Buyers fall into one of five categories when buying a home; the aspirant fledgling, those that have been around the block, the savvy long-haulers, the bandwagoneers and the wallflowers.
Aspirant fledglings
These homebuyers possess a strong desire to have a home they can call their own, and put an end to “wasting” money on rent. They are generally optimistic about the market and house prices but, because of their inexperience they are more likely to seek out advice from friends and family, not to mention estate agents, the media and television. Many are concerned that they might be left behind if they do not buy, and that their dream home might escape their reach.
Been around the block
Experience counts for these homebuyers. They are more likely to rely on their own analysis of the market than media reports, drawing on the know-how they have accumulated in previous house moves. Most accept that house prices could fall. The value they derive from owning their home is more important to them than the prospect of a financial return. However, already having a foot on the ladder reduces the fear of being left behind by rising house prices.
Savvy long-haulers
This group of buyers make up the majority of investors. They are investing for the long-term, having considered other investment options available to them. Often, their investment is to provide for them in retirement. They tend to give greater consideration to the timing of their purchase than homebuyers do. Media and television reports are pretty unpersuasive to them, as are the proclamations from property investment companies. Long-term trends are more important to their price predictions than is the case for many homebuyers.
Bandwagoneers
These investors have entered the property market because they had seen other investors doing so. They are much more likely than other investors to be influenced by television programmes and media reports about how lucrative buy-to-let can be and the future of house prices. Property investment companies are also relatively more persuasive to them. They make up the minority of investors, however.
Wallflowers
These participants may well fall into one of the above groups. Currently standing on the sidelines, they carefully consider the timing of their purchase and are ready to enter the market if they see prices fall. Falls in price represent a buying opportunity, possibly because they consider that property is currently over-priced. Although they still expect prices to rise, a greater proportion than other participants expect, or perhaps hope, that prices will fall in the next year.
Adrian Coles, director general of the BSA commented: “This report looked to examine how people think about residential property purchase and how they form their expectations of future movement in house prices. People are motivated by a variety of reasons to enter the property market, a diversity that is likely to add to the resilience of the market should house price growth decrease or even fall.
“In addition, different groups rely on different sources of information to construct their expectations of future price movements and the general state of the housing market. The report suggests that those buying property generally do give great consideration to a wide number of factors and enter the market with their eyes open.”
