Property Market Update - August 2020
Since our last property market update, things have taken a rather unexpected turn. A sheer drop in property transactions at the start of lockdown has been superseded by a mini-boom resulting in record sales. Prices are rising regionally, but a looming recession is sure to have an impact on the market. We take a look at what all this means for you and your property transactions.
Record sales in August – the most sales in one month in over a decade
In a surprising turn of events, the post-lockdown period has seen an increase in property sales, with a record total of £37 billion made in sales in the last month. In the summer months numbers normally see a drop as buyers and sellers are interrupted by holiday plans. According to the house price index, that’s a 38% increase on last year, in spite of lockdown. Mini-boom sounds like somewhat of a misnomer, then, as the RICS had been reporting a huge drop in new buyers back in May.
Analysts are reporting a number of reasons for this rise – the stamp duty holiday being an obvious one. But rather than chalk the numbers up to a lack of summer holidays, experts believe there’s an additional reason for the increased interest. Known as the ‘working from home effect’, buyers are opting for more space, indoors and out. Sales of larger, top of the ladder homes were up 59%, and the number of first-time buyers is also on the rise.
Not a misnomer – mini-boom vs recession
However, the effects of recession are predicted to hit at some point – hence the desire to call the current trend a ‘mini’ boom. As the first wave of buyers whose plans were put on hold due to lockdown subsides, furlough schemes are coming to an end and unemployment is starting to creep up. Overseas buyers are yet to make a full return to the market. This makes it fairly unlikely for the current, record-breaking numbers to be sustained. However, there is a lot of hope for the housing market – conditions are nowhere near similar to the 2009 financial crash, and predictions of a fall in prices get more positive as time goes on. EY’s forecast has risen from a -5% to a -3% drop, and Savills has predicted the market will return to growth in 2021.
Price rises everywhere but London
So far, the increased interest in property has led to an unseasonal rise in house prices in most regions. London has, on the other hand, sustained a more typical fall in prices for the season, of around 2%. The RICS has reported caution over the medium-term outlook, with many professionals anticipating a further drop in house prices in the latter half of the year.
Prime central London trends
The Knight Frank Prime London report reflects the trends of price drops and rising sales volumes. The average discount was lesser for prime outer London than central – again reflecting the demand for more spacious property. The positive news is that the discount on prime central London properties is slowly shrinking, from an average of 7.6% in May, to 6.3% in July. Offers agreed on properties valued at £5 million+ were 10% higher than average, and 41% higher for properties below £1 million.
What this means for sellers
Demand is currently high, but it might not be that way forever. At Laurus we help to get our clients’ paperwork in place and make sure they’re Sale Ready from the moment they receive a valuation to the day they find a buyer. This means we’re already prepared to hand over to the other solicitor and can dramatically reduce the time between offer and exchange. At times of caution in the market, and with unprecedented external pressures, working with a well-prepared, responsive solicitor can make all the difference.
What this means for buyers
Buying property in the current circumstances can be as exciting as it is unpredictable. Having a lawyer who is willing to proactively collaborate with everyone involved is key to a quick turnaround. As London prices are currently low, clients probably want to act fast, and at Laurus we work closely with surveyors, mortgage brokers and estate agents to make sure client work is completed thoroughly, quickly and with the utmost professionalism. Our team has open lines of communication with all parties throughout the transaction and are always on hand to relieve clients’ anxieties and make the process more efficient.
