Since the government gave the green light to reopen the property market, we have seen a flurry of activity here in London. But how much is transactions that have been halted for 2 months, and how much is new demand, remains to be seen. One thing we do know is that conventional price indexes have become virtually meaningless since the property market was so abruptly shut off back in March. The Office of National Statistics has even suspended its UK price index from April until further notice, so we don’t have the traditional benchmark of data that we normally would.
The online property portal, Rightmove, showed that the average price of property coming to market in April dipped 2% to £311,950; by contrast, in April last year, UK house prices increased 2.1%.
While it will be a buyers market for some time, here in London we continue to have a dynamic where sellers don’t have to sell. So, there will continue to be a gap between asking prices, offers that are reduced from that asking price on the part of buyers, and then possible acceptance or rejection by sellers. Many sellers may reject offers deemed too low and opt to continue to market the property, or even withdraw it altogether.
There is a wide range of estimates as to the level of property price decline. While the Centre for Economics and Business Research predicts that 2020 prices will be down by 13% “as a lack of transactions, high uncertainty and falling incomes take their toll”, a third of valuation surveyors are predicting that price falls may be limited to 4% or less. Areas that have a more resilient job market will more than likely see property values hold up better.
Looking towards the rest of the year, there will be low inventory levels as fewer new builds are delivered and it is estimated that up to half a million transactions will have been lost due to COVID-19. As interest rates continue to stay low with the Bank of England base rate at just 1%, this may mean that while there might be fewer buyers due to employment concerns, there may be fewer properties flooding the market, so there may not be a dramatic reduction in prices.
Some interesting dynamics that may come into play for buyers:
- People may seek to move further out and get more space for the money as working from home becomes more acceptable and standard
- Demand for outdoor space in the form of gardens and balconies
- Buyer confidence in the employment market
For those buyers that are going to be out looking, they should expect more restrictions on accessing properties. Estate agents will be conducting 3D virtual walkthroughs on all our properties giving prospective buyers a detailed and thorough tour. We’ve also put in place procedures which abide by government guidance to safely conduct viewings.
~Novel Serialisation: Heavens Fire~
For Market Appraisals, we will do a video consultation first. Should we need to visit the property, we ask that minimum of 2 metres social distance is maintained and minimal conversation is conducted face to face. Agents will of course be in PPE and request that vendors are also adequately covered.
Beyond estate agents, The Royal Institution of Chartered Surveyors is working on guidance for its members. The British Association of Movers has also provided guidance to its members about safety and what they will and should no longer do.
These are definitely unprecedented times but housing is a fundamental need that still needs to be transacted. We look forward to serving our clients whether they are looking to sell, buy or have a property for management.
Ugo Arinzeh is the founder and Managing Director of Onyx Property Consultants. She has an MBA in finance and spent over 10 years with Bank of America Merrill Lynch structuring and negotiating real estate transactions. Over the years she has personally bought, sold and managed properties both in the US and London. Ugo is passionate about property and founded Onyx to utilise all her skills from her corporate and investor background to deliver exceptional results for her clients. As part of Keller Williams, Onyx is connected to the largest network of agents globally.
