Conveyancing firms “stabilise” and Rightmove predicts further house price increases

Search Acumen, the property data insight and technology provider, has issued the latest edition of its quarterly Conveyancing Market Tracker for Q3 2021, revealing that the number of active conveyancing firms has recovered to pre-pandemic levels, stabilising at just over 4,000 for the second quarter in a row.

The report shows that the top-ranking conveyancing firms registered their biggest total number of transactions at this end of the market since Q4 2014 at 79,402 transactions between July and September.

Across the whole market, completed transactions dropped to 279,689 in Q3 2021, a 4% decrease from the previous quarter but still a 65% rise on Q3 2020 as activity continues to increase. Business levels for the average firm remain elevated at 70 transactions during Q3 – up 54% annually from 45 in Q3 2020.

The top 20 conveyancing firms recorded the strongest quarterly performance, with activity rising 4% from Q2. This came despite a 4% drop in transactions across the market as a whole, as activity cooled slightly following the tapering of the Stamp Duty Land Tax (SDLT) holiday at the end of June 2021.

The research also shows that the number of active conveyancing firms stabilised during Q3. Figures show that a total of 4,021 firms registered completed transactions between July and September, down from 4,048 between April and June. But this still compares well to recent trends: prior to Q2 2021, the number of active firms per quarter had persistently lagged below 4,000 since Q3 2019, and fell as low as 2,411 during Q2 2020 at the height of the first Covid-19 lockdown when property market activity was heavily restricted.

Search Acumen’s analysis shows that 16% fewer conveyancing firms were active in Q3 2020 compared with the same period this year despite the SDLT break having been newly introduced by the Government in July 2020 to support the pandemic recovery.

However, with the SDLT holiday drawing to a conclusion over the previous quarter, there was a slight decrease in the number of active conveyancing firms across Q3 2021. While 4,040 firms registered completed transactions in July 2021, this dropped to 3,999 in September 2021 as market activity cooled slightly compared to the height of this year’s rush of transactions.

Andy Sommerville, Director of Search Acumen, commented:

While this latest data shows a slight slowdown in the conveyancing market from the staggering heights of the first Stamp Duty deadline in June, it is important to keep the bigger picture in mind. The reality is that, for another three months, strong market performance has brought continuing pressures and heightened expectations of conveyancers and real estate lawyers to turn people’s property buying ambitions into reality, often to very demanding schedules.

 The tapering of the SDLT holiday during Q3, before the final curtain fell in September, meant activity dipped slightly compared to the frenzy seen earlier in the year when bigger savings were up for grabs. However, the conveyancing market has continued to operate at an elevated level, and those firms ranking in the top 100 are juggling close to record levels of business to keep the nation moving.

 As another turbulent year approaches its close, I would urge the entire industry to take time for reflection. Conveyancers have moved mountains to help people complete moves this year, and the spirit of innovation and openness to change must continue into 2022.”

Looking ahead, property website Rightmove’s recently released house price forecast suggests that the property market will continue to be busy in 2022, albeit less frenzied than in 2021. The report predicts that the national average house price will rise by another 5% in 2022, with 3% increases expected in London, as strong buyer demand and a historically low levels of available property continue to push up prices in 2022.

Rightmove’s Director of Property Data Tim Bannister says:

“It’s been a hectic 18 months for the property market since the end of the first lockdown, with changed housing needs driven by the pandemic inspiring many moves, and the stamp duty holiday encouraging some movers to bring their plans forward. The net result as we approach the start of the 2022 market is the lowest ever available stock of property for sale per estate agency branch, yet with ongoing high buyer demand. This imbalance between supply and demand has resulted in buyer demand per available property being at near record highs, suggesting that the 2021 scenario of multiple buyer bids on a high proportion of properties when they come to market is set to continue in the new year.

We do, however, expect the pace of rises in 2022 to be slower than in 2021 due to increasingly stretched buyer affordability following this year’s rapid rises in average prices. Slowing in the pace of price rises and activity is likely to be more evident in the second half of the year as base rate rises, higher inflation, and higher taxes begin to weigh more heavily on buyer sentiment. Therefore if sellers are too optimistic on their asking price in the first half of the year, they risk missing the most active part of the market. While local markets vary considerably in their supply demand imbalance, Rightmove’s unique access to this detail and scale of data underpins our forecast for overall continued upwards price pressure in 2022 despite the prospect of base rate rises.”

Rightmove also suggests that “late-bird” movers will form a significant proportion of activity in the year ahead, which should see more properties come to market, especially when combined with the usual surge of speculative spring sellers who look to get on with their moving plans early in the year.

There are already encouraging signs, with a 19% jump in November in the number of people requesting for agents to value their home via Rightmove compared with the same period last year.

Bannister forecasts:

“While Rightmove sees a continuing busy market in 2022, we forecast it to be less frenzied than 2021 especially if the current scarcity of properties is eased as more owners decide to come to market in the first half of the year. Movers will still benefit from good mortgage availability and attractive rates even if base rates rise, and more choice of property coming to market and the slower pace of price rises compared to 2021 will encourage some who have held back so far to take action.”

Managing Director of Barrows and Forrester, James Forrester, commented:

The dark clouds of uncertainty that hung over the UK property market for much of 2019 and early 2020 have yet to return and there are no signs of them doing so in 2022 either. So we can expect more of the same where upward house price growth is concerned, although it’s likely that the market will shift down a gear or two.

We’ve seen consistent levels of annual house price growth hit double figures throughout 2021 and this has been driven by an imbalance between supply and demand, but also a push for bigger homes in the wake of lockdown restrictions. 

While there will never be enough stock to satisfy demand, this trend for larger homes is unlikely to be as intense going forward and so we can expect a slight correction in this sense. A five per cent uplift for the year is probably a little bit conservative and it’s fair to say that’s the minimum benchmark for market performance over the coming year.

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