How to buy in a hot property market

By Lydia Pickard of Hawes and Co

THE CURRENT COMPETITIVE MARKET – is now a good time to buy?

Predictions are never easy. In May 2020 the Bank of England put forward warnings of a possible 16% fall in property prices due to the pandemic. Nevertheless, it appears the property market, against all odds, has not just survived but is unquestionably prospering.

The average price of properties in London and the South East coming to market has risen by a substantial amount in the last 12 months; with a 7.3% jump in London and a considerable 10.7% increase in the South East. In Merton Borough, the average asking price stands at £682,901 (recorded by Rightmove February 2022).

The pandemic continues to influence numerous home moves – the main driver of this recent price growth is predominantly the “second stepper” sector – those individuals who need more space and are ready and prepared to move out of their first homes.

Fear of missing out in the current cut-throat market is fuelling a surge in activity. With an abundance of potential buyers and a lack of available stock, there has been an influx of enquiries to agents, resulting in buyer demand being 16% higher than this time in 2021.

However, don’t be disheartened by this, while there is an imbalance between the supply of available homes and buyer demand, there are early indications of a healthier market, with the number of new sellers listing their homes for sale up by 11% in comparison to this time last year – providing much needed new property choice for buyers!

HOW CAN YOU BE A POWER BUYER in the current market?

What is a ‘power buyer’? A ‘power buyer’ is someone who has their finances in order, is well-prepared and can move promptly, according to Henry Pryor, a professional buying agent. They may be referred to as someone with a well-lined purse – the type that can win any bidding war or gazump any deal. Nevertheless, cash purchasing isn’t paramount in the current red-hot market in which stock levels are lower than ever before.

Rightmove describes these so-called ‘power buyers’ as; individuals who have already sold their own home, are cash buyers or are first-time buyers with a mortgage agreed in principle, with a conveyancer lined up to instruct upon acceptance of offer. These buyers will appear more attractive to agents and sellers than those yet to find a buyer for their own home and will instantly be in an advantageous position to the competition.

Over and above that, being a chain-free buyer puts you in the front running above other buyers. (*a property chain is a series of linked transactions that form when people need the money from their sale to allow them to finance the purchase of their new home). The difficulty in property chains is that no one can exchange contracts or complete until everyone in the chain is ready; with the chain moving at the pace of the slowest link. A long property chain is an estate agent’s worst nightmare because there is an ever-increasing risk of something going wrong.

So, unless you’re a first-time buyer or have lots of cash at your disposal, it is likely that you’ll need to sell your current property before you can buy the next one to put yourself in the best possible position to secure your next property and be an agent’s first choice.