Peterborough 2nd and 3rd Time Buyers Finding it Tougher (and slower) to Move up the Peterborough Property Ladder.

Post lockdown, the need for Peterborough families who want bigger homes has meant Peterborough homebuyers must now pay considerably more to trade up to that larger home…

One thing that has come out of lockdown has been the inexorable movement of Peterborough households wanting to upsize to a larger home. Often considered to be first time buyer properties, the smaller 1st step on the property ladder one and two bedroom properties are selling quite well, yet demand for those properties on the 2nd and 3rd step rungs on the Peterborough property ladder (i.e. the three or four bedroom homes) has been even greater.

This demand has been driven by Peterborough buyers looking for more living space, especially those looking for an area or room to work from home (be that a bedroom, reception room or even an outbuilding converted into a study).

The average asking price of a 3 bed Peterborough home is £215,700, whilst for a 4 bed Peterborough home it stands at £329,500

As you can see, quite a jump for an extra bedroom! The heightened contest for 2nd and 3rd step Peterborough homes for that extra bedroom has pushed demand to a record in October for those looking to take the next step up the ladder. Historically, as a family and its household income grow, the need for more space has permanently been the No.1 reason for moving home, yet now there is a new need for additional space to facilitate people working from home. This means not only do we have growing families wanting larger Peterborough homes, there are also the people needing the same larger homes for space for a home office. Therefore, looking at the current stats, as you can see, the Peterborough property market is doing quite well…

47.5% of all 3 bed and 44.5% of all 4 bed homes in Peterborough are sold (subject to contract)

Roll the clock back to pre-Covid and ask any Peterborough homeowner who had enough bedrooms for their children if they wanted an additional bedroom, and most homeowners would say that was very much a ‘nice to have’, yet not a ‘must have’. With us all being cooped-up over the spring this year, demand for additional rooms is at a high, with those presently looking for their next larger Peterborough home are probably going to find that only offers close to (if not sometimes over) the asking price will be accepted.

Even though no properties sold during lockdown, putting the Peterborough (and UK) property market on hold for many months, many more people buying their next Peterborough home will have more than made up for it since lockdown was lifted as the portals have stated if the UK property market remains at its existing trajectory, then the number of properties sold YTD by the end of October 2020 will be greater than YTD October 2019.

Yet all these properties sold are causing another issue. Just because a property becomes Sold Subject to Contract (SSTC) doesn’t mean the property is actually “sold”. Before going into Covid, it was taking approximately 19 weeks between agreeing a sale price (and instructing lawyers) to completing the sale. Yet, because we are nationally running at 140% to 150% of properties SSTC (than where we normally are at this time of year), many of my estate agents colleagues are having to manage expectations with buyers and sellers, and tell them that the date they are going to move will take a little longer.

The elephant in the room is that the temporary stamp duty holiday ends on the 31st March 2021

It sounds an age away, yet trust me, nothing could be further from the truth.  Adding an extra month for the additional homes in the bottleneck means even if the sale of your Peterborough home was agreed today, that would take us to the 3rd week in March … that’s cutting it very close for the stamp duty holiday.

It is so fundamental for buyers and sellers of Peterborough homes to work meticulously with their estate agent, solicitor and mortgage lender. For example, there are less staff in the local authorities to do the local searches, bank staff are working from home meaning mortgages are taking much longer to get approved, and conveyancer/solicitors are snowed under with work. Therefore, if you get a document that needs filling in, are asked to provide documents, pay disbursements or questions need answering, do it immediately and without delay. A day here and day there will snowball and could mean you miss the stamp Duty holiday … and that could cost you thousands and thousands of pounds.

The bottom line is that we haven’t seen this sort of pressure on the UK property market since 1987, when dual-MIRAS was abolished. Now, as we are slowly starting to come out of Covid, with many legal and banking staff working remotely or still on furlough, the perfect storm has occurred with unprecedented demand from buyers looking to move post lockdown. The best advice I can give is, as soon as you put your property onto the market, find a solicitor that has the capacity to work with you, then instruct that solicitor to start work immediately to prepare the paperwork, so once you have a buyer, things can move more smoothly and quickly. The last thing you want is to lose out on saving thousands of pounds by missing the stamp duty holiday by a whisker.

Why are Some Banks Reining in Over-Enthusiastic Peterborough Homebuyers and Buy-to-Let Investors

The Peterborough property market is an enigma and chock-full of contradictions.

Not with standing an economic recession and forecasts of property values dropping, nobody seems to have informed the Peterborough homeowners selling their homes and those Peterborough people looking to buy them. As I have discussed in many recent articles on the locality, the Peterborough property market is booming and property values in some sections of the market are rising, yet amidst enthusiastic reports of gazumping, there are disgruntled and malcontent grumbles about mortgage company surveyors down valuing property on survey.

However, before we talk about the banks and surveyors, let’s look at what is happening in the Peterborough property market now.

Land Registry figures published last week showed unyielding evidence for what everyone in the property industry had been saying since the market reopened after a seven-week lockdown on May 13: property prices are rising.

The average value of a Peterborough home rose by 0.5% in the year to June to £223,300

Many expect the statistics to show more rises following the Stamp Duty Holiday announced in July, which unbridled a burst of buying activity in the Peterborough property market. In many (not all) sectors some properties have been going for over the asking price whilst some have been going to sealed bids.

Some newspapers have even suggested a small minority of homeowners are ‘backdoor-gazumping’, which is genteelly being referred to by estate agents as ‘retuning the asking price’ – as in, the homeowner removing the property from the market, ‘retuning the asking price’ in an upward direction, then placing it back onto the market.

Conceivably enthused by these stories, some house sellers and estate agents might be getting a little carried away and placing overambitious asking prices on homes they are selling. Customarily a property with too high an asking price wouldn’t sell – yet some over-enthusiastic Peterborough buyers are paying over the odds for certain types of properties.

So, let’s look at what is happening to the Peterborough property market (Peterborough plus 3 miles) by house type and the number of bedrooms…

 Number of Peterborough properties
on the market
…and of those –
how many are Sold STC
% Sold STC
compared to those for sale
Detached House103145143.7%
Semi Det House82239648.2%
Terraced/Town House68032848.4%
Apartment52015329.4%
Bungalows37216945.4%

And when we look at the number of bedrooms …

Number of Peterborough properties
on the market
…and of those –
how many are Sold STC
% sold STC
compared to those for sale
Studio/1 bed2166931.9%
2 beds83535041.9%
3 beds141167047.5%
4 beds77134344.5%
5+ beds2188036.7%

As you can see, the best performing type of properties in Peterborough are the terraced/town, very closely followed by the semi-detached houses and the best-selling properties when it comes to bedrooms are 3 beds.

These are quite impressive figures for the Peterborough property market, yet some of the banks are having none of it

They are looking apprehensively into 2021 when furlough/the new job support scheme ends, meaning it’s quite tough for all buyers borrowing high percentage mortgages (i.e. more than 80% to 85% of the value of the property in a mortgage). 

It is even tougher for self-employed buyers (whose income is less than assured) to get those high percentage mortgages – and finally, the banks are most certainly concerned with high percentage mortgage buyers who pay over-inflated prices for property using the bank’s money… hence the down valuing (Definition of Down valuing : the buyer and seller agree a sale price, then the mortgage is applied for with the buyer’s bank and the bank’s surveyor states the purchase price the buyer is paying is too much).

One small note to Peterborough landlords – I am also hearing that some overzealous Peterborough buy to let landlords who are over-egging the potential rental figures on their buy-to-let purchase in order to obtain the mortgage, are also being reined in by the banks.

Now this is not a huge issue (e.Surv – a nationwide surveying firm only reported a 4% increase in surveyors having to down value property in Q2 2020 compared to Q1), yet should you be lucky enough to have multiple offers on your home, ask the agent what the overall buying position of the buyers are. You need to specifically ask what percentage loan the buyer is taking on and the position of the buyer in the chain (they have to find this out anyway by law and you have a right to know that information as the property seller if you ask).

The bottom line is the highest bidder might not be the best buyer for you. It’s true, average property prices are rising nationally, yet this does not mean you should pay over the odds for your next Peterborough property.

If you would like a chat about any aspect of the Peterborough property market – please do send me an email on info@woodcockholmes.co.uk or call me on 01733 303111.