have been over-ambitious with their asking price so it doesn’t hurt to make a lower offer if you can back it up with some clear rationale. Asking prices are all well and good, but make sure you know what properties are actually selling for in your chosen area.
Don’t be offended if your offer is rejected. Remember to leave the offer on the table and check back with the agent at a later date to reopen negotiations if the house is still for sale. The vendor may feel differently if they haven’t sold their home two or three months down the line. With more properties coming onto the market now you can afford to take your time to find the perfect property which meets your needs and your budget.
At The End
Be prepared to walk away from a sale if the price isn’t right. If you make a ‘best and final’ offer, be prepared to stick to your guns otherwise negotiations could drag on, or you could end up being pushed to a price you can’t afford. Conversely, don’t put your desire for a good deal above a house which ticks all of the boxes for a price you can afford. You can always renegotiate your offer if a survey throws up any surprises since it is not legally binding until you exchange contracts.
