Despite all the well reported gloomy assessments of the national and global economy, inept politicians, Brexit uncertainty and a small interest rate hike, the local housing market is showing an incredible resilience. The legal press has reported a national picture of solicitors dealing with soaring levels of conveyancing transactions despite the Royal Institute of Chartered Surveyors reporting house price growth stalling, Estate Agents bemoaning a lack of stock and the picture painted about the economic outlook continuing to be bleak. So is it wise to buy a house in this climate?
My opinion is that everyone who can afford to, still should. Property remains one of the most safe havens for our money. Growth in property values in the mid to long term far outperforms depositing your money into a savings account and all but the most risky of stock market investment strategies.
Also, as the Bank of England interest increase was a reaction to the rate of inflation being higher than the 2% target, many analysts do not see it being raised much more in the near future, if at all. This is because the rate of inflation was artificially increased due to the devaluation of Sterling post Brexit. This does not happen straight away as fuel/energy deals are done well in advance and the exchange rates are ‘hedged’ so it takes time for the effects to filter through. As a result the underlying rate of inflation is most likely well within the Government/Bank of England target. It is certainly not due to an overheating economy. In all likelihood it will be at least 6 months before the next change, if not longer. And the Banks generally are not passing on the full 0.25% increase to their savers as well.
As of yesterday’s Budget, Stamp Duty is to be abolished for first-time buyers on all properties worth up to £300,000.00; yet another good reason to buy now. This reform is designed to boost home ownership, takes effect immediately and will knock up to £5,000.00 off the costs of purchases. Above this level, stamp duty will be paid by first time buyers, at 5%, in the £300,000.00 to £500,000.00 band. So a £10,000.00 tax bill on a £400,000.00 property is being reduced to £5,000.00 and a £15,000.00 charge on a £500,000.00 home goes down to £10,000.00
At Borlase and Company we have a wealth of experience in buying and selling residential and commercial properties and will be delighted to assist in your next acquisition.