2020 has been a roller coaster year so far and we are only half way there! The start of a new decade meant a review of personal and business goals/objectives, re-aligning focus and getting ready to make this decade one to remember. Borris managed to finally agree a deal for the UK to leave the EU and whether you agree with this or not, I am fairly confident that everyone had heard enough about it and wanted to move on. However, what we didn’t want to move on to was Covid 19 and the ensuing pandemic that we have found ourselves in for the last 3 months.
With that pretty bleak backdrop of the year so far, you could be forgiven for expecting the economy to retract and the property market to likely dip. However, are the headlines a reflection of reality or another media spin to sell papers. Hopefully we can convey our view of the future prospects and brighten up your day.
On Monday Nationwide reported that house prices have seen the biggest monthly dip in May for the past 11 years – 1.7%. Add to this their 2020 view of a retraction along with Lloyds, Savills and Knight Frank to name a few. Is this a sign of the market retracting or a reaction to the temporary lockdown in the UK? HMRC also reported that house transactions fell by over 50% from April into May as the majority of people will have been forced to delay their purchases due to delays with professional services, changes in work conditions and an inability to move with removal companies temporarily closing operations. Our view is that the 47% of transactions that did complete in May could have been in the majority distressed sales or cash purchases where the purchasers would buy at a lower price because they can provide the vendor with a level of certainty. This could have resulted in transaction values dropping slightly on normal levels.
However, on a brighter note, Rightmove reported on Tuesday that, Wednesday 27th May was their busiest day on records with over 6 million site visits during the course of the day. Is this driven by people being stuck at home with more time to look for a new property or the likelyhood of lockdown job changes and break-ups? We have certainly felt the demand serge already in the rental market with properties being snapped up faster than ever before and now that it is acceptable to move again, people starting to re-locate.
Our view is that there is a lot of pent up demand in the market that will be released over the coming months followed by a likely slowdown in new purchases but as we all adjust to the new “normal” we believe that there will be a bounceback where the early confidence in the market in Q1 2020 will resurface.
We would be really interested to understand your views on the market and how it will react to the economic uncertainty.
Stay safe everyone