A survey released this week has shown that 4 in 10 British people think that properties in their area are overpriced, and Rightmove have reported on price sensitive markets, with buyers reluctant to even enquire if a property is priced just a couple of percent too high. After years of unprecedented property price growth, buyers are becoming more cautious and unwilling to pay over the odds as property values stabilise.
A couple of years ago, a buyer could pay slightly more than a properties worth, confident that their properties value would exceed what they paid within a matter of months. When prices are moving more slowly, buyers need to know that they are getting a good, fair deal – they can no longer rely on rapidly rising house prices to cover their back. So how do you know that you are getting a good deal?
• Check recent sold prices in the area
Sold prices are a much more reliable indicator of value then “for sale” prices. Do your research on comparable properties using Rightmove’s fantastic tool: http://www.rightmove.co.uk/house-prices
• How long has the property been on the market?
Ask your estate agent how long the property has been on the market, if it was on the market with another agent before them and what the average sale time is in the area. An above average amount of time on the market is usually a good indicator for if a property is overpriced.
• Is it an investment property? Has a RICS valuation been conducted?
Good developers will have a copy of their independent RICS (Royal Collage of Chartered Surveyors) valuation, and will be happy to share this with investors. This will give a good, unbiased idea of the value of the property.
• Is the area earmarked for investment?
If funds for investment have been committed to a neighbourhood, or work is underway, it can cause an increase in house prices as demand rises in the area. In this case, it is important to look at these investment plans carefully as these could be influencing values more than past sold prices, even if the neighbourhood looks the same on the surface. For more tips on investing in an up and coming property hotspot follow this link http://heatongroup.co.uk/news/how-to-spot-an-up-and-coming-property-hotspot/
These are by no means the only indicators, it is important to take other factors into consideration; Amount or renovation work that needs to be undertaken, if the property is for investment or to live in and if the property is for long or short term gains. Keeping your goals in mind and conducting thorough research should ensure that you pay what the house is worth.