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Crediton House Prices 2021: What will happen to the value of your Crediton home next year?

What will a no deal Brexit on the horizon, the end of the stamp duty holiday in March, mortgage payment holidays coming to an end, unemployment set to rise after furlough and ongoing on/off coronavirus restrictions do to the Crediton property market and the value of your home?

In the late spring of 2020, every man and his dog were forecasting impending doom on the British property market. Drops of 10% were considered optimistic as we all held our breath after lockdown was relaxed. Yet, the property market didn’t listen to the forecasters. UK property values today are 2.5% higher than they were a year ago, and more locally,

Crediton house prices are 6.0% higher than a year ago.

So, what exactly is going to happen to the Crediton property market in 2021?

Well, with the end of furlough and 1.7m people still on the furlough scheme at the start of October, a number of economists are saying that unfortunately many of those furloughed will become unemployed. Unemployment currently stands at 4.5% in Q3 2020 (compared to 3.8% in Q3 2019). The Government’s independent Office for Budget Responsibility believes the unemployment rate will peak at 9.7% in early 2021, and then return to pre-coronavirus  levels in 2022. In the past recessions of the early 1980’s, early 1990’s and Credit Crunch of 2009, when unemployment went up, the property market went down.

Yet, in this recession, the link between unemployment and property values may not be so direct.

So why is the link between unemployment and house prices potentially broken? It comes down to interest rates.

The reason Crediton house prices have gone up by 306.76% since the middle of the 1990’s isn’t because the labour market has got so much sturdier, nor that the economy has outperformed every G8 country, or that the UK has had less boom and bust economic cycles than the previous decades. Instead, it’s because of the fundamental and underlying decline in the Bank of England (BoE) interest rates.

High BoE interest rates equal high mortgage payments which holds everything back regarding the property market. In the 1980’s, the average BoE interest rate was just over 11%, making mortgage payments very expensive and keeping property prices dampened. In the 1990’s, the average BoE interest rate was a little over 6%, in the 2000’s just over 4%. However, in the 2010’s, it had been a really low 0.5%. Now with interest rates down to 0.1% because of coronavirus and the BoE threatening negative interest rates, there appears little threat of an eruption in mortgage repayment costs.

With mortgage payments at an all-time low of just under 30% homeowners’ disposable income (compared to 48% in 2007), those middle-aged people lucky enough to still be in a job (who are mainly made up of workers whom are spending a lot more time working from home), they could be more inclined to dedicate more of their monthly income to mortgage payments than they did pre-coronavirus for a bigger garden or a move out of the big cities?

So, if unemployment isn’t going to make a huge difference to the Crediton property market, what is?

Most commentators believe a no deal Brexit will have hardly any short-term effect on the property market (apart from certain upmarket parts of central London).

The stamp duty holiday ends at the end of March 2021 and that certainly will reduce the number of Crediton people moving (as many moved their plans forward to beat the deadline) meaning there will be less Crediton people moving in 2021, yet that will curtail the supply of property for sale and hence keep Crediton property prices higher.

Next, the Help to Buy scheme (started in 2013 and where the Government underwrites part of the mortgage for the first time buyer, meaning they can obtain a 95% mortgage) ends in April next year, yet the Tories indicated at their conference last month they would probably create ‘Help to Buy – Part 2’.

The bottom line is in the early 1980’s and 1990’s recessions, when interest rates were over 15%, obviously homeowners couldn’t afford to keep up the mortgage payments when made redundant or on lower wages, so many handed in their keys to the banks and got their homes repossessed, thus exacerbating the issue with falling property values.

However, with interest rates so low, this will not be the case. I envisage that UK property prices will be between 4% to 5% higher by December and Crediton values just behind that at 2% to 3% higher, before levelling out in 2021 (although we might see a modest dip in certain sectors and types of Crediton homes depending on location and condition).

I suspect those Crediton first time buyers, eager (and able) to break free the rental-rat-race will want to take up the anticipated ‘Help to Buy – Part 2’ scheme, particularly if the BoE base rate stays low. The other winners in 2021 will be low mortgage/equity rich households upsizing to the countryside or leafy suburbs to test out their boss’s promise of ‘flexible-working’.

Yet the losers will be the 18yo to 29yo renters … most likely to be made redundant and least likely to buy a home.

My advice to the Government for this cohort is to not ignore them once the country is out of this coronavirus situation. It’s all very good keeping the Home Counties Tory voting Baby Boomers happy with green belt policies and other policies to keep their property values higher, yet as the Generation X and Millennials get older and take over as the largest demographic to keep happy (for the polls), the hitherto inconceivable action of the Government levying Capital Gains Tax on your main home may come to fruition.

I mean, we have £400bn to pay back because of coronavirus … it has to be repaid and it has to come from somewhere. Those denied real access to buying their own home in the last 10 years, because of massive house price gains over the last 25 years, could vent their anger via the ballot box — if not at the 2024 General Election, maybe in 2029, when they realise that the futile housing policies of both Labour and Tories of the last 23 years have left them with enduring financial diffidence.

Maybe we should all look to the grocer’s daughter from Lincolnshire who in 1979 set out a bold vision of home ownership for everybody. Whichever political party truly picks up the batten and reframes it for the current 2020’s generation and comes up with the goods, will be the ultimate winner in this game.

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The Crediton and Mid Devon Property Market Post Lockdown – The First 100 Days

So, wind the clock back to 2008 we had the once in a lifetime event of the credit crunch, we then had another once in a lifetime event with the Brexit vote in 2016 and now the mother of all ‘once in a lifetime’ events, Coronavirus in 2020 – three once in a lifetime events in the space of 3 Olympic Games!

The doom-mongers forecast that the British property market would drop like a lead balloon  on the scale of the 1989 housing crash (where property values dropped by 30.87% in a couple of years) but would be nothing compared to the tsunami that was Covid. Yet in the first 100 days of the property market coming out of lockdown, behavioural and economic changes mean that many Crediton homebuyers are now even more dedicated to moving home and the Crediton property market is doing quite well.

Going into lockdown, the effect on activity in the Crediton property market during those two months was expectable and predictable as it was placed in suspended animation during April and May. When the Crediton property market re-opened in mid-May, nobody predicted what happened next. Of course, many of us in the property industry estimated some release of pent-up demand from the Boris Bounce, yet nobody anticipated such a ricochet in activity.

This is particularly interesting when one considers GDP dropped by 20.4% in Q2 2020 (fascinating when compared to notable historic times when it dropped by 13.8% in WW2 and 16.7% in WW1), yet amidst the largest contraction in the UK economy ever in a single quarter, what wasn’t expected was an increase of potential property buyers and sellers wanting to move post-lockdown.

Some have cited this boost to the property market on a number of factors. Firstly, we have had the Stamp Duty Holiday, others have pointed at the never seen before 0.1% Bank of England base rates making mortgages cheap, then we had the furlough scheme which protected so many jobs and finally, the pent-up demand from the Boris Bounce.

Yet, when one actually talks with buyers and sellers, whilst all of them cite one or two of the above reasons, all of them mention and talk about how the lockdown has made them re-evaluate and reconsider how they want to live, their work-life balance and where they want to live. This is also reflected with tenants changing their requirements when looking for a property to rent (so Crediton landlords – be aware of this).

Demand for apartments in the centre of Crediton has eased off, whilst demand for property with a good-sized garden or other outside space has increased. One question we get asked all the time is also the broadband speeds, although they are quite decent in Crediton (the average broadband in our local Council area being 21.0 Mbps download and 5.2 Mbps upload).

So, with record numbers of Crediton properties coming on to the market – is it boom time for Crediton homeowners?

Yes, the Crediton property market is good, yet the number of people who have placed their property on the market has also gone up. Us estate agents have never been so busy putting property on the market and I feel sorry for Ken who puts up our for-sale boards – his poor wife hasn’t seen him in daylight for weeks!

But that does mean you are in competition with so many other properties on the market (the number of properties coming on to the market typically at this time of the year is about a third to half less). The Stamp Duty boost ends in March 2021, so that means you need to have found a buyer by November at the very latest. By overegging your asking price, to test the market, might mean you will lose out on this hiatus and could end up missing the boat!

The prices being achieved for the Crediton properties that have been selling have been fair and realistic and have stood up much better than many were originally predicting.

Yet as the country looks forward, given the ambiguous nature of the outlook for the British economy and the possibility that Covid-19 may be with us for a little while yet, I must implore Crediton property sellers to be realistic with their asking price so a greater number of you who want to make the move, are able to do so.

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Is This a Good Time to Buy Your First Home in Crediton?

Young couple kissing and taking selfie in new house.

Should you wait to buy your first home in Crediton or buy now? What sort of mortgages are available? What sort of deposit is required?

These are questions all Crediton buyers are asking at the moment, yet this week I would like to focus on Crediton first time buyers and what it means directly and indirectly to homeowners looking to move up the property ladder and buy to let landlords.

Well quite frankly, to answer that question it’s contingent on what Crediton property you are looking to move into and even more significantly, how long you are hoping to live in that property.

We have many armchair economists and even professional economists predicting Armageddon when it comes to the property market, yet the Crediton (and UK) property market is essentially very sound. Don’t forget the Chancellor himself, George Osborne warned that if we voted to leave the EU two things would happen. Firstly, the UK property market would crash and property values would drop by 18% in the two years after the vote. Secondly, there would be an ‘economic shock’ to the country’s economy that would increase the cost of mortgages (through increased interest rates as there would be a run on the Pound). UK GDP rose by £132bn in the two years after the referendum and interest rates actually dropped and locally with regard to property values…

Crediton house prices rose by 8.2% in the 2 years following the Brexit vote

Lloyds have predicted an enormous 30% fall in property prices over the next 36 months whilst Savills have suggested a short dip of 5% during the summer, based on very low transaction numbers, with property prices bouncing back to be just over 15% higher in 5 years’ time. This assumes that the UK plc economic downturn is short & sharp, and that no substantial gap opens up between supply and demand in the property market (i.e. everyone doesn’t dump their property market all at the same time).

Crediton Property Values after the 2008 Credit Crunch crisis plummeted 12.1% between 2008 and the end of 2009

Yet, the circumstances of the 2008/9 property crash were fundamentally different to today. Many ‘armchair economists’ assume there will be a re-run of the 2008/9 and 1988 property crashes in the coming 12 months in terms of house value falls. Yet, dissimilar to the last recession, this dip has not been led by previous years of strong property price growth like the other two crashes. House prices in many parts of the UK have been down in the last 12 months.

You would think Crediton first time buyers who have already saved their deposit could grab a bargain in the coming months, you would believe they would have less competition in the market because of landlords holding back buying additional rental properties. This is because of the press speculation that rent arrears are sky high from tenants who are unable to pay their rent. Yet evidence from many professional bodies in the private rental sector state rent arrears across the whole of the Country are appearing to be very low indeed, despite Covid-19. 

Interestingly, the firm Yomdel who handles ‘web live chat’ and ‘phone support’ for thousands of estate and letting agents have reported national activity is higher than the two months of the Boris Bounce (in January and February 2020). The number of new buyer enquiries for the last two weeks is double (108.9% higher to be precise) than the 2019 yearly rolling average. New landlord enquiries are 32.1% higher than the 2019 average and tenants are 150.1% higher than the 2019 average  .. these are all great signs and go against the doom monger economists.

My best advice to all Crediton property buyers is, be they second time buyers, first time buyers, landlords.. whatever number buyers, they should buy with a medium-term view of future Crediton property values, instead of an expectation of always looking to make a quick few pounds flipping a property (i.e. selling it quickly).

Let’s not forget that mortgage interest rates are another important factor: they are at a 325-year low, so borrowing money has never been so inexpensive. If you know you are going to be living in your first (or second) Crediton home for five years and you want the peace of mind of knowing precisely what your mortgage payments will be, then it’s very attractive. At the time of writing, Barclays are offering any first-time buyer a 95% mortgage on a 5-year fixed rate of 2.95%. The average value of an average terraced house in Crediton is £185,500 and so with the 5% deposit of £9,000 on a 35-year term the…

Mortgage payments on a typical Crediton terraced house would only be £674 per month (i.e. much cheaper than renting)

Many lenders are lending money even if you are on furlough, yet you may find you won’t be able to borrow as much pre Covid-19. Interestingly, some mortgage companies will even take into account total income, where your employer is topping up the Government’s furloughed amount, whilst other lenders will consider mortgage applications on a case-by-case basis. The best advice I can give is, don’t assume what you can or can’t borrow. Speak to a whole of market mortgage broker, to see what is possible – not what your friend on Facebook tells you what you can or can’t borrow.

You only need to put down a 5% deposit for the property you would like to buy

If you think about it, it’s inconsequential if Crediton property values drop or not, or if they do drop whether they bounce back quickly (or not as the case maybe) because it’s impossible to know the bottom of the property market. I would say if you find the right Crediton property for you, at the price that feels right, that will be your home together and you are going live in that Crediton property for the next five to ten years, it’s not a bad time to be buying.  It’s like waiting for the next piece of tech – there will always be a better model or an assumed better time. We are talking about your home here – a home for you and your partner and family, be that your kids, dog, cat, pet or favourite pot plant because…

Spending money on rent is all wasted money – at least when you buy your own home, you start to pay your mortgage off from day 1

So many first-time buyers use the Bank of Mum and Dad to help with their deposit, yet I have spoken to many parents who wouldn’t want to interfere in their mature children’s life and subsidise day to day expenditure, yet are embarrassed to offer help with the deposit. If you don’t ask …you don’t get!

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You’ve had an offer..now comes the CRUCIAL part!

Close up of african couple holding wooden house

Most buyers will have made an offer on the basis of at least some degree of emotional attachment to your property and although you don’t want to manipulate that, you do want to use it to your advantage so don’t be afraid to negotiate hard.

Here are my tips for dealing with offers:

Don’t be offended by really low offers. Any offer is a good offer. It means someone wants to buy your property. It’s down to your agent to negotiate correctly and achieve the highest price possible.

Don’t get hung up on achieving a “round figure” just because it sounds nice – eg If you have have an a max offer of £249,500 but you want £250,000.

You have 3 choices on every offer – accept, refuse or use. Don’t be afraid to “use” an offer to counter offer on your onward purchase.

If you receive one or more offers early on in the marketing process, be very cautious in trying to beat the market and holding out for more. Research shows that the best offers usually come in during the first four weeks of marketing a property.

From the moment an offer comes in you need to react, as delays make buyers nervous. Remember, just because they have made an offer that doesn’t mean they’ve stopped looking.

Make sure EVERY offer is correctly qualified, identifying both the potential buyers’ chain and financial position before entering into negotiations with them. One of the principle reasons sales fall through is that the correct due diligence wasn’t carried out by the estate agent at the point of negotiation.

Thanks for reading – if you have any comments or questions feel free to post below, or get in touch, I’d love to hear from you!

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Ever Fallen for the “Buy Cheap – Buy Twice” Trap?

mouse trap

What’s the difference between an estate agent and a great estate agent?

I can tell you – its 4% of your asking price.

According to extensive research, the average estate agency achieves just 95% of the asking price whereas great agents achieve 99-100% (at Helmores we achieved 99.1% average during the whole of 2019). On a £500,000 house, that 4% difference equates to £20,000 more for your house… that’s a lot of money! So we can agree that choosing a great estate agent is crucial?

As with anything good, great, extra-ordinary or premium service, it’s slightly more expensive but BETTER VALUE overall.

How many times have you opted for the cheaper option, only to have to return and buy the quality option. As the saying goes, buy cheap, buy twice.

Estate Agents are no different, there are the good, the bad, the ugly and the remarkable. A bit like surgeons… some have carried out lots of procedures and so have more experience and knowledge, some have only just started and could more easily make a mistake.  When it comes to estate agents and negotiation, it’s no different.

Picture this… You have a house which you’re planning on marketing at £500,000.

Agent 1 is offering to sell it for 1% but has a track record of achieving 96% of asking price and agent 2 is offering 2% but has a track record of achieving 99%… which is the cheaper agent? Agent 1 right?

No, of course not!

Agent 2 is because they’re more likely to achieve you £15,000 more for your house but only charge you £5,000 more so you’re £10,000 BETTER OFF at the end… that’s what it’s all about… the END amount of money in you’re left with IN YOUR POCKET

A great tool is the estate agent performance comparison website here: www.getagent.co.uk   – it will show you which agents are achieving the best prices in your area.

Thanks for reading – if you have any comments or questions feel free to post below, or get in touch, I’d love to hear from you!

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Find a buyer or find a house to buy?

Probably the most common ‘chicken or the egg’ question I get asked is:  Should I find a suitable house to buy and THEN put my house on the market or secure a buyer first THEN start looking?

So here goes…my advice is that you should find a BUYER FIRST (assuming you need to sell your current property to buy your next).

Why? I have listed just a few reasons below:

If you are ‘proceedable’ (i.e. are able to proceed with the purchase if your offer is accepted), the reality is you will be taken more seriously by the seller and the estate agent

If you fall in love with a house (because buying a house is an emotional decision), and then put your house on the market, it is unlikely the person selling your dream home will take it off the market and wait for you to sell. This increases the chances of you losing the house which will always put  you under more pressure to sell your own property which could result in you accepting a lesser price, not to mention increasing your stress levels!

With a buyer behind you, you are likely to be able to negotiate a better price rather than saying ‘I can pay X amount WHEN I have a buyer for my house and IF I get the price I am expecting’’

Until you have an offer on your property (whether you’ve accepted it or not) you don’t REALLY know how much money you have available to spend on your next house.

Hopefully you would have done your research by speaking to estate agents, browsing online and driving round some areas you wish to buy in before even deciding to sell to make sure your expectations are realistic and by all means start viewing some potentially suitable houses to make sure what you will want to buy is realistic, but don’t get too emotional and try not to fall in love with a house until you have an offer on your property.

Thanks for reading if you have any comments feel free to post them below – I’d love to hear from you!

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How does your home smell?

Smell of Coffee

Whilst your home might be flawless in your own eyes, there are certain things that can instantly put buyers off. We aren’t talking furniture or dodgy décor (although, try to modernise if possible), but aspects of the house that can turn a nose up in a second. With this in mind, we have put together our tips-  3 things to look out for, before the buyers descend…

Bad Smells – Even if your home resembles something from Good Housekeeping’s most desirable homes pages, if there’s a whiff in the air, the buyers are going to care. House smells are top of the list when it comes to putting buyers off. Smells range from cigarette smoke and pets, to mould and mildew lingering in the air. Unfortunately, noses become accustomed to certain smells over time, so ask someone who doesn’t live in your home to smell the air. Don’t be offended if you don’t like the answer; they’re helping you out. Get rid of any bed smells so potential buyers come in to a fresh and clean atmosphere, not one that is filled with spray to cover the smells.

Canva - Wake Up Smell the Coffee Wall Decoratio

Unclean bathrooms – The bathroom is one of the most important rooms that people like to keep clean. A bathroom can make people dislike your home immediately if it isn’t spotless; if the bathroom is grubby and has mildew, they will wonder what other dirt lurks beneath the surface of your property. Extra cleaning is a must if you want to sell your home. Scrub your bathroom to perfection, paint the chipped walls, put in a new rug and fresh towels, and buy a clean shower curtain. Open the windows when buyers are looking around to let in some fresh air.

Damp Rooms – If you have a basement and don’t use it as a functioning room, you may experience some damp issues. Often it is caused by rainwater seeping into the foundations, and doesn’t necessarily mean you have a fault within the grounds. However, buyers won’t see it like this. If they smell damp, they think cost, or a delay in moving in while the damp is removed. Or even worse, recurring damp problems. This is a red light. To remove damp smells, determine where any water from outside is going. The smell could be caused by the drains being clogged, or rain gutters full of leaves. Investigate and resolve, or lose a sale.

Little things can make a big difference, and any effort you spend now will all be worth it later!