We are still seeing stock coming to market and prices in excess of home report valuations – good news for sellers – but buyers generally are not having to stretch to the 20 per cent plus offers over valuation to secure their new homes that we were seeing a few months ago.
A lot of sales are still going to closing dates, especially in the in-demand areas like New Town and Morningside. However, there are also more fixed price sales now, and bids that would not have been entertained six months ago at the height of the market stand a much better chance of being successful.
Along with the cost-of-living crisis, the news agenda has been filled with reports of rising mortgage costs recently, but interest rates seem to be levelling off and mortgage companies are lending again. Since the Mortgage Market Review legislation came into play in 2014, applications have been critiqued on affordability, ensuring applicants could still afford to make their mortgage repayments even if the interest rate increased above the lenders’ standard by an average of 3 per cent. This means that, while mortgage rates undoubtably have a huge effect on the majority of homeowners, there should not be the kind of pressure and havoc that ensued during the 2008 recession where many homeowners had mortgages of up to 125 per cent.
Changing mortgage rates are likely to affect first time buyers the most. They might find their deposit does not stretch as far as first planned when they have to take higher interest rates into account and they are not able to borrow as much as a few months ago. However, first time buyers do not have a chain, and chain-less buyers, where their purchase is not dependant on any other sales, continue to be attractive to sellers.
We also need first time buyers to keep the market moving at the bottom end where it is imperative that properties keep concluding and people move onto and up the housing ladder, stimulating movement upwards.
Some homeowners are choosing to sell their properties with a view to renting short term until the type of property they are looking for comes to market. This gives them the advantage of being chain-free and ready to move quickly as they have already sold their property and know how much they can afford to offer and take on as a mortgage.
The top end of the market should be the least affected by rising mortgage rates – homeowners might have smaller mortgages or have already paid them off, they might be downsizing and realising the value in the current home to buy their next one.
The low sterling to dollar exchange rate has stimulated a rise in the number of enquiries received from foreign buyers who perceive the Edinburgh market as cheap and a good investment. They might have children attending university or a connection of some sort to the capital and are looking for a holiday or occasional home in the city.
Whether or not to buy or sell is always going to be a hugely personal decision based on your own situation. Regardless of changes in the market, if now is the right time for you to buy then it is the right time for you to buy. Sellers are still listing homes and buyers are still making offers and there is still movement in the market. In fact, it might just work to your advantage, with properties up for sale that might not have been before, or offers accepted quicker or at a lower price than previously expected.
Jill Andrew, Partner at Coulters and chair of Edinburgh Conveyancers Forum