HOMEBUYERS IN A HURRY ARE TRADING IN TO TRADE UP
For those already on the property ladder, the option of part exchange offered by many housebuilders makes now the ideal time to move on up.
By Penny Mack, Chelgate Ltd

Whether or not now is a good time to climb on to, or move on up, the property ladder is a hot issue. Some people are agonising that if they don't buy now they never will, while others are waiting in the hope of the bubble bursting and property prices returning to realistic levels.

Last month, we heard the Halifax say that houses prices had risen by 16.9 per cent in the last year - the strongest annual rate in 12 years. Fuelled by continuing strength in consumer confidence and a shortage in supply, the Halifax said, prices have jumped 8 per cent in the last four months alone - pricing the average home at £101,980. The same analysis forecast house price inflation of 10 per cent for the next year.

On the other hand, financial information group Experian cautioned us that the property boom is already over in some of the more sought-after areas. In areas such as Cambridge, Newmarket, Oxford, Brighton, York and the London Boroughs of Lambeth, Tower Hamlets they warned that low demand could cause the value of homes to fall by as much as 10 per cent.

On balance, there is unlikely to be a 1980s style bust and so, despite some exceptions, prices will continue to rise - although they may begin to do so less quickly. The difference today is that while the cost of purchasing a house is increasingly expensive, mortgages are becoming increasingly affordable, bridging the gap between high prices and affordability. Today, only 15 per cent of purchasers' gross incomes are spent on mortgage payments, down from 21 per cent only last July and substantially more in the late 1980s, when interest rates were higher. Now is definitely the time to take out a mortgage.

The question, then, is perhaps not 'Is now a good time to buy?' but 'Is now a good time to sell?'. Anyone who has had to sell a property, particularly in a confused property market, will recoil at the thought of buyers pulling out, chains collapsing, offers being lowered or even the nightmare of failing to find a single interested buyer for the property.

This is why part exchange is an ideal choice in today's anxious property market. Part exchange is a simple procedure whereby a housebuilder buys your home, at a price based on an average of several quotes from local estate agents, and takes the value off the price of your new home. It allows you to move on up the property ladder at a time when it is best to do so, without having to worry about how a financial slump might affect your chances of selling your existing home.

Ian and Tracey Atkinson bought a house at Trafalgar Green, a development by Wilson Connolly in Ashingdon in Essex, using part exchange. The family had been living in their previous home for 13 years and were apprehensive about the difficulties of selling. However, they were able to sell their existing three bedroom house to Wilson Connolly for £123,500 when they bought a larger three bedroom house for £160,996. The only money that exchanged hands was the £37,495 difference in price. Had it not been for the option of part exchange, they would probably have remained in that property.

"If we were going to move, we wanted a house that we could buy using part exchange," said Ian Atkinson. "Then we found the house we wanted in the right area and knew immediately that we wanted to buy it. Using part exchange relieved a huge burden of stress, making the whole process much more tolerable. It only took six weeks from when we first reserved the house to the date we moved in."

Jo Kenrick, sales and marketing director of Wilson Connolly, added: "Part exchange is the ideal solution for people like Ian and Tracey who have spotted their dream home but can't commit to buying it until they can find a buyer for their existing property. It only takes a matter of days for them to put a deposit on the new property and for us to give them a price for the old one. It may sound too good to be true, but there's no catch. We will always offer the market price for a property, based on independent evaluations.

"Other advantages to the purchaser include savings on estate agents' fees, the speed at which the exchange can take place, and the fact that there is only one customer involved, so the timing is very much in their hands."

Essentially, part exchange allows people moving home to buy when the time is right for them, not when the market dictates it. It is no surprise that housebuilders across the country are reporting that part exchange purchases are on the increase - it seems to be one of the few things about the property market which is unambiguous and not prone to a sudden change in direction.

Published in HOME MAGAZINE, August 2002.

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