First-time buyers have been having a hard time of it lately as competition for the reduced stock of homes for sale has driven prices up and forced buyers to offer over the Home Report to secure their new home.For those who don’t know, the Home Report valuation is usually the upper limit that mortgage companies are prepared to lend to. So, if you require a mortgage and offer over the HR valuation, you must need to have
(a.) The Deposit (can be from 5% to 20% or more) and
(b.) The difference between the agreed sale amount and the HR value
While there are so few properties for sale and there are buyers with cash reserves then the pressure to pay over the HR will persist.
In addition, as Prestwick is one of the most desirable towns to move to, there are a lot of buyers from out of the area who have obtained great prices for their homes and can outbid locals on many occasions.
There is presently a self-perpetuating high demand/low availability market
Many sellers are holding off putting their homes on the market until they have found a property to live in. We recently performed 39 viewings for one property in Prestwick and the majority had a house to sell but were not yet on the market.
The buyers were very cautious as they did not want to sell first because if there was nowhere to buy, they would make themselves homeless. The low level of availability of rental accommodation adds to their worries.This contributes to the low level of supply and helps keep prices high through competition for each available home.
Is this sustainable?
Statistically, more people put their homes on the market for sale in the Spring, and so a greater supply may lead to a relaxing of the competitive nature of the current market. However, if the number of potential buyers increases as well, then the upward pressure on prices will remain.
With time, the effects of higher interest rates, inflation and the aftermath of the pandemic’s influence on many sectors of the economy may temper the ability of buyers to continually offer more.
And, at some point, the market will level out when supply and demand become more closely aligned.
Unfortunately, the Hoppers' crystal ball is not able to determine when that will be.