Last year was the year of the seller in the property market. House prices were going up at such a speed that any buyer who dared hesitate or quibble was cast aside by a rapidly rising market. But this year, the tables have turned
The market has cooled - house prices fell in the last three months of 2007 for the first time in seven years - and confidence is low. This means buyers now have the power, with first-time buyers in a particularly strong and unfamiliar position. With sellers getting increasingly desperate to sell, it is they who can move quickest.
It's about time first-time buyers were given a break. At the end of last year, the number of first-timers had fallen to its lowest since 1980. A report from Halifax, the UK's biggest mortgage lender, shows that some 300,000 people bought their first home last year, down from 532,000 in 2002. They weren't buying, quite simply, because they couldn't afford to.
Now, though, they are in a much more enviable situation. With buyers waiting longer to sell, and getting more and more desperate, first-timers are in an excellent position to negotiate hard, with the carrot of a quick sale and no chain to wave under the nose of the seller.
'If I were a first-time buyer I'd buy now for two reasons,' explained Chris Brown, president Elect of the National Association of Estate Agents. 'First, interest rates are looking as though they will fall soon, so mortgages are going to get cheaper. Second, with the market not getting staggeringly better, sellers are more open to negotiation than they were two to three months ago.
'A year ago, if I were a buyer offering a seller £10,000 off the asking price I would have been shown the door straight away. Now, sellers are having to be more flexible. People are also forced into being a bit more cautious about borrowing money post-Northern Rock.
'In the past, people had got a bit carried away and were borrowing scary multiples of their salary. I think there's now a definite feeling that people are not prepared to stretch themselves financially in the same way, and that's a very good thing. Now, if people can't afford an extra £10,000 they are more likely to try and get it through negotiating down the asking price, rather than borrowing more money.'
If, like thousands of others, you are considering buying at the moment, then take heart; it's a good time to strike out. Here are a few pointers to help you along the way.
- Bargain hard. You would be mad to offer asking price at the moment. Hometrack figures show that homes are selling at an average of six per cent below the asking price. Start with an offer of 10 per cent less than the advertised cost and work up from there. Be aware that lots of struggling buy-to-let landlords are selling at the moment and hoping for a quick deal. Use this to your advantage.
- Sort out your finances. You will be in an even stronger bargaining position if you have your deposit and mortgage ready. Speak to a lender or a mortgage broker first and get an idea of how much you have to spend.
- Take your time. Don't believe the estate agent waffle. In all likelihood, the market in your chosen area will not suddenly have picked up on the very day your search begins. Don't be rushed into making an offer. See plenty of properties and get some idea of what you can get for your money.
- Consider newbuild. Developers are having a tough time too, and increasingly desperate ones are offering very attractive incentives; paying your stamp duty, for example, or for your curtains, even contributing to your mortgage repayments. Do be careful though. Identikit newbuild developments in city centres are performing very badly at the moment because of an issue of over-supply. Always think about who might buy from you when you're ready to sell, and if you're surrounded by the same type of property, consider whether there are enough buyers to go around.
- Get help. There are several schemes to help first-time buyers that aren't available only to key workers, with some offering help to buyers earning as much as £42,000. Some allow you to purchase a share of a house owned by a housing association. Other initiatives help with the finance, allowing you to buy on the open market. Contact your local authority (www.direct.gov.uk) to find out more.