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28 Jul 2020

Asking prices hit record highs: how to get the best deal when buying a house

Discover what's happening to house prices and get advice on grabbing a bargain

Asking prices have hit record highs as confidence returns to the property market, but how can you ensure you're getting the best deal?

Here, Which? explains what's happening to the property market, whether now is the right time to buy and how to grab a bargain when making an offer.

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Asking prices hit a record high

New figures from Rightmove show asking prices on homes being brought to the market have increased by 2.4% this month.

This means the average UK asking price has now risen to £320,265, a figure the property portal says is a record high.

Rightmove says the number of monthly sales agreed has risen by 15% compared with last July, as buyers and sellers make up for lost time.

But despite this mini-boom, the total number of properties on the market is still down 13% year on year.

Does this mean houses are becoming more expensive?

If you were thinking of buying a home in the next few months, you might feel like your hopes of grabbing a bargain have been dashed.

But that's not necessarily the case. Rightmove's figures reflect the prices sellers are asking, rather than what buyers are paying.

The most accurate guide to what's happening to house prices comes from the Land Registry, but it hasn't released any data since March.

Property experts have predicted that house prices could drop by around 5% this year as the UK recovers from the COVID-19 outbreak.

Will the stamp duty holiday make a difference?

The stamp duty holiday means many buyers across the UK will make savings if they move before 31 March next year.

In England and Northern Ireland, the threshold has been temporarily increased to £500,000, so those buying a property can save up to £15,000 in tax.

This change could have a big effect on the number of buyers looking to move home in the next eight months - but not everyone will secure a better deal.

If buyers flood to the market but the number of houses for sale doesn't rise quickly enough, this extra demand could simply result in higher prices, thus wiping out the benefits of the stamp duty cut.

Is now a good time to buy a home?

There's optimism around the property market at the moment, but we're still living in uncertain times.

The COVID-19 fallout means house price volatility and mortgage difficulties could remain for some time.

If you're thinking of making an offer on a property this year, take heed of the following tips.

Think about your future plans

First of all, think about your own long-term plans.

If house values take a hit over the next 12-18 months and you want to sell, you could make a loss.

On the other hand, if you're thinking of staying put for the long term, your patience could be rewarded if the investment rides out any short-term price falls.

Assess your mortgage options

It's not just a volatile time for house prices, but for mortgages too.

If you're buying with a 5% or 10% deposit, you're likely to have very few mortgage options at the moment.

Buyers with bigger deposits can still benefit from great rates, but those who've been furloughed or are self-employed may find it harder to get accepted.

Consider taking advice on your options from a mortgage broker before you start your property search.

Don't be drawn in by stamp duty cuts

The stamp duty changes mean some buyers will make considerable tax savings, but it's important to look at the bigger picture.

Estate agents will tell you demand is soaring in the wake of the cut, but don't be drawn in by the bluster or tempted into an offer without first doing your own research into the local market.

Buying a home is a big commitment and timing is important, so while the stamp duty change could save you some money, it should be one of your considerations rather than your main reason to buy a home.

Making an offer on a property

Making an offer on a house is a nerve-wracking process, whether you're competing with other buyers or trying to secure a cut-price deal.

How to make your offer stand out

If you're not the only interested party, you may need to put forward a case for why the seller should choose your offer.

Emphasise the key things in your favour, for example, if you've already got a mortgage agreement in principle or are a chain-free buyer.

In addition, let the seller see you're organised and ready to move. Have your surveyor and conveyancer pencilled in to instruct as soon as you get the green light.

How to grab a bargain

On the other hand, the circumstances around the sale may make you believe you can get a better deal.

Perhaps the property has been on the market for a long time, the seller is in search of a quick sale or you're confident you're the only bidder.

If that's the case, be prepared to haggle.

When you enter into a negotiation, play it cool and don't reveal your budget to the seller or estate agent.

Think with your head rather than your heart and take time to consider whether you're really getting the best deal.

If there's something about the property you're unsure of, you may consider having a survey done first before committing to a price.