24 March 2017
Uncertainty is never good for the housing market, and unfortunately there is plenty of it. Whether it is President Trump’s policies, increasing fiscal constraints and slowing growth in China or upcoming French and German elections, there is great uncertainty around the world.
Closer to home we have the impact of the Brexit negotiations, rising inflation and slowing wage growth, to concern us. Subsequently, many buyers and sellers are biding their time. Vendors question whether it is the best time to sell and generally many aren’t doing so, unless they are forced to, because they are unlikely to get best value.
With stock levels limited, even though we are now firmly in the spring market, more people are considering renting. Those who need to be in a particular area for their children’s schools or for work, or who have sold up and are renting in the hope that the market will soften in the next couple of years so they can pick up a bargain, are renting. Others are renting because they can’t find what they want to buy or because stamp duty is prohibitive if you are spending more than £1.5m and especially if it is a second home. If you plan to live in the UK for five years, and rent a £10m property for £5,000 a week, it won’t cost you much more than the stamp duty if you had bought outright. In a market which is not really moving, neither can you rely upon price inflation to offset that.
Generally we are not in favour of renting unless you have to because it is dead money but on balance, renting may be a more financially sound route for some people. Buyers should come to the market with at least a five-year ambition, ideally ten if they are looking to make any meaningful financial gain on their investment, as property won’t make you the quick buck it might have done in the past.
Prime Purchase has always conducted rental searches, even though our name suggests where our main emphasis has been. But we have seen a noticeable increase in enquiries from people who wish to rent because there is an acute lack of stock to buy, across all levels of the market, but particularly at the top end. Added to this, the rental market is far more fluid than the sales market, so having the inside track to the best opportunities is just as valuable.