Buying A Home More Important Than A Summer Holiday
In what Rightmove is describing as the “rulebook being rewritten”, the mini boom the housing industry is currently going through is accelerating rather than decreasing.
Usually the summer holidays are a time of relief for those in the industry, as buyers indulge in summer holidays and time spent off with family, rather than opting for packing up a home and the stress of moving. However, this summer, more property has been put on the market and more sale agreed than in any month in the previous 10 years. The figures are up a massive 20% on the previous highest month, and have a total value of over £37 billion.
Rightmove has been tracking the market date for 10 years and has seen a 1.2% property value decrease over the summer months on average, this summer the online portal has reported only a slight fall of 0.2%, which has been due to London’s more normal seasonal fall of 2%, reversing what would otherwise be an unseasonal national rise.
Miles Shipside, Rightmove director and housing market analyst comments:
“There have been many changes as a result of the unprecedented pandemic, and these include a rewriting of the previously predictable seasonal rulebook for housing market activity and prices. Home movers are both marketing and buying more property than we have recorded in any previous month for over ten years, helping push prices to their highest ever level in seven regions. Rather than just a release of existing pent-up demand due to the suspension of the housing market during lockdown, there’s an added layer of additional demand due to people’s changed housing priorities after the experience of lockdown. This is also keeping up the momentum of the unexpected mini-boom, which is now going longer and faster. We associate this time of year with diving into the pool rather than the property market, and of sand and sun rather than bricks and mortar, but buyers have had a record £37 billion monthly spending spree.”
The previous record was set in March 2017, but even then, the figures are showing a 38% increase on this time last year. The increase has largely been put down to the Chancellor’s decision to implement a stamp duty holiday, however the increases being seen by Rightmove suggest that this may not be the only contributing factor. The increase in activity is being seen across the sector, with a 29% increase in first-time buyers, 38% in the second stepper market and 59% for the larger, top of the ladder homes.
When comparing the number of sales agreed against the same week in 2019, there has been a 60% increase, with 44% more properties coming to the market than the same period last year.
Shipside also observed:
“More property is coming to market than a year ago in all regions, and at a national level the new supply and heightened demand seem relatively balanced. However, those expressing most desire to move on are unsurprisingly in London and its commuter belt. London has 69% more properties coming to market, with the South East at 60% and the East at 56%. With work and transport patterns potentially changing most around the capital, commuter-belt properties need to have more appeal to prospective buyers than just proximity to a station. Many buyers do appear to be satisfying their new needs in these regions, as the number of sales agreed in each is also at a record level. The out-of-city exodus has helped push prices to record levels in Devon and Cornwall, for example, where working from home means a different lifestyle much closer to your new doorstep.”
The increase in properties coming to the market and in agreed sales is putting extra pressure on the industry, which is certainly being felt in the legal industry and with lenders. With a ten year high, that is expected to increase further whilst buyers approach the end of the stamp duty holiday, there is the worry on how time scales and deadlines will be affected.
“Not only are we seeing an unusually busy summer period, but also parts of the lending and legal sectors are having to cope with capacity constraints, as some staff will still be on furlough while many will still be working from home. Patience will be required, especially with some lenders limiting their product ranges due to capacity constraints in their ability to process mortgages. To minimise the risk of missing the 31st March stamp duty deadline it’s best to plan well ahead. This busy pace of the market looks set to continue in the short term, and although the market has proven resilient since reopening we still need to be mindful of the wider economic concerns as the year progresses.”
Speaking to those in the property industry, the increase in demand is certainly being felt by agents.
Kevin Shaw, Managing Director of Residential Sales at Leaders Romans Group (LRG), said:
“This is positive news for both the property sector, and the wider economy. The market performed well in Q1 this year, and has picked up since lockdown restrictions were lifted. Pent-up buying demand is a key factor for this post-lockdown emergence, as is the increased demand for living space and gardens. As many of us continue to work from home, people have realised business can function well while doing so, and so no longer want to commute into big cities five days a week, or live in urban environments closer to offices.
“There is real demand to live in rural locations providing green space. The recently announced stamp duty holiday is another market accelerator too, with many investors and buyers exploiting the savings that are to be made. We’ve also seen stock levels increase – growing supply gives buyers more choice. These figures are extremely positive, but unlikely to lead to a sustained boom in prices. “
Dominic Murphy, Managing Director of DM & Co. Estate Agents in Solihull, added:
“The market is showing incredible signs of resilience post-lockdown. The chancellor’s announcement has certainly contributed to this bounce back and the market is more active now than it has been in the last ten years. July 2020 was the best month in DM & Co.’s history .
“We’re seeing increased activity across all price brackets and expect this to continue well into Q4 as buyers will be doing all that is in their power to push sales through before the end of the stamp duty holiday. I suspect that the market will remain buoyant until job losses filter through and really start to hit the market in full force and mortgage-ability starts to be questioned. If you can be in a chain-free position, you are most likely to be taking advantage of the momentum that the market is seeing and not be open to chains breaking further down the line.”
Let us know how your firm is being affected by the current demand and what effect it is having.