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Should I Sell My House Now and Buy Later?

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Events are moving fast and there’s economic gloom aplenty in the news. It’s not all froth and with a recession likely to last 18 months, more interest rate rises to come, and many buyers sitting on their hands, there’s a strong chance house prices will fall. So, should I sell my house now and buy later? Let’s break it down.

A House Price Crash?

It’s not a crash – just a price fall. Predictions range from property portals suggesting a five per cent drop in house prices next year to Savills forecasting a drop of 10 per cent. And of course, all this comes after a 20 per cent rise in average house prices since early 2020.

Yet even without a market crash the bravest may consider selling quickly, renting for 12 months, and then buying after prices have dropped and stabilised.

So, should I sell my house now and buy later? The pause between selling and buying allows you to select exactly the right area and the right property without the frenzy of doing everything simultaneously. Best of all, perhaps, there’s money in the bank after selling high and buying low – but is that really the case?

Sell-Rent-Buy is a tactic I have occasionally suggested in the past but there are plenty of pitfalls and it needs the most careful consideration, planning and family agreement.

Will there be a drop in house prices in 2022 / 2023?

Few would have thought house prices would rise during a pandemic, but they did. So, will house prices definitely fall in a recession? Probably, but not definitely, so the sell-rent-buy tactic is a financial risk. If prices stay static or even rise a little, you’re in trouble.

Is it better to rent or buy in the current market?

Renting comes with challenges

It’s a big family decision with needs like proximity to schools, jobs, transport and the rest. Once you have decided where to rent, there’s the challenge of finding a place. Supply lags behind demand and in September 2022 – the latest housing market data available – letting agents in the Propertymark trade body reported just one property available for every 13 potential tenants.

Then there’s the renting cost

A lettings index, suggests the average UK rent – for something like a two-bed apartment – is about £975 per month outside of London and £1,980 per month inside. If you are outside the capital and need a three-bedroom house for a family, your rent could be £1,500 a month – that’s £18,000 for a full year. Inside London and you could be talking £30,000 or more. 

If you’re unfamiliar with renting, or haven’t done it for many years, we’ve got a complete guide to renting a house for you! There are scores of other more detailed guides to different aspects of renting, too.

The other costs with sell now and buy later

It’s been estimated the average house removal is £649 – you’ll pay twice of course, moving to rented accommodation and then to the home you buy. If you don’t take all your furniture to the rental property, you could add £3,000 or so on top for 12 months in a professional storage depot.

Removal Quotes

And don’t forget inflation, currently at 10 per cent: money in the bank between a sale and a purchase slowly loses some of its value too.

So far it sounds like a lot of outlays, a frightening amount of organisation and a fair bit of risk – but it’s not a one-way street.

The upsides of selling now and buying later

Obviously while you rent you have no mortgage costs which may be a net saving.

Renting is also surprisingly hassle-free in most cases. If something goes wrong you have a letting agent or a landlord to undertake repairs – and although there are some stories of rogues in the industry, the vast majority work hard to get and keep good tenants.

Renting allows time to judge a location and type of home. You can confirm your decisions or, conversely, get a mistake out of the way in just a few months rather than suffer buyer’s remorse and regret an expensive house purchase you may have to live with for years.

Most of all, there’s the potential – but remember not the certainty – that you might end up spending less money by buying after prices have fallen.

In the example I’ve given here, you need to be confident your next home may fall in price by at least £40,000 in London or £25,000 outside to break even – bigger falls might mean you get more for your money when you eventually buy.

Mortgage Quotes

It’s a decision only you can take after balancing the financial risk with the upheaval. It’s not a tactic for everyone but some feel the breathing space and extra time to choose gives a better result in the end, and possibly a bargain purchase too.

If you do it, good luck – and let me know how you get on.

Last Updated: November 7th, 2022