While the property market remains at record breaking highs in most areas, the market does appear to be calming down after the rush to beat the first Stamp Duty deadline on the 30th June. We speak to industry leaders about how they’ve handled the extreme conditions in the market, and their advice if you’re currently contemplating making a move.
How has the market changed?
Douglas & Gordon CEO James Evans has seen the company through unprecedented volumes of sales, at a time where agents and solicitors had to work more closely than ever to ensure client satisfaction. The additional pressure on service providers was intense, with buyer demand increasing by 44% on last year – James, now that you’ve had some time to reflect on the stamp duty deadline, how would you describe the changes that took place in the property market?
“The London property market has been relatively flat for almost five years since the UK decided to leave the European Union. Many people in London seemed to be sitting tight in anticipation of the Brexit deal. When the UK finally left the EU in January 2020 we saw a surge of activity in the market which was brought to an immediate halt when the pandemic hit. However, that four years of pent-up demand remained, as we saw in June 2020 when the housing market re-opened and buyers started to look once more. There is no question that the Stamp Duty Holiday had a significant impact, bringing huge numbers of buyers and sellers into the market. To put this into context, our sold properties dropped nearly 70% year on year from June 2019 to June 2020, followed by an extraordinary 783% increase from June 2020 through to 2021 when the deadline of the Stamp Duty Holiday drew to a close.
Along with this release of pent-up demand, in our opinion the Stamp Duty Holiday has also brought forward the next 3-6 months’ worth of Londoners who have been thoughtful about getting on with their property moves. Across our business we saw a 133% increase in properties to sell in the month of July 2020 from July 2019.
While we have seen huge price increases in a very short space of time, it is worth remembering that prices in London have been either down or flat in many areas for quite some time. If anything, this increase is just a correction of what has been a very subdued housing market.”
Equally, says James Hollingsworth, CEO at Laurus, the underlying market remains robust, despite huge amounts of pressure from the Stamp Duty Holiday.
“Record low borrowing costs, plus this sense of wanting to move after months in lockdown – I think there’s just been a fundamental shift in attitudes. People are wanting to move and not prepared to wait.
We may see a slight pause in July and August because those transactions have been brought forward – but unless there’s a fundamental change in the economy, in interest rates, because of inflation, or prices going up too high, I don’t think things will change dramatically. I think we still have a strong market.”
What makes an effective property team?
Since the Stamp Duty holiday was announced, the number of sales agreed steadily rose, as did house prices. This resulted in record high prices, and an all-time low of new properties coming to market. The strain was felt by both service providers and clients – so what have leading estate agents been doing to support clients through these challenges?
James Hollingsworth says the role of the agent has been more important than ever during lockdown.
“We’ve been setting out expectations from the beginning, by keeping agents copied into correspondence and by letting clients know that the agents’ role is integral. If the expectation is set at the beginning that the agent is going to help us do our jobs, the client will trust that is part of their role. This approach is far more likely to be successful than an agent who disengages after the memorandum of sale has been issued.”
“Taking a proactive approach to selling has been helped ensure that our clients have been able to complete on their planned deadline. Our Sale Ready service helps to save weeks from the conveyancing process, and we wholeheartedly believe that all sellers should engage with us early to help check and organise their documents whilst they wait for a suitable offer.”
It does appear that, despite savings being on offer, some people are still moving out of a genuine desire to relocate – for example, in June, sales agreed for properties over £500,000 were up 49% on last year, despite missing out on the top end of SLDT savings.
But as the market cools off, the impending changes will undoubtedly make some buyers wary.
How do you predict the market will change in 2022?
Lauren Lambourne, an Associate solicitor in Laurus’ City property team, predicts that January may bring a return to normality, with a quieter market being typical for this time of year.
However, if prime London market prices stay relatively low, Lauren says, "I expect inflated interest from overseas buyers, and the London prime market to improve – but there is no reason to expect a huge rise in prices for 2022."
"Post SDLT deadline, I expect prices will even out generally. Those who have been nervous about unemployment throughout the pandemic will now be able to seize the opportunity to take advantage of the current low prices in London."
"Many are still looking to relocate out of London, particularly for space and gardens. Once offices are fully open again, perhaps more will be looking to buy London properties again."
Are there any trends already emerging within D&G?
Sales applications are still high, says James.
“Right now, we have some of the highest number of sales applicants that we have had for many years and plenty of extremely high-quality properties to sell, but it feels like London is taking the summer to pause for breath. Many areas of London still represent very good value for money and if you are considering buying before the end of the year, my suggestion would be to look sooner rather than later."
"Lots of people will have experienced very frustrating times trying to buy property in a competitive, frothy market recently. August may present an opportunity to buy without the fierce competition of the past few months and before a busy autumn market with many buyers anecdotally wanting to come out and buy in September and October.”
What would you say to someone who is undecided on a sale/purchase?
James (Evans, D&G) tells us, “A key factor, affecting Central London particularly, has been the lack of international buyers over the Covid period. It goes without saying that when international travel resumes, and Central London becomes alive again, prices will follow suit. My view is Central London is representing good value today and I do not believe it will stay that way for long. Another reason the smart money should really be buying now.”
Lauren adds, "It’s always a huge life decision deciding whether to move. It can be very stressful."
"Depending on their circumstances, I would advise that property is and has always proved to be a great investment. We’ve seen the market go through many ups and downs over the past 20 years but it always bounces back. House prices may drop in 2022 but they will even out again, perhaps towards the end of 2022."
"There are many factors that come into play when deciding whether or not to move. Whilst it can be daunting and overwhelming, it is also exciting. If unsure, always carefully balance out the reasons but do not let market trends worry you as the house market has proven its recovery many times."
If you are looking to make a move in the property market yourself or would like to speak to our property team about referring a client, please don't hesitate to get in touch on 020 3146 6300 or firstname.lastname@example.org.
How to increase your chances of a successful sale
As we contemplate getting back on the move, some of us will be considering selling our most prized asset - our home.
Remortgaging during Covid-19
For some, there has been never been a better time to release equity, or switch to a cheaper product.