This article will look at the notion of "timing the housing market" from the perspective of both buyer and seller. It assumes that the seller is looking to either profit from their sale (get more money than they originally paid for it, or upsize), and the buyer is hoping for a dip or a crash, and take advantage of lower prices.
Nobody knows the future,but sometimes we can have an idea of what's up ahead and we can plan according to the most likely scenario.
From the Seller's Perspective
Let's start with the easiest perspective - the seller. It's the easiest only because property has enjoyed a multi-decade bull market. In the majority of cases, a seller is "quids in" in terms of selling at a higher price than their purchase price. Not always, I must stress. There are exceptions to prove a rule, but a rule it is: house prices have outpaced inflation over many years.
Having said that, what about the future? Interest rates have been at unprecedented lows over the last 10 years, which have helped boost property prices. However, it does look like we are reaching a "ceiling of affordability". Lenders have thrown everything at the market: lower rates, longer mortgage terms, dual-income mortgages - but at some point we must reach a limit, since wages have fallen far behind house price growth, and "the salary multiple" is going up and up (measuring a year's salary against the value of a home) - in some places it's over 10 times the salary.
So "timing the market" is really being aware that there's more downside risk than upside in the future years ahead (in my opinion), given the drag that slow wage growth is ultimately having on property prices. In other words, if you are thinking of selling, then it may not pay to "see how it goes for a few more years" - sooner is better than later.
From the Buyer's Perspective
Well, having read the view from the seller's perspective, surely it's better to wait as a buyer, right?
It really depends on circumstances. Many buyers who were expecting an imminent crash in 2012 and 2013 were disappointed. The UK government came out with "Help to Buy" which helped house prices continue to climb higher, and lenders kept cutting their interest rates, encouraging more buyers into the market.
Even if you end up buying at a market top, if it's a family home, you almost certainly have no worries. You can lock in a very low lending rate, and effectively it's like you got a big discount on the property when compared to historical rates which were easily above 5% for many decades. Take advantage!
Furthermore, it's also easy to get stuck in a renting trap - where the money you could be saving for a deposit is spent on the rent. Many are choosing to live at home with their parents for a few years, then make the leap onto that first rung of the housing ladder - rather than rent.
Article kindly provided by carpetcleaninginoxford.co.uk
Sellers have enjoyed price gains over many years, but there does seem to be more downside risk than upside potential on house prices. Selling sooner than later (if you are planning to sell) locks in those gains.
Buyers - there's never really a bad time to buy if you're buying a family home and intend to live in it for many years.