Seasonality is a common phenomenon in the world of properties. The property market looks different at different times of the year – what does this mean to the buyer?
Data from the UK House Price Index shows the average UK house price annual growth has dipped in to negative for the first time since 2009. However, prior to this most recent dip, growth has been steady in recent years, driven by strong London-results.
While current economic trends have the most influence when it comes to prices, part of this dip can be explained by seasonal trends.
Prices and Transactions Increase in the Summer
According to this London School of Economics academic paper, the UK property market sees increases in both prices and in the number of transactions when the weather is warming up. According to the data, the second and third quarters of the year don’t just warm the weather but also heat up house prices.
For many buyers, spring and summer are ideal times. Travelling from one viewing to another in the nice weather is more pleasant, after all, while from a buy-to-let perspective it gives you time to prepare the property and undergo any necessary maintenance before the weather gets cooler. Winter can also impact your ability to spend as a landlord so it makes sense to buy yourself enough time to ensure you can give the best service to your tenants.
Although spring tends to be the most popular time to buy, it often isn’t the best in terms of prices. Sellers have the upper hand and the fact that more people are looking means you have to act fast, though if you’re a landlord looking to sell up you can obviously use this to your advantage.
Autumn and Early Winter Bring Down House Prices
The same study found the opposite happens when the weather is cold. House prices and transactions tend to fall from October to March. Towards the end of March, demand is trending upwards so prices will pick up, too.
Though this means there are fewer opportunities during this time, buyers in general – and specifically landlords if they can deal with a void period while they ensure the property is in good condition to let out during the winter - could use it to their advantage. Sellers might be more eager to sell and you will have more bargaining power – it can be easy to find something below the asking price, which of course in the long-term can increase landlords’ rental yields and capital gains.
There is also a slight bump in demand mid-September. Kids are back to school and families are often looking to move.
What about Brexit?
Brexit is undoubtedly having an impact on the UK housing market as it is trying to deal with the uncertainty.
One surveyor told the Guardian that, “Brexit is having a marked effect on sales and prices, reducing both by up to 10%”.
What landlords need to do right now is hold their nerve and adopt a long-term view. There are options out there and even first-time buyers could consider buying an investment property.
When Should You Buy Property?
While there are clear seasonal trends to house prices and the market has more opportunities during the second and third quarter, the right time to buy always depends on you and your objectives. Every season can have its pros and cons and you have to find the right time in terms of your personal circumstances and how you’re developing your buy-to-let business.
If you’re predominantly driven by asking price, then it might be that late autumn and winter are the best options for you, but be wary of the possible challenges of letting at this time, especially if the property will need work doing before you can let it out.
As always, think about your wider buy-to-let objectives and how buying a new property fits into your wider strategy.
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