Mortgage Market News

What is happening to the top end of the housing market?

Tuesday April 25, 2017

The top end of the housing market has become relatively static over the last few months. We have become accustomed to the fast inflating house prices in recent years, where prices start to slow and in some places even fall. For those who own high value homes, this is making it a challenge to sell at the asking price, as buyers put downward pressure on property values.

Office for National Statistics house price index

The UK House Price Index from the Office for National Statistics (ONS) shows that the annual house price increase in 2016 of 7.3% has not been matched so far this year. Growth in annual house prices fell to 3.5% in March, down from 4.5% in the month before.

Annual price growth of 0.5% in 2016, among the top 5% of property transactions, was much slower than across the rest of the market, where on average 2016 prices grew 4.2% from 2015. This values the average high value property home at £1.12 million, instead of the £1.17 million, if house prices at the other end of the market had risen in line with the rest of the market.

Why might this be happening?

There are two main reasons for this. Firstly, the increase in stamp duty and secondly the uncertainty of the outcome of Brexit. The stamp duty tax increases on all properties over £925,000, which creates a significant gap between what would have been paid under the new regime in comparison to the old regime. This gap increases the higher the value of the property. All of this happens before taking in to account the additional 3% charge being levied on all second homes and buy to let properties – regardless of their value. The combined effect of this has been to try and reduce the number of high end property transactions and dampen prices.

In addition to this, there is a lot of uncertainty since the vote to leave the EU last year, which has increased buyers caution when it comes to making high value home purchase decisions.

Options available to help sell your home

If you are looking to move from your current home, but are unable to sell it at the asking price, there are still a number of options available to you. Whether you are looking to downsize, move into a larger property or just relocate, there are a number of ways that you can leverage the equity in your existing property. Doing so will allow you to purchase your new residence, before selling your existing property.

Although a traditional bridging loan may be a viable option, you may wish to release equity from your property without incurring higher interest rates or being under a 12-month term limit. We have access to specialist lenders who will consider short term loans of between 1 and 5 years, priced at the lender’s standard rates, giving you a much longer period in which to sell your home.

Alternatively, we have access to Buy to Let lenders who can look at larger loans and can accommodate the much lower yields that high value properties generally receive. This enables you to wait for a more favourable time to sell and you can enjoy the benefit of a rental income while you wait for an acceptable offer.

Even if you have low or even no income, it may still be possible to arrange loans for both of the above scenarios through our private bank and specialist lender contacts. We will assess your circumstances fully and may be able to present your case to range of private banks, which may result in a bespoke mortgage solution.

If you are looking for a mortgage for a new home and would like to discuss the options available to you with one of our specialist Mortgage Managers, call us on 020 7519 4985 or send us an email.


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