With the ongoing cost-of-living crisis and general market instability, buying a property in Northern Ireland can feel like a minefield.
Our senior valuer, Adrian Doran outlines what to keep in mind when considering buying, selling or renting a home in the current climate
1. Understand the current market
The market in general terms has slowed, mainly due to recent interest rate rises and cost of living increases, although some sectors are still seeing strong interest levels, such as larger, detached family homes. Investment properties are also in demand, given the shortage of rental stock and higher monthly rental prices. Interest rate rises have had a particular impact on the first-time buyer market with mortgages typically seeing increases of 40-50% since early summer this year.
2. Be realistic with your sale expectations
When valuing new properties, it is important to price accurately given the current conditions. In some instances, we may advise homeowners and sellers that negotiating a figure with a ready, willing and able buyer is the most sensible option, rather than waiting for or expecting a bidding scenario to arise.
3. New-builds are in high demand
New-build homes are in short supply, particularly in the wider Newry area, due to the lack of both available sites and the sharp increase in building costs. This has negatively affected the viability of some projects that would otherwise have been in the pipeline. Don’t rule out existing homes when looking for your next buy.#
4. Take advantage of stamp duty cuts
Earlier this autumn, the UK Government announced changes to stamp duty. This is the tax payable on any home purchase, with the amount of tax payable depending on the value of the home. With the new changes, more people now won’t have to pay this duty on their new homes. The changes have had an obvious positive impact for both first time buyers and home movers and is likely one of the reasons why the larger family detached market remains in high demand.
5. Have you considered co-ownership?
In addition to stamp duty cuts, the Co-Ownership property value limit was increased to the higher threshold of £190,000. Co-Ownership offers those who cannot afford to purchase a home by themselves the chance to buy a share of your property and rent the rest from Co-Ownership, a registered housing association. The co-ownership changes have had a positive impact in Northern Ireland as a much greater range of properties can now be taken into consideration by buyers availing of the scheme and, as a result, we have seen more mortgage brokers advising clients of this potential route to purchase.
6. Be aware of potential price fluctuations
There is always potential for price increases or decreases in the housing market, but a lot will depend on the health of the overall economy and particularly any future interest rate rises or falls. It’s likely too early to make a call for now, but we’d recommend keeping an eye on this while you search for a new property.
7. The benefits and drawbacks of buying now
The main benefit of buying a house now, if you are currently in position to do so (i.e., have funds or mortgage approval), is that it is less competitive. There are still willing sellers out there and the buying pool has decreased from early 2022 levels, and as such, there isn’t the same level of competitive bidding situations, which could mean a less stressful buying process.
On the flip side, the current mortgage market is still quite volatile and should be carefully navigated when buying a home. We are also facing a potential reduction in the supply of properties coming to the market, which could make it more difficult to find your perfect home.
8. Sellers shouldn’t be discouraged
Selling has always been about matching a seller and buyer who are both ready, willing and able to proceed with the house sale. For those moving within the current market, timing doesn’t matter as much; the main consideration should always be, whether the property or area is suitable, and whether it is affordable in your situation.
9. Check out your property’s energy rating
The energy efficiency of a property has always been a strong consideration for buyers, but even more so over the last 12 months with the noticeable increase in energy prices. As a result, we have seen buyers showing a preference for the higher rated properties with recent boiler and insulation upgrades. Properties with a higher energy rating will be more efficient to heat and could save you money long-term with cheaper energy bills.
10. Renting may be a better option for some
While there is a strong and continued desire for home ownership in Northern Ireland, renting may remain a better and more affordable option for some. However, there is always a degree of uncertainty with rental properties surrounding the length of potential leases and rental increases. As with mortgage rates, we’ve seen a sharp increase in rental payments over the past two years, and when mortgage and rental payments remain comparatively close in this way, many will look to choose purchasing property versus renting, given the extra security of home ownership.