When is the perfect time to buy a property? Is there even a perfect time to buy?
Those are questions you may be asking yourself if you’re pondering whether to take the plunge on a new home in London in 2021.
And with so much uncertainty surrounding both Brexit and the coronavirus, if you’re feeling a little uncertain yourself, that’s completely understandable.
The truth is, though, there’s never a ‘perfect’ time to buy a home and all you can do is ensure you’re as best placed as possible to take that big step.
Here, we’ll look at whether now is a good time to buy in the capital and examine how Brexit and the ongoing coronavirus pandemic could affect the London property market.
Should I buy a house now?
There are a number of reasons why now could be a good time to buy a property.
But whether or not you should buy will largely depend on your personal circumstances.
If you have your deposit saved and you’re in a good position with your work and income unlikely to change, now could be a great time for you to buy…
Stamp duty rates
Stamp duty rates in England were cut in July as the Treasury looked to boost the property market after seven weeks of Covid-19 lockdown during the spring.
The new rates, which are in place until March 31, 2021, mean that buyers pay no stamp duty on the first £500,000 of a property’s purchase price.
From April 1, 2021, it’s likely that exemption figure will revert back to £125,000 (£300,000 for first-time buyers).
With the current stamp duty rates set to change on April 1, 2021, one way to buy quickly and beat the deadline is through the Modern Method of Auction.
Interest rates were cut twice in successive weeks during March as the coronavirus pandemic took hold in the UK
The first cut saw rates slashed to 0.25%, before the Bank of England reduced them to 0.1%.
With rates at that record low figure, borrowing has arguably never been more affordable for those looking to buy a property with a mortgage.
Help to Buy
The current Help to Buy scheme comes to an end in March 2021, with the new scheme replacing it only open to first-time buyers.
That means, if you’re looking to buy your first home in London, you can still access an equity loan to boost your deposit.
Brexit and London property prices
Although the UK officially left the European Union in January 2020, an 11-month transition period was put in place for trade deal talks.
That transition is set to end on December 31, 2020.
From January 1, 2021, Britain will sever ties with the EU and that has fuelled speculation about the effect the ‘divorce’ could have on the property market.
Since the EU referendum of 2016, property prices in the UK grew by 9.7% in the four years to August 2020, while Rightmove has reported 6.6% growth in 2020 alone – despite the coronavirus pandemic.
In London, prices stalled between November and December, falling by 1.5%, according to Rightmove.
But the capital has still experienced 3.5% growth in 2020 as a whole.
Price predictions for 2021
Despite a whole host of predictions about price growth, or decline, in 2021, there is little consensus.
The message from most commentators, however, is one of cautious optimism.
The Office for Budget Responsibility is predicting 4% growth in property prices through 2021 followed by ‘strong growth’ in 2022, while Rightmove has forecast 4% growth next year.
And with interest rates at record lows and the stamp duty ‘holiday’ in place until March 31, 2021, buyer interest should remain strong throughout the first quarter of the year.
Will the housing market crash in 2021?
While most predictions for the property market in 2021 suggest a slowing of growth due to the coronavirus and Brexit, a full-scale ‘crash’ looks unlikely.
PriceWaterhouseCoopers (PwC) has predicted a 7% fall in property prices in its ‘worst case scenario’ report, but suggests that growth of 1% is more likely, with 4% growth by 2025.
Where to buy a house in London
London property can be expensive – everyone knows that.
But that doesn’t mean the capital is out of reach for buyers with smaller budgets.
If you’re a first-time buyer looking to get on the ladder in London, take a look at our guide for first-time buyers in the capital.
And if you’re considering whether a new-build or existing property is the right choice for you, this piece on the pros and cons of both could help you decide.