Discover different ways that a typical homeowner can make the most of a rising property market
House prices are rising.
You may already know that the property market has seen a repeated cycle of rising and falling for generations. These peaks and troughs have always taken 18 years to come full circle.
A rising housing market can be excellent news for a few select groups of homeowners, even if you are not looking to move!
Inflation keeps rising.
The cost of living keeps rising.
But salaries are not rising at the same level.
This disparity creates confusion and uncertainty in the economy. But more importantly, in our homes and daily lives.
Should you spend frivolously and live life to the max, or should you try to save and hold back on doing what you want?
We have less spare cash each month as we have to pay for the many increases in energy, fuel and taxes.
And moving home is expensive - perhaps you should stay put until everything settles down?
Huge levels of Government spending, both from the pandemic and the war in Russia, will cause further economic uncertainty. We will likely see the market level out - not a crash, just a correction, we hope!
You may already know that the property market has seen a repeated cycle of rising and falling for generations. These peaks and troughs have always taken 18 years to come full circle.
Every 18 years, regardless of the economic situation at the time, the property market has a boom and then a bust.
It takes 18 years to reach the peak, only to drop again.
But, crucially, with each cycle, the peak is higher than the previous high, and the crash is not quite as low as the one that came before it.
If we take 2007 as the last peak, 2025 should see the next highest point in the market.
So, that means that there are 3 years left of the strong housing market before we see a correction.
How can we use these next 3 years wisely to benefit from that rising market?
Most people will purchase another property when they sell. This means that any increase in value they gained on their sale will be spent on their purchase as they are buying within the same market. Unless, of course, they downscale and buy a cheaper property.
But a rising housing market can be excellent news for a few select groups of homeowners!
Downsizing: Suppose you sell your home at a premium price and buy something significantly smaller or cheaper. The difference in the values goes straight into your pocket. This could easily mean that you could pay off any remaining mortgage by downsizing if you are approaching retirement.
Relocation: By relocating to a more affordable area, you can pocket the difference in values. With the increasing trend of working from home, there is seemingly a mass exodus from expensive city centre properties to more rural areas where homes are a little cheaper. I have known a family selling a modest 3-bed semi in London that moved to the North of England and bought a substantial 5 bedroom Victorian property for the same price!
Remortgage: Even if you're not looking to sell your home right now, the value of your home will most likely have increased. You may be able to remortgage your property to release some money. Perhaps you could extend your home? Renovate? Pay off other debts to consolidate your monthly payments and reduce interest charges? Or maybe even purchase an investment property or holiday home?
Selling up investment properties: Landlords are cashing in on their property investments by selling their rented properties whilst the market is particularly high. With no need to purchase another property, landlords can bank the equity from the sale. Although there are likely to be some tax considerations so, make sure that you seek professional advice before taking the plunge.
What goes up must come down, meaning that, as prices continue to rise, there will undoubtedly be a correction, eventually.
Let's be honest, if we had a crystal ball and knew when this would happen, we'd all be super rich!
But as we all know, history repeats itself.
Looking back through the years, we can clearly see a pattern. And that pattern shows that we have another few years of solid property market ahead of us.
There is never a perfect time to move house, but now is a pretty good time to try!
If you've been thinking of selling your home to take advantage of the buoyant market, contact one of our property experts today!
But, if you don't want to sell your home just yet, perhaps a property valuation will help you see what equity you have available? And maybe a remortgage could be on the cards for you instead?