I am often asked: “When is the best time of year to buy property?”.
And my answer invariably disappoints:
“When you are ready.”
Which doesn’t sound very helpful, but what is worth remembering is that acquiring a home is not like buying shares where you simply look at the bid/offer price and hit a button. Because when you are acquiring a property, you will be negotiating with the owners.
This means that what is happening in the market in general is often less important than an individual’s specific situation, i.e. someone may be incredibly motivated to sell (for several reasons) irrespective of market conditions.
So, all you need to do is find that one seller who is keen to transact and has the ideal property for you. As you can never tell when that situation will arise, I advise people to start looking as soon as they are ready because the great opportunity could arise tomorrow, but also be patient because you may have to spend several months searching.
Please note that when I say “ready”, I mean you have undertaken all the necessary preparation to make yourself the “dominant buyer”. If you haven’t read about this in my book, The Insider’s Guide To Acquiring £1m to £100m Property in London”, you can request a complimentary copy by emailing my assistant at dee@mercuryhomesearch.com or calling 02034578855 (+442034578855 from outside the UK).
Having said this, the run up to Christmas is often a great time to buy.
Why?
Because some sellers become far more flexible on price. Quite simply they want to have exchanged contracts or at least agreed a price before the end of the year. This is completely illogical (unless there is a tax motivation), but either way it works in your favour as a buyer.
The fact that fear is the dominant emotion in the market right now also works in your favour.
So, if you are contemplating acquiring a property, you should start actively looking now rather than waiting until the New Year. HOWEVER, …
… you must be selective. I have lost track of the number of people who tell me about the discounts they have negotiated on property in central London and how they are “bargains”. And on the face of it the discounts negotiated are sometimes significant compared to the asking price, but there are two problems they rarely take into account:
- A discount is only really a discount if it less than fair value. Most asking prices have little resemblance to fair value so the discount negotiated may still be above fair value.
- Focussing on the discount rather than the future performance of the property is one of the biggest mistakes property buyers make.
There are certain properties that are guaranteed to underperform the market in both weak and strong markets – the exact reason the owners are often happy to be rid of them. In other words, these properties do not fit into the “Best in Breed” strategy.
Here are some basic figures to show you the importance of buying a property that will outperform:
If you bought a property for £1m this is what would happen:
| 0 Years | 5 years | 10 years | 20 years | |
| 5% per annum | £1m | £1,283,358 | £1,647,009 | £2,712.640 |
| 8% per annum | £1m | £1,489,845 | £2,219,640 | £4,926,802 |
| 10% per annum | £1m | £1,645,308 | £2,707,041 | £7,328,073 |
As you can see, over the long term the difference of just a couple of percentage points outperformance can be huge due to the power of compounding.
And this is the trap too many buyers fall into. They see a “bargain” but only consider the base numbers, because they have been told that the run up to Christmas is a good time to buy. So, it is essential that you undertake your due diligence – not only by scouring the market to find the best opportunities, but also to understand what makes a best in breed property and what represents fair value.
If you don’t find a suitable property then just wait until you do, even if that means searching for several months.
(If you are buying a home, you will probably be focussed on finding a property where you and the family will have lots of space to grow into, where you will feel safe and have fun while also having easy access to great shops, schools, restaurants, etc. I am not suggesting that you sacrifice this, far from it, but most homebuyers fail to see the full range of properties available and miss the one that would fulfil their requirements and will outperform).
One final note – due diligence does not mean looking at websites or waiting for property alerts, because all you are doing is joining an electronic queue – everyone else is doing the same thing. You need to source off-market properties too. Now, you won’t be able to recreate the network and system that I have which allows our members to have first refusal on the finest properties, but you can still give yourself an advantage over most other buyers by following some simple strategies.
Quite frankly, relying on the websites virtually guarantees average results (although you should be just about ok if buying properties under £1m as long as you fully understand valuations and are a good negotiator).
You can discover more about this in my book, The Insider’s Guide To Acquiring £1m to £100m Property in London. If you haven’t requested a copy, you can do so by emailing dee@mercuryhomesearch.com or calling 02034578855 (+442034578855 from outside the UK).
Good luck with your search for a property in London.
