'Is Now a Good Time to Buy a Greenwich Home?'
What if Greenwich house prices do drop? Then, surely, it’s going to be wise to wait and save lots of money? But what if I told you that for most Greenwich homebuyers, waiting could end up costing them a lot more money than what they would save on their purchase price!
This is the question many people are asking right now, and the answer depends on your circumstances.
I pride myself on my ability to provide objective, fact-based information on the Greenwich property market so potential Greenwich house sellers, landlords and buyers can make the best decision for themselves.
My role is to educate the potential Greenwich house sellers, landlords and buyers and to provide them with the best possible information available, not to convince them to do something they don’t want to do.
To answer that big question in the title of the article (is now a good time to buy a Greenwich home?), it comes down to three things.
1. How much will you get for your Greenwich home when you sell it?
2. How much will you have to pay for your new home?
3. How much will that move cost you in ongoing monthly mortgage payments?
To answer points 1 and 2 correctly, I need to address point 3, which relates to interest rates.
The click-bait newspapers and websites are pushing messages to potential sellers and buyers towards the top end of the sensationalised scale. I prefer to define what is happening, i.e. the reality.
On the face of it, it doesn't look good.
The average 5-year fixed rate mortgage has risen from 2.11% at the beginning of January this year to 6.21% in early November.
Yet even though the Bank of England increased the base rate by 0.75% on the 3rd of November, the average 5-year fixed rate mortgage dropped by 0.22% between the 3rd week in October and bonfire night. As interest rates go up, mortgage rates are coming down even though interest rates are projected to increase to 4.5% by the autumn of 2023.
So, why did the Bank of England mention in the first week of November that the UK is facing a two-year recession? Some might think this controversial, yet the Bank of England wants a recession as it will aid in reducing inflation. It’s as plain and simple as that!
Instead of relying purely on interest rates to reduce inflation, the Bank of England is hoping if we go into some form of shallow recession, it will not need to increase interest rates much above the anticipated 4.5%.
However, whether it's interest rates or a recession, both will slow the number of home sales in Greenwich and will indirectly affect Greenwich house prices.
So, will Greenwich house prices drop? By how much and what money will it save you if you wait?
I have spoken recently in my property blogs about the Greenwich property market, and the prices that will be achieved for homes in late 2023/early 2024 will be between 5% to 10% lower than what is being achieved today. There is no point in repeating why (message me if you want those articles), but in essence, increasing mortgage rates, inflation and affordability will mean the price people can pay for a Greenwich home will be curtailed because of those factors. Let's assume a reduction of 10% in Greenwich house prices.
Around 81 in 100 existing homeowners are buyers. When they sell their home, they almost always move upmarket regarding accommodation and location. Hence, they will pay more for the home they buy than the property they sell.