Residential Market Update- Corona’s Impact
The RICS publishes a monthly market survey based on comments submitted to members active in the residential property market, many of whom are involved with estate agency and valuations. It is perhaps with bated breath that we waited for the July 2020 survey, covering the first full month of property trading since the end of lockdown restrictions. The market was effectively suspended in late March, with restrictions on office openings, viewings, working patterns and an initial requirement to “stay at home”.
The survey shows a positive month and forthcoming outlook. The Stamp Duty holiday has had an effect in stimulating the market, but members feel that the market may ease once the general effect of the Government’s various financial schemes is phased out in the coming months (e.g. furlough).
New buyer enquiries rose during July, the second successive month in which demand increased, following the slump from March to May. Similarly, new instructions rose quite sharply. Not surprisingly there was a rise in agreed sales and there was a positive reading across all of the UK.
Most respondents to the survey anticipate continued growth over the next quarter, although long term projections do see things tailing off.
July saw a growth in house prices for the first time since March across all regions except London. The general anticipation is for house prices to keep rising.
On the lettings side demand continued to rise and there was some evidence that there are more instructions from landlords (the first time since 2016), although rental growth is expected to happen in the coming months.
Our local experience (the North West and North Wales) is that the market is robust and the pandemic has left markets largely unchanged; popular areas remain popular with buyers and there remain areas where selling always remains a challenge.
However, notwithstanding the rosy picture painted by the RICS survey, we have subsequently received the news that the country is in recession, and it is the worst recession in the history of reporting, with a massive collapse in the economy. In the short term the economy has been buoyed by a number of schemes provided by the Government, a collection grants and loans. As these are removed and the initial benefits are no longer relevant, it is likely that the effects of recession will be more widely felt. We conclude that the property market is perhaps in for a bumpy ride for the rest of 2020 and maybe most of 2021 as individuals and businesses adapt for a new way of working and a slower economy.
2020/2021 property price predictions are no more than a gamble at this stage.
As professional valuers at Oakwood we keep a watching brief on the property market, but rest assured we are never instructed to “down value” property for lenders or make a stab at future values. Lending valuations are as at the date of inspection. Some lenders do ask for valuations on the basis of short market periods, but these are judged on a case by case basis and are not the same as down valuations.