It isn’t too difficult to describe what constitutes a healthy market yet people rarely do because it is subjective and it has an attitude, it does have a number and I will give you that too.
For me, there are a number of things that are required for the market to be healthy and some of the answer relates to what a normal market is, I’ll discuss that in another article.
A healthy market is one where there is confidence not fear, reassurance and not concern, it is a market of balance.
To have balance we need to be in position where property prices aren’t rising rapidly, that breeds fear, fear of missing out and eventually fear of a backlash. Falling prices are the other side of that issue.
The questions you hear that define those moments are ‘if I don’t do it now I won’t ever get on the ladder!’ and then, later, you hear ‘what happens if things worsen, I could lose money on this home!’
Attitude is key and there are three elements to it:
- Confidence that the market is relatively stable. We all want the market to be affordable but in the same thought we want to know that our investment will increase.
- Affordability, we all want to know that if we take on this huge mortgage, this financial burden that we will be safe and we can survive.
- ‘I’m buying a home! ‘This is the most important element and yet the one I don’t think many people properly consider, not in an analytical and almost introspective way.
One of the most common mistakes I have seen people make and I have spoken and worked with many thousands of people through my career so far, is to focus on money, on investment when buying a home.
There needs to be a separation in your attitude.
If you are a property investor then your appraisal of a property should be commercial, calculating, based upon your level of risk aversion be it low or high. Don’t buy a home you want to live in. You should choose to buy based upon your portfolio aim, your business plan, your expected return on investment. Use common sense and don’t shy away from instinct about good and bad property. Buy an investment.
If you are buying somewhere to live then you’re primary question should be, how will my life improve by being here? How will the time I spend here be made special? Buy a home.
Remember this, we can all make more money if we have to; you started with none. I haven’t yet found someone who can make more time; you don’t know how much you started with and, when it’s gone…
A healthy market is one where people make balanced decisions about buying knowing that the average person now moves once every twelve to fourteen years most likely*. (In todays climate how does that make a longer term fixed rate look?)
Average UK House Prices:
The purpose of this series of articles is not to provide you with answers it is to get you thinking. I don’t want you to listen to me or anyone else out there, I want you to ask yourself:
What is right for me?
Get advice along the way, talk to and listen to professionals, the essentials are:
Independent Mortgage Advisor
When you are thinking of buying, of making one of or the largest financial decision in your life, don’t scrimp, work with great people.
A healthy market is also one where the process of buying and selling works smoothly, efficiently and effectively; most importantly, it does those things for the consumer, the customer, the buyer and the seller.
I mentioned there is a number to a healthy market, in my mind it is one point two five million and I’ll explain that elsewhere too.
Please note that there are lots of statistics out there relating to house prices, numbers of transactions and all manner of issues. There is different data, different ways of analysing, different algorithms etc etc etc.
The numbers shown are provided to give context and some may challenge them, suggest alterations, please do your own research and come to your own conclusions. I keep learning along the way and will be over the moon if you do too.
* A report in two thousand and seventeen suggested that the average person moves once every twenty three years.
If you haven’t already, do read: