City thinking, local knowledge

Is a Drop in House Prices Better News than Some Property Owners Think?

By Questa Chartered

House prices in the UK are on a “downward trajectory at the national level,” according to the Royal Institution of Chartered Surveyors. This is especially true in the West Midlands and south-east England. Do you hear the echo of alarm bells? Before you start fretting, let’s flip the script. Could this be an opportunity rather than a crisis? Let’s find out why this might not be as bad as you think.

The Numbers Game: What’s Really Going On?

Savills has thrown a spanner in the works by suggesting that if you adjust for inflation, average house prices are essentially where they were in late 2015. The upshot? If you purchased your home around that time, you may have seen a real-terms loss in the value of your home. But is that the whole story?

Why You Bought a House: It’s Not Always About Investment

Research by eXp UK reveals something intriguing. A whopping 83% of homeowners are comfortable with cooling house prices. Only 27% are jittery that a market slowdown could trigger a house price crash. To get to the root of this comfort, we need to look at homeowners’ motivations. And guess what? Only 12% bought a house primarily as an investment. The majority, 51%, just wanted a place to call their own. Makes you think, doesn’t it?

A Matter of Perspective

So, your response to declining house prices depends a lot on why you bought a property in the first place. For most, a house is not just a financial asset; it’s a home, a sanctuary. It’s about laying down roots and building a community.

Upgrading Your Home: A Silver Lining

If you’re eyeing that dream home, now might be the perfect time to make a move. Why? Because a market-wide drop in house prices could actually be in your favour. The price of that more expensive house you want will probably drop by a larger absolute amount than your current property.

Stamp Duty Savings: An Added Perk

Remember Stamp Duty Land Tax (SDLT)? That pesky expense you dread when buying a property? A decline in property prices means your SDLT could be considerably lower. Now, that’s a bonus worth considering!

The Rental Market: An Alternative Revenue Stream

Do you invest in property for rental income? A drop in house prices can often boost the rental market. When buying becomes less attainable, renting becomes more appealing. This could lead to increased rental demand, and yes, better rental yields for you.

Time to Buy: Invest Wisely

For those in a strong financial position, lower house prices could signify a golden opportunity. Why not snap up an additional property or two? Long-term, if the market recovers, you could be looking at significant gains.

Market Corrections: A Necessary Reset

Sometimes house prices need to come down to go up. A market correction can make for a healthier, more sustainable property market. It’s a bit like pruning a plant to help it grow better.

Your Financial Journey: No Rush Decisions

Here’s some food for thought: Markets fluctuate. If you’re concerned about your property’s investment potential, remember that assets often depreciate in the short term. The majority of people polled by eXp UK still believed they’d sell their homes for more than they paid, whenever that day comes.

Reach Out: We’re Here to Help

If you’re still unsure about what these market changes mean for you, our specialist advisers are just a call away. We can help you navigate the complexities of the property market and ensure you’re making the best decisions for your financial future.

So, the next time you read those doom and gloom headlines about falling house prices, take a moment. Breathe. Remember, the housing market is more nuanced than it appears. What looks like a setback could just be setting the stage for new opportunities.

Don’t just react—plan, strategise, and if needed, consult with experts. Your future self will thank you.

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