Dear reader, as always, first and foremost - I hope you’re doing well...
We're fine, OPEN ONLINE and continuing to provide the best service that we can for our Landlords: signing new Tenancies and Renewals (with significant increases), taking care of maintenance and ensuring your asset is fully managed in every sense.
In addition, we are banking the enquiries in terms of buyers and sellers, completed on another flat sale in the city today so in terms of our activity, there's plenty going on.
So, what does all this activity mean for the future of the housing market in general, and how will transactions and capital values be affected post lock-down?...
In this newsletter, I'm going to take a look into my crystal ball and tell you exactly what the next 2 years are going to bring... I wish! Okay, well I'm going to use the evidence that is available now, with a bit of reasoning and get as close to that as I possibly can...
As always, updates on other areas will be sent out in due course.
One thing we can be certain about: the market needs certainty
As you're most likely aware, the housing market thrives on positive consumers and confidence which ultimately is created through CERTAINTY - throw into the mix: easy to access mortgages, good employment rates, resulting in low levels of interest payments versus wages... ultimately increasing affordability and creating a brisk and buoyant market.
We got all of this back in December 2019 with a majority government and as a result, we saw record 4-year levels of activity from January of 2020: buyer demand outstripping supply, leading to 11% more completions and a 2-3% up-shift in capital values with definite signs of more increases to follow.
Even in lock-down - a staggering 97% of sales listings remain online - a clear vote of confidence that for now, the market is holding its own and staying strong.
Source: Rightmove House Price Index April 2020 - download here.
How can a market be strong without viewings and offers?
Prior to last year's election, we were dealing with BREXIT (remember that small thing... it seems a lifetime ago!). The uncertainty surrounding our membership in/out/majority/minority/second referendum etc slowed transactions down considerably, which meant a lot of home movers saying, "Hold on guys, let's just wait to see what happens..." and therefore we experienced a significant amount of pent-up demand.
This demand was the reason behind the record numbers at the start of this year - raring to go, and then... lock-down - so instead of being satisfied, more uncertainty meant pent-up demand Round 2!
So now, we have consumers that were already wanting to get moving that waited last year who are doubly eager as a result of waiting again.
Essentially, when we are 'released', I think we're going to see plenty of, "At last, let's get moving" moments - after all, if buyers liked the look of property 6 months ago, there shouldn't be any reason to dislike the look of property a few months on.
Survey results are in...
A very simple poll from Rightmove asked the following 2 questions to get a better idea of consumer confidence pre and post lock-down:
Before lock-down, what were you planning to do?
Buy for the first time 40%
Buy and sell a property 27%
Buy a property 22%
Sell a property 9%
To rent a property from a Landlord 2%
What impact has the lock-down had on your progress or plans to buy, sell or rent a home?
Going ahead as planned 39%
Postponed, will go ahead after 55%
Withdrawn from the process 6%
In summary, these results go some way into backing up the momentum we saw at the beginning of the year - clearly, there is an appetite for consumers, with the furlough scheme and mortgage availability - all the signs are present to facilitate this appetite - movers are ready.
Are rents going up?...
I mainly put this down to two things:
a) The media (Tenants are very well aware of the rising costs for Landlords)
b) A pro-active Agency that offers an EXCELLENT MANAGED SERVICE which Tenants are prepared to pay extra for
Crystal ball time from me, the market is going to...
Sitting on the fence is a bit boring isn't it, so... crystal ball time:
Firstly, will sales start to pick up with higher values in the horizon?... In my opinion - yes - not straight away, I'm sure there will be a few months, taking us to the end of the year perhaps, where consumers and mortgage lenders will be adjusting to the 'NEW NORMAL'.
Speaking of mortgages, an interesting point to note which definitely supports a quicker rise in transactions: unlike the economic crash of 2008, this time we do have access to credit at affordable rates (back then, buyers were asked to provide 40% deposits!).
Okay so more transactions, does that mean it'll be at the expense of vendors letting property go at lower levels?... Not necessarily - historically, drops in the market have usually been due to lenders repossessing properties - with the government assistance in place, mortgage holidays and extremely low interest rates... debts will build up significantly slower, therefore reducing the need to repossess.
At the start of next year, I see the momentum from the double pent-up demand start to take hold - perhaps a touch of hesitancy if a Coronavirus vaccine is not yet available, meaning longer social distancing measures perhaps - but virtual viewings are here to stay, which means both buyers, vendors and agents will save an incredible amount of time, conversion of viewings to offers will be at an all-time high which will most certainly accelerate the initial momentum and therefore should, in my view, show house prices starting to increase... and will continue to do so into 2021.
This government is currently investing billions into our economy - housing is a crucial part of kick-starting retail, people spend money when they feel invested in their homes and therefore I would not be surprised to see more home-move incentives come our way, especially keep an eye out for announcements on new stamp duty initiatives this year.
In terms of rents: over the next two years, I see continued growth each and every single month.
If you are interested in buying or selling, whether it's investment stock or your dream family home - please feel free to contact me directly by replying to this email, I am more than happy to go into the forces that affect our market in more detail based on your specific circumstances and would be happy to help share my experience, latest news and advice.