With the dust settling on the Covid-19 pandemic, and broad hope that we are now finding a way out of its grasp, the fallout after a frantic year in the housing market is starting to be examined.
Due to surging demand and limited supply, house prices rocketed throughout 2020 and into 2021, rising to all-time highs in the majority of the UK. This incredible level of competition led to buyers making fast, pressured purchases, with many agreeing to pay well above the asking price just to secure the purchase.
Today, however, it appears that a lot of these buyers regret the decisions they made and the prices they paid while trying to secure a home in the busiest market of a generation.
Aviva’s How We Live survey reveals that 50% of people who bought a home during the pandemic now regret the amount of money they paid for their home. This compares to just 12% among those who bought before the pandemic.
Almost a quarter of pandemic buyers say they paid over the asking price, compared to just 8% among people who bought before the pandemic.
The cause of this regret and overpaying can be found in the rest of the data. An astonishing 94% of pandemic homebuyers say they felt pressure to act, move, and buy quickly. The average buyer was signing a contract having only spent 46 minutes viewing the home.
This pressure to buy quickly is what contributes to overpaying. It’s the fear that someone else is going to swoop in and steal it from under your nose. And not only does this pressure cause you to over-pay, it also makes you miss things when viewing the property; it hinders our ability to think rationally and cautiously.
As a result of this, 92% of pandemic buyers say they have since discovered problems with their new homes that they didn’t notice while viewing.
With the housing market still buzzing and prices still high, Aviva offers some sage advice to wannabe buyers.
Owen Morris, managing director, personal lines, Aviva says:
“Our research reveals many people are finding problems with their properties only when it’s too late.
“These range from more minor irritations, such as the need to decorate, to more worrying problems such as crumbling brickwork or a risk of flooding.
“It can be easy to fall in love with a home on first viewing, but we’d urge people to do their homework and proceed with caution when making one of the biggest financial decisions of their lives.”
The biggest problem with over-paying for a home is the risk of entering negative equity. This is when you’re paying for a mortgage that is worth more than the home you’re using it to buy.
With house prices at an all-time high, they can, providing there are no further unexpected global events – only decline over time as demand starts to level off. So a house worth £200,000 today might be worth just £185,000 down the line. But your mortgage will still be for £200,000. This means you don’t really have the option to sell the home and use the funds to completely pay off the mortgage. Negative equity.
Take great care when placing an offer for a home. Do your research and find out exactly how inflated its value is today compared to the recent past. You can do this on Zoopla and several other online hotspots.