When you’re buying or selling a home, how much does the performance of the housing market?
With the current increase in mortgage rates, you might be wondering if it’s the right time to buy or sell. Understanding how the market is performing is vital when making informed decisions, as this will ensure you’re better prepared for house prices going up or down in the future.
This is particularly relevant if you’re buying and selling properties simultaneously, since property values are relative. When prices fall, you may not get the amount you were hoping for your property, but on the flip side, you could acquire a new home at a lower cost. Conversely, in a rising market, you might pay more for a new property but earn more from selling your existing one, boosting your equity.
Always remember to factor in interest rates and the evolving mortgage market, which should influence your choice to buy or sell.
Buying and selling in a slow, falling market
Navigating this market type can be tricky, and is often dependent on the property type and location. Desirable homes tend to attract buyers regardless of market conditions. However, properties situated on busy roads or those that are prone to flooding/subsidence might languish on the market for months or longer.
In this market, people typically negotiate for the best deal possible, which can work in your favour if you’re looking to sell.
Buying and selling in a rapidly ascending market
While this may seem like an excellent market to sell in, buying another property can still have its challenges. In a rising market, your property can sell quickly after numerous viewings, even generating multiple offers.
You may also find yourself in competitive bidding wars, potentially leading to higher prices. You may have to decide whether you want to sell to the highest bidder, or whether to opt for the bidder who is ready to start the purchasing process.
Whichever option you choose, the pressure is then on for you to find a new property quickly. Nonetheless, the end result is that you can sell your home, enabling you to progress and eventually secure a property.
Assessing affordability for buying and selling
Ultimately, the decision to buy or sell hinges on your financial circumstances. Start by estimating your borrowing capacity with our borrowing power calculator. Next, determine how much equity you have in your home. If you possess substantial equity to invest in your next property or even purchase it outright, market conditions matter less. However, the current high-interest rates could affect your monthly payments, so consider your financial situation carefully.
If your property’s value hasn’t appreciated by much or has declined, selling in a falling market could prove challenging. In such cases, it might be prudent to wait for a more favourable market.
How do interest rates impact me?
Interest rates significantly influence your mortgage payments and it’s crucial to evaluate how much you can comfortably spend on your mortgage each month. Consider whether a fixed interest rate or variable rate aligns better with your financial situation – this is something you can discuss with your mortgage adviser.
Consult with an adviser
While concerns about price fluctuations are valid, what often takes precedence is the present and future affordability of a mortgage, your ability to manage associated expenses like agent fees, legal costs, and Stamp Duty, and the presence of prospective buyers for your current home and available properties within your budget.
If you’re thinking of buying or selling your property and want to discuss your mortgage needs, please get in touch today.