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Thinking of selling your home? Then it's essential that you understand how house prices are faring in your local area. For those selling, getting the low down can make you money, as you will have a better understanding of just how in demand your property is and can price it accordingly. If you're a buyer, it can be the difference between buying into an area that is on the up, and buying into one that is in decline.
Signs of a booming market are probably the easiest to spot. One of the biggest give-aways is a growing number of estate agencies opening in the area advertising property for sale, as they look to cash in on likely future growth. And look at the way they market their properties - the more aggressive their advertising, the more confident they are that they will be able to sell, or let, what they have to offer.
With this in mind, check out the property for sale sections of any local papers and magazines - the thicker they are with advertisements, the better an area is doing. Other tell-tale signs are lots of building work and regeneration. A skyline full of cranes and scaffolding is a sure fire sign that property developers are moving in to accommodate the influx of new residents.
A strong signal that house prices are booming is if an area is starting to 'gentrify'. Gentrification is the conversion, over a period of years, of less developed and desirable districts into thriving neighbourhoods occupied by professionals and young families. It starts with the arrival into an area of 'pioneers' - often people with money to spare and more often than not those in creative occupations - such as designers - people who are attracted by a particular feature of that area, such as run-down period properties, derelict old warehouses, or simply proximity to a town centre. Following their arrival small independent delis, coffee shops and art studios tend to open up, along with new bars to cater for the new crowd and an estate agency or two.
More people arrive on the back of this and before long more bars, shops and estate agencies start to set up in the area - which in turn attracts more established chains. The sharper prices rise and the quicker properties sell, the hotter an area is.
The signs of a stagnant market are not always easy to discern. Indecision and stalemate are the biggest symptoms, as buyers and sellers stick stubbornly to their guns. As with the falling market scenario, there will be less property for sale fewer homes will be on the market as people sit on their hands until they have a better idea of what is happening. Meanwhile, estate agencies cut back on advertising and marketing, as they are unsure that they will be able to generate a sale or find tenants.
If the stagnation period continues over a length of time, businesses will start to close down. More generally, while an area will retain the same character, the number of businesses arriving and new properties being developed starts to tail off.
Stagnant markets can often be stimulated by interest rate cuts, which encourage people to start buying again.
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