Will property freeze or thaw in the next normal?

Paul Starkey

Paul Starkey

Chief Commercial Officer at Reapit

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There has been foreshadowing in recent months that winter is coming, not just on the thermometer but also as an anticipated wave of further hardship to the UK brought on by COVID.

We face a housing market that is set to face a frosty winter as a liturgy of challenges and circumstances further coalesce to stand against us.

Nevertheless it is not all doom and gloom. Instead I suggest rather more hopefully that the transformation of the property industry over the past several months has prepared us for the new normal, and indeed the next normal as is the expression of the day.

Into the eye of the storm

We are now several months into the resurgence of the residential sales marketplace as activity resumed and buyers look to take advantage of the Stamp Duty holiday in place until 31 March 2021. But now the trends we are seeing are of slowing activity, as pent-up demand that built up over the convening years of Brexit and the early months of coronavirus lockdown starts to peter out.

Yet we are also seeing a shift in that pent-up demand, as the lockdown has encouraged buyers and renters to reflect on their lifestyles or adapt to a changing commute as many offices transition to work-from-home procedures that might have long term impacts as workers no longer have to live near an office, or can work from home more frequently.

There is still a rush, and a big one at that. According to independent trackers from Yomdel and BriefYourMarket, activity is still strong with enquiries and instructions respectively at their highest levels in weeks.

Nevertheless, the ongoing activity is caveated with the creeping slowdown in enquiries noted in the latest Yomdel Property Sentiment Tracker albeit still higher than normal, but BYM’s latest Property Market Index highlighted that withdrawels and fall-throughs had seen a comparative decrease at least over the previous week.

Reapit’s most recent Property Trends Index also corroborates the resilience of the open property market, with activity accross the sales sector trending above most 2019 levels over this period.

As we move into shorter and colder days, the imminently threatening issues are of a coronavirus second wave – already upon us by the looks of it – and less stringent but no less impactful localised lockdowns taking place over the winter months. What happens next will be anyone’s guess, circumstances will likely evolve unpredictably as we weather the storm that is COVID.

But nevertheless, we are within a balanced circumstance, with activity still strong despite a literal and statistical cooldown taking place. We are also unlikely to see such heavy restrictions placed on the housing market as transpired at the beginning of the year – the full lockdown at the start of the pandemic was a financially costly endeavour and playing that card again would have grave consequences for both the property industry and the economy.

Which is why it is fortunate but not so surprising that the property market has been allowed to remain open throughout the second national lockdown imposed this week.

Housing is the bedrock of economy activity in the UK, with a healthy housing market key to a healthy economy. The government is aware of this, hence why the housing market was one of the first industries able to take advantage of a loosing of restrictions in spring. This means that activity should be able to continue unencumbered for now, albeit with some necessary guidance on operations.  

But no frost on house prices…

There is an interesting insulator to the housing market that would suggest a more protected housing market than may have been projected earlier this year when the pandemic was hitting its early peaks, namely that of house prices. 

The latest house price indices from Nationwide, Halifax and Rightmove all demonstrate healthy house price growth on both a month on month and annual basis over September and October (latest available data at time of writing.

Halifax’s latest HPI suggested that house price growth for September was higher still with 7.3% annual change – the strongest since June 2016 – including a monthly increase of 1.6% over August.

Nationwide’s latest HPI demonstrated that annual house prices grew 5.8% year on year in the month of October – the highest rate since January 2015 – and with a 0.8% month-on-month increase over September.

Rightmove’s latest HPI offers the most recent market data available from the portal showing 5.5% year-on-year growth in October, with 1.1% month-on-month growth over September.

Crowning off this market growth, the Rightmove HPI also keenly highlights a number of records broken over the month of September, including the highest number of sales agreed in any month – up 70% on September last year; 66% higher figures of active buyers over last year, albeit down from the 67% July peak; and an average time to sell of 50 days setting the fastest ever record for this metric.

Perhaps the key lesson we can take from this is how the industry has quicky, and rather efficiently, been forced to adapt to the new normal. But it is our preparation for the next normal that paves the way for surviving the winter and thriving in the spring.

Surging for spring

The adaptive embrace of new software and technologies has been a critical component for businesses to function during the pandemic. Zoom has become a permanent fixture – welcome or otherwise – in many businesses. For many agencies as well, the rush to quickly adapt to new hygienic guidance in offices and social distanced operations for viewings has meant that technologies such as FocalAgent’s no-contact video touring and virtual viewing tools have thrived.

This is not going to be a regressive change, in fact, software adaptation and integration is a phase likely to accelerate over the coming months as we accept that the work-from-home experiment is likely to become far more permanent for many in future – both for customers and for agents. If we take anything into the throes of winter, it is a message that we are ready for this. There are significant challenges on the horizon, not the least a recession that is likely to last for a while. Nor can we ignore the financial difficulties of many facing harsh adjustments to their employment. But for many, life will continue much as it always has, and the property industry must be ready to welcome them.

This article was originally published on LinkedIn.

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