After the media have tried to use data to ‘talk down’ the property market over the last couple months, even they couldn’t ignore the ‘mini boom’ that the housing market has experienced since re-opening, most declaring it a ‘surprise’!
However, for those working in the market since mid May, this isn’t a surprise at all and the industry has been rushed off their feet. Current national data shows that, in the main, property prices are performing around the same growth level (2-3%) year on year as we have seen over the last 15 years.
Even though that isn’t ‘great’ growth (it’s less than half the level prices would have grown at annually since 2000), it is still a good result considering the news that we are (understandably) in the deepest recession ever!
The regional property price data is a mix of asking prices through to sold property price data this month with LSL Acadata coming back into the market. Overall, prices are still looking very buoyant year on year in pretty much most regions, with the newly opened markets of Wales and Scotland bouncing back incredibly well. The LSL Acadata data shows a less positive picture, with some areas recording some falls, but it’s likely to take a few more months for the data to ‘settle’ down so we can review exactly what’s been happening in the market since lockdown and re-opened.
For now though, in the main, people are not letting a second wave or the chance of price falls getting in the way of putting a new roof over their head, and this is probably the first time that I can remember people have put their happiness in a home over and above the fear of what will happen to house prices.
In the absence of Land Registry data, we are using the Hometrack data to take a look at what’s happening in cities across the UK. In general, they tend to perform better than the ‘rest of the UK’ as rural areas don’t necessarily have the same supply and demand constraints.
Cities across the UK are experiencing anything from falls – mostly restricted to Aberdeen which is still suffering from the issues caused by a fall in oil prices, through to over 4% rises in the likes of Manchester and Nottingham. This shows how individual property price movements are, not only at city level, but even down to individual property prices and I think this will be exacerbated when the recession really starts to hit the property market, which as Hometrack have indicated could be pushed back now until 2021.
Overall though, the data reiterates that individual property price knowledge from local expert agents are the key to successful buying and selling for consumers.
Towns/cities commentary from the indices
"UK house price inflation in the 12 months to June 2020 edged higher to +2.7%, the highest level of annual growth for almost two years. The post election rebound boosted sales and activity over Q1 which is still feeding into the headline index.
“The monthly UK growth rate has halved to +0.2% and city price indices are registering slower annual growth as a result of the lockdown.
“There is no evidence of any material, localised price falls across the index series at regional or city level. A small proportion of local areas are registering small month on month price falls of up to -0.2%.
“Given current trends we do not expect the headline rate of annual growth to move into negative territory over 2020. A growing imbalance of supply and demand is set to support prices over 2020 and sales agreed today will be completing up until November. Any price falls in the headline UK Index are more likely in 2021 H1.”
The really good news, albeit not ‘great news’ is from Hometrack this month, stating that “sales volumes which we expect to be 15% lower than in 2019” – much better than some of the previous predictions suggesting the market could drop by substantially more.
The chart below from Home.co.uk shows a strong increase in supply coming onto the market versus last year, but of course this is ‘pent up sales’ with new listings being held back for at least six weeks.
This improvement is backed up by the NAEA data which shows: “the number of sales recorded is the highest number since May 2017. Year-on-year, the number of sales agreed has increased marginally from nine on average per branch.”
It’s vital that sales agents capitalise on this rise as much as possible over the coming few months, as at some point, because demand and supply is being pulled forward so much, the market will have to come to a bit of a halt.
Whether that happens before or after Xmas we won’t know until around October time.
Transactions, demand and supply commentary from individual indices
“Current activity levels clearly show that Britain is getting moving again, with the number of properties coming to market up by 11.1% this month compared to a year ago despite Scotland and Wales not contributing for the full period, and total available stock recovering to now being just 13% down. The market is now in full flow with 40,741 (44%) of the 92,085 newly listed properties in the first month after the English market reopened having already found a buyer, compared to 34% for the equivalent dates last year. The stamp duty holidays, which are now expected to run until 31st March in all regions of the UK, are a further incentive to come to market now.
“The immediate effect of the stamp duty cut in England has been to amplify the buyer surge. The number of sales agreed in the five days after the announcement (between the 8th and 12th July) was up by 35% on the same days a year ago. This is significantly higher than the 15% increase in sales agreed numbers in England measured in the month of June before the announcement.”
“The average number of sales agreed per estate agent branch stood at 10 in June, double the amount recorded in May when there were five sales recorded per branch. The number of sales recorded is the highest number since May 2017. Year-on-year, the number of sales agreed has increased marginally from nine on average per branch.
“The number of sales made to FTBs stood at 29 per cent, falling from 32 per cent in May.
“The number of house hunters registered per estate agent branch rose from 344 in May, to 379 in June. Year-on-year, housing demand is up by 24 per cent, rising from 305 in June 2019.
“The number of properties available per member branch stood at 37 in June, increasing from 35 in May. Year-on-year, the supply of housing remained the same.”
“With regards to new buyer enquiries, +75% of survey participants noted an increase over the month. This marks the second consecutive report in which demand has rebounded firmly following the lockdown induced slump seen from March to May. Similarly, new instructions being listed onto the sales market rose sharply, evidenced by +59% of respondents reporting a rise (up from a reading of +41% in June).
“Alongside this, +57% of respondents nationally saw a rise in agreed sales over the month. This is up from a reading of +43% last time and is again indicative of a strong pickup in transaction levels after the hefty declines reported a few months ago. Furthermore, a positive reading was returned for the agreed sales indicator across all parts of the UK.”
“While there has been a lot of focus on the impact of COVID-19 on house prices, the greatest impact will be felt in sales volumes which we expect to be 15% lower than in 2019.
“This is a much better outcome than many, including us, expected in mid-March. We estimate 124,000 sales will be lost over 2020 as a result of the market closure.”
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