What will happen to house prices as lockdown restrictions ease? In this three-part series, we look at how the pandemic is affecting the market, what buyers can do to negotiate a discount, and how to avoid getting into negative equity if house prices fall
During lockdown, the buyers that stayed in the market had leverage. The outlook for prices was bleak and the headlines meant people had bargaining power.
Liam Bailey, of Knight Frank research, said sale prices came off by 5pc before the market reopened.
And when it did, buyers got even more aggressive. Some tried to negotiate as much as 20pc off their pre-agreed sale prices.
Yet for most, it didn’t work. Instead, the market surged as pent-up demand flooded the market and buyers sought larger homes with more outdoor space after lockdown. Sales agreed are now above pre-lockdown levels.
House prices jumped by 1.7pc between June and July, according to building society Nationwide. Property website Zoopla has forecast growth of 2pc to 3pc for the rest of the year.
Chancellor Rishi Sunak’s stamp duty holiday, which means 88pc of transactions in England will pay no tax at all until March 31 2021, has further boosted sales.
Yet the fundamental problems facing the housing market have not gone away. Unemployment will rise as the furlough scheme ends in the autumn and the country heads into recession. Analysts think the house price drops have only been postponed. Deutsche Bank predicts values could fall as much as 23pc.
Anyone who is in a position to buy now should be wary that there could be a slump in sales immediately after the tax holiday ends.
The message? Don’t let yourself get swept up in the buying frenzy. Purchasers should still negotiate. Here’s how to start, even if you have a bit less to spend.
How much of a discount is realistic?
Roarie Scarisbrick, a London buying agent with Property Vision, said: “Most people, maybe 70pc of sales, in most market conditions get 5pc off the original asking price. Then maybe 20pc of people can get 5pc to 8pc off. And an 8pc to 12pc discount is a dwindling minority. Over that is an anomaly.”
Even though buyer demand is strong, there is still uncertainty. The Bank of England’s economic forecasts are consistent with a 16pc drop in house prices. During lockdown, Thea Carroll, a buying agent, negotiated a 16pc discount off a property sale.