I often get asked whether it's a good time to sell, or buy, or both (or neither), in one market or another.
Other than "How's the market?", it's the most common question I get, when out and about. And the question is being asked more and more, in the current market. The answer to this question is both easy and difficult!
The reason it's easy is because, if you need to move, then it is of course a good time to buy and sell. I think something we've missed sight of is that our houses, are our homes, and not cash machines. They shouldn't be viewed as such. We should buy, sell and move house, because it suits our needs, not because we are going to make, or lose money on a property. But anyway, you could get me on my moral soap box for an entire blog about that!
But if you want to push me for an answer either way, then here it is...
Firstly, the decision on what to advise comes in knowing someone's situation, as there is differing advice for differeng people & situations. In a rising market, the best time to sell and buy, if you're upsizing, is at the bottom of the market, and not the top of the market. Here's why:
Let's take you back to 2011 and the market is just starting to turn, with your house being worth £220,000 having previously being worth £250,000 in the peak. Daft to sell the property now, you might think. Well yes, if you are moving in to rented accommodation. But if you are upsizing, then this is the perfect time to sell.
That's because the house you want to buy is worth £300,000. That's an £80,000 difference in price. Now, fast forward to 2014, and yes, you will have seen a 25% increase in sale prices. That equates to you selling for £275,000. But that also equates to a 25% rise on the house you want to buy meaning the house that was worth £300,000 in 2011, is now worth £375,000. The gap....£100,000. So even though you might have got a lot more for your house, you're actally £20k down on the deal compared to if you had done it back in 2011. (Not only that, but your stamp duty contribution has increased as well!)
The market is still on the rise today. Probably too fast, to be honest. But with the mortgage market review, and interest rates likely to rise, we think this will slow the market, but not put it in reverse. If you look back historically, we had a crash and prices in reverse between 1991 - 1996. From 1997 we started to see 'green shoots' and this continued with an average house price increase of 8% per year on average up until 2006.
The housing market tends to go in these cycles. So, using the cycle we saw last time (in the 90s), we can assume that the 'green shoots' started poking through in 2011 (which is indeed what we saw). This would suggest property rising in price until around 2020/21 (when the next creash will happen, based on that!).
I remember in 2000 when my old boss said to me "Adam, the housing market can't sustain this - it's bound to crash soon". To be fair, we saw a stutter that year. But we all know what ended up happening over the following 7 years! We seem to be at that 2000 stage again, with commentators suggesting that the market can't continue to rise and that we're in for another crash. And they're right in that we can't continue to see these rises at their current rate. But in my opinion (unless the government intervene with a random policy), we will see a less frantic market, but with more steady and sensible price rises over the next 5-6 years.
In short, 2011 was the perfect time to sell for many people if upsizing. The next best time to sell and buy - now.
If you're downsizing, there are other things to consider. To downsize and make the most you possibly can from your asset, means you have to call the top of the market. And that's a difficult task, which not many people get right. But I think downsizing should be done in the middle of the cycle (around now). If you are lucky enough to call the top of the market, then great, you've done well on your own house, but the house you buy, will instantly drop in price - not much point in doing that. So for me, selling to downsize now, when there is still upward movement for the nest house you buy is what I would do.
Ultimately, the best time to sell and buy, is when you're ready and when you need too. Buying and selling property has become too much about how much money will be made from one property or another, when it should be more about the need to move house to improve your quality of life.
Whichever way you decide to play it, the other thing to do when you sell your house, is to make sure you don't get ripped off by the high street agents, with their ludicrous fees of 1.5%, or whatever it is. At Hatched.co.uk, we charge a flat fee of £270 up front to list the property, and then just £270 once we sell the property, saving the average seller thousands of pounds in estate agency fees. If you're one those that need to move, or you know anyone else who does, then you can find out more, here - at Hatched.co.uk.