When we think of the challenges that rising house prices can cause, more often than not our thoughts turn to first time buyers struggling to get onto the property ladder.
With demand from buyers consistently outstripping the supply of properties coming onto the market over the last 18 months, and the issues regarding lenders not offering beyond home report values, it has been a particularly challenging time for those looking to secure their first home.
Conversely, there is an underlying assumption that homeowners are benefiting from rising prices – but this is not necessarily the case.
For those selling for the first time and looking to move up the ladder – the so called ‘second steppers’ - rising prices means that the gap between the value of their current home and the one they want to buy is likely to have increased. In simple terms, rising prices mean that they need more money to fund your move up the ladder.
Market Conditions - an unusual phenomenon
The Edinburgh property market is often referred to as a ‘sellers market’ just now.
The number of active buyers is greatly exceeding the number of homes available for sale meaning that most properties are securing strong offers, with a vast majority of properties are now selling above the home report valuation and in record time.
Somewhat ironically, despite the high levels of demand that would greet them sellers are reluctant to put their current property on the market until they find a home that they want to buy. In essence, the lack of homes on the market is discouraging many people from putting their own home up for sale!
This self-perpetuating phenomenon is having a knock-on effect – resulting in around 30 per cent fewer properties on the market in early 2017 than we would typically expect to see despite such favourable conditions.
Giving confidence and assurance to those looking to sell for the first time really could ‘grease the wheels’ of the property market – freeing up more homes and boosting supply for struggling first time buyers and ‘second-steppers’ alike
Top Tips For 'Second-Steppers’
To help do our part in helping Scotland’s first time sellers, we’ve compiled a list of tips to help ensure you are well placed when selling your home for the very first time:
1) Research, Research, Research!
OK, perhaps not the most exciting or revelatory tip, but it deserves its place as number one.
When you do decide to make the move up the ladder, it pays to do real in-depth studying into the market.
This will help you find areas that will be affordable while offering everything you want in terms of schools and local amenities.
Understanding what homes in that area are selling for, by using resources such as ESPC's House Price Reports, getting to grips with the likelihood of homes in an area exceeding valuations and the time they are spending on the market will all help towards point two.
It can also be well worth speaking to a financial adviser as early as possible so that they can go through your situation with you and give you a clear picture of what you will be able to afford.
As well as doing some detailed research it can really pay dividends to make a list of the things you would want in a new home. Start with your list of everything that you would ideally want, from location to the type of property.
Once you have your wish list, start to prioritise from there. What are the things you must have from a new home? If you are looking with a partner are you both ‘singing from the same hymn sheet’ Are your demands realistic or do you need to look at compromising?
Having a firm grasp on your realistic ‘must haves’ and ‘can manage withouts’ will really help when searching for and ultimately securing that next home.
3) Consider your selling options
It is widely accepted that the Edinburgh property market is skewed in favour of sellers just now. Fewer homes have been going on the market, despite rising demand – pushing average prices beyond home report valuations.
As long as this trend continues, a viable option for some second steppers will be the ‘buy first sell later’ approach – sourcing and securing your next home before selling
Alternatively a safer option will be to opt to move into a short or variable term let post-sale could allow for a more patient transaction and house hunt.
Both options come with risks though and the approach that is best for you will very much depend on your own circumstances. If you get in touch with a good solicitor estate agent early in the process they’ll be able to chat through your options with you and help you decide what the best course of action is.
4) Be Prepared
Regardless of your chosen method for selling, it pays to be as prepared as possible and have contingency plans in place.
If you opt to buy first, have you got everything in place so that as soon as you have an offer accepted you are able to quickly get your home onto the market? Have you considered what you would do in a worst-case scenario if your home takes longer than expected to sell? If your current home does not sell and you place it on the lettings market– can you afford to cover the additional dwelling supplement?
Conversely, if you are selling first, what would you do if your current property sells before you find a new home? Have you considered where you would be willing to rent and what you would do with any furniture that might need put into storage?
The most stressful aspects of a move are usually the unexpected hurdles. By making sure you’ve planned for the worst you can make the whole process much smoother and stress-free, even if you never have to put your contingency plans into effect.
If you’re thinking of moving up the ladder and have any questions about buying, selling or any other aspect of your move, give Warners a call on 0131 667 0232 or drop us an email at email@example.com and one of our team will be delighted to help you with any queries that you may have.