An update on the demand in the property market

Welcome to the July edition of the Greenstone newsletter. Activity in the property market has continued to increase with new sales agreed reaching early March levels. The property demand is certainly being translated into sales. The lettings market has also continued to grow with demand from prospective tenants continuing to increase.

Elsewhere we take a look into property searches and identify how search priorities are changing. To end we share how the property demand has caused a rise in asking prices.

We hope you enjoy this months edition. We also provide property tips, insights, and updates on our social media channels which you can click to follow at the end of our newsletter. As always, please get in touch if you have any property queries.

Best regards

Lewis Green, Director

New Sales Agreed Reach Early March Levels

As the United Kingdom was plunged into lockdown, we saw property portals and online property websites reporting huge numbers of visitors and this online activity is now being translated into sales agreed. Zoopla are reporting a huge spike in sales agreed with current figures now matching those back in early March when the market was booming, showing that the property market in England is experiencing a true resurgence post-lockdown.

In the month following the reopening of the property market, up to 7th June, analysis shows that demand for housing was 54% higher than at the start of March, with new sales agreed having risen by 137% since the market reopened.
Interestingly, the higher the values of the property the greater the increase in the volume of sales agreed when compared to before the Coronavirus crisis. Home sales for properties priced £1m and above are 16% higher than three months earlier – this could be attributed to homeowners looking to trade up in terms of location or property size. The impact of the Coronavirus can be seen on the most searched terms for properties – with home offices and outdoor space now higher in buyers’ priorities.

Zoopla’s Director of Research and Insight commented:

“The rebound in housing demand over the last month is not solely explained by a return of pent-up demand.

“COVID has brought a whole new group of would-be buyers into the housing market.

“Activity has grown across all pricing levels, but the higher the value of a home, the greater the increase in supply and sales as people look to trade up.”

The analysis from Zoopla is supported by Rightmove’s recent data publication which revealed that 40,000 new sales have already been agreed since the market reopened – with the average asking price of properties up by an average of 1.9% compared to pre-lockdown.

Property expert Miles Shipside commented:

“Following the initial shock of the early reopening of the housing market, England is getting moving again with a boom in traffic on Rightmove,” said Shipside.

“There are no signs of panic selling or even a price dip. Some sellers who had agreed a sale before lockdown have been worrying that their buyer may try to re-negotiate with a reduced offer.

“On this evidence buyers may now be trying to exchange quickly, as there are signs of high pent-up demand and upwards price pressure, rather than downwards.”

Continued Growth In The Lettings Market

Since activity resumed in the property market rental demand has continued to rise. According to Rightmove, upon the reopening of the property market rental searches rose by 22% higher than May 2019. With people being able to streamline their searches with virtual viewings, and finally be able to physically view property they are interested in, this has enabled more effective property searches. The private rented sector can work at a much faster pace than sales with less paperwork and planning; further accelerating the activity.

The prop tech firm Goodlord found that the first two weeks of June saw new and completed lettings applications rise above 2019 levels, and they are now maintaining a steady pace similar to that of 2019. Lockdown has caused many changes in people’s lives including possible job changes and lifestyle priorities, leading the intense demand for rental property. Whilst the supply of rental property has also increased, Rightmove’s Miles Shipside believes that a shortage of available rental property to meet demand could push up rent prices and allow landlords to be more selective when choosing tenants – and a rise in prices has already been identified.

The latest figures from the Office of National Statistics has found that rent prices have already crept up, with the average rent price in the private rented sector in England at a new record high of £700 per month! As expected, rental properties with more bedrooms can secure higher rents, with properties only offering single rooms having the lowest monthly rent. The highest rents were found in London compared to any other region, as anticipated.

As an investor, it is unlikely for your property to experience a void period with such high rental demand – reducing the risk to your investment. Tenant demand is soaring across all regions of England (a regional outline is listed below):

Region	Lettings Demand Increase Since 2019 (%)
South West	34%
East Midlands	33%
West Midlands	31%
Yorkshire and Humber	28%
East of England	25%
London	23%
North West	21%

How Are Property Priorities Changing?

2020 has forced us to make many changes in our lives, from home working, to self-isolation, it has created a time period for us to step back and re-think what is most important to us. As life slowed down many transformed their lifestyles and now need their homes to fit into this. This drive for change has already started to be noticed by agents and property portals, with a decrease in demand for the more vanity features and an increase in lifestyle practicality. Findings from a report released by the Royal Institution of Chartered Surveyors (RICS) have also confirmed the trends.

Home Office
When searching for property, features such as spare rooms for home offices spaces have been key for many. Working patterns have changed over the past few months, with many opting for more flexible work routines for the long haul. Home working has been found to be very productive and provide a better work life balance for many. For those that no longer want to commute, space for a comfortable home office is a number one priority.

Garden or Balcony
Properties with a garden or balcony have dramatically shot up the priority list. According to RICS, more that four fifths of property professionals believed that there is an increased desire for gardens or balcony’s for potential buyers. The lockdown period we have all faced has shown many how important the great outdoors is and having access to that on your own property is the most convenient way of getting outdoors.

As well as this, having space for garden storage has also been high on the property wish list. This is so that bikes and garden furniture can be stored securely. The rental sector has seen a dramatic increase in searches for property with bike storage in line with the encouragement from government to cycle to work where possible.

Proximity to Green Space
Having a garden or balcony is not the be all and end all for everyone. For some, as a long as they are in proximity or easy access to public outdoor spaces, they can still meet their needs for getting into nature. There have been many home hunters looking outside of city life to be closer to nature trails, local parks, and cycle routes. Outdoor exercise has become a staple part of fitness routines, so having nice locations to cycle or jog is key to meeting the fitness goals for many.

Home Improvements
The UK is poised to spend billions on DIY and home improvements following our period of lockdown. Spending so much time at home has caused people to have less tolerance for the areas of their home that they have been meaning to change. From extensions, to converting rooms into different functions, society is certainly starting to take ownership of their lifestyles and make their environments fit into their preferred ways of living.

Asking Prices Are Up 1.9%

Rightmove’s latest house price index for June has found that asking prices have increased in England by 1.9% on average. This is compared to pre-lockdown levels indicating the market is ploughing forward despite the recent pause on activity due to the coronavirus outbreak. The number of new sales agreed has also shown a swift recovery now being only 3% lower than this time last year! This is a bounce back from 97% drop due to lockdown restrictions. The pent-up demand has certainly made its mark on the market getting the property market moving once more.

Those that were anticipating a price dip upon the release of the property market from lockdown have been proved wrong, with homes coming to the market at an additional average of £6,266. Buyers are paying 97.7% of asking prices on average; further showing that people are keen to make up for lost time and purchase their new home.

Miles Shipside, Rightmove director and housing market analyst, commented: 'Following the initial shock of the early reopening of the housing market, England is getting moving again with a boom in traffic on Rightmove. There are no signs of panic selling or even a price dip. Some sellers who had agreed a sale before lockdown have been worrying that their buyer may try to renegotiate with a reduced offer.'

'On this evidence, buyers may now be trying to exchange quickly, as there are signs of high pent-up demand and upwards price pressure, rather than downwards. Lenders may also have been concerned about price instability affecting the risk profile of their low-deposit mortgages, so hopefully this will give them more confidence to increase their range of first-time-buyer products.'

The pause in the sector during Spring halted 175,000 people from bringing their home to market. They have not been deterred as record numbers of new sellers have requested valuations, and new listings are at a higher level than last year. The coronavirus pandemic has caused many to reconsider their lifestyles and push on with property decisions they had previously been hesitant about.